Why Hong Kong was at its best in the late 1980s
The final years of the booming decade represented the height of wealth creation and opportunity, but also a period which was culturally unique
This is my Fire Monkey year. In the next week, I hit 60. What has Hong Kong has taught me about business in the last six decades?
Hong Kong started as a byword for product and service - doing a good job for people. Good business people are not always flashy, or loud, or even smart. Luck and timing play huge part. Like successful business people, locations like Hong Kong also need luck and timing as well as, of course, hard work.
As a teenager I remember that it was possible to drive down to Central and park free around a tree-lined Statue Square. Now only the billionaire’s chauffeurs can do that. Life was slower than today but for as long as I can remember, the “doors close” button on the elevators have been worn out. It was then that I absorbed Hong Kong’s values of hope combined with hard work and ambition. There’s a feeling that no one owes you a favour, so you had better get on with it. It comes from the urgency of being a refugee society and the need to make a living. I learned a lesson that to make things happen, you have to hustle.
Time is money so things had to be done yesterday. I started working in the city in the 1970’s, which was a decade of enormous energy as the government poured investment into housing, bridges, highways, hospitals, and water supply. The Hong Kong spirit of urgency and impatience was combined with a spirit of efficiency. Corners were cut but in a professional manner, within the rules; not illegally. This Hong Kong taught me ambition – a sense that no one could stop you succeeding.
Back in London, I found a boss who illustrated the difference. He thought I was a cowboy and I thought he was a hidebound old fuddy-duddy, incapable of decision-making. In Hong Kong, bureaucracy was light and there was no blame culture. Projects came in under budget and within time. Getting the job done was paramount – the details could be winged later. If they did trip up the project, people were confident and experienced enough to find a quick solution.
A friend from the mainland recently asked: “What was the best time for Hong Kong?” It has to be the late 1980s as Hong Kong grew incessantly and everyone made money despite the 1987 crash. The city moved seamlessly from being a manufacturing hub to a financial centre as the former moved to China. The population averaged 25, with the energy of youth, eager to study and learn. There was never a shortage of work and employees would walk out of one job into another with a decent rise.
The 1990s saw the big global companies moving in, making Hong Kong a really big financial and trading hub with global presence. We could still be creative. The Hong Kong sense of “getting your retaliation in first” was not malicious and everyone understood that it was to secure your hard-won position. If there was a row, then Hong Kong people would not get mad, they got even.
The global influence made everyone more suspicious and aware of blame. Looking back over papers and documents from past careers, I see now that people were always much nicer, more generous, and more helpful to me than I thought at the time. I can’t help thinking that this new suspicion resulted in lost business and personal opportunities.
Hong Kong’s openness about making money makes it more honest than many other places around the world. “Wah, nice flat! How much you pay?” is often the first comment by a visitor to one’s home. Talking about money somehow makes it more transparent compared to the West. The processes of the big global companies and their global rules has made Hong Kong more of a regional centre and less of a global hub. Everything has become less negotiable in the noughties and the tens as a result of internet systematisation and homogenization. The average age is now 55, not much less than I.
Hong Kong was established and developed because of its geographical location but the internet makes location a lot less important. In 1970, we were alone, masters of our own destiny – now we are the 14th biggest city in China - not just a small part of China, but of the World. We can’t afford to lose our refugee “can do” spirit that meant that those at the bottom of the pile could look at those who succeeded and believe that with hope and hard work they too can do the same.
Richard Harris is Chief Executive of Port Shelter Investment Management
This story has been corrected to amend a time reference in the first paragraph.
Shortly before Christmas, a photograph of a family entitled “Visiting Grandma” circulated via email.
It showed an old lady looking bemused, surrounded by her happy family, each hunched in a posture of prayer over their smart devices. On Boxing Day, my brother sent me a photograph of the whole family adopting the same position – including my 85-year-old mother, peering intently at her iPad mini, one finger hovering purposefully.
The outright share price winners in a straight race in 2015 were the global personal technology companies. Amazon was up an amazing 122 per cent; Google, now known as Alphabet, soared 49 per cent; Facebook rose 36 per cent; and Tencent was up 35 per cent. These price movements illustrate the grip that technology has on our lives and that of the market.
Most of these big companies have been making steady acquisitions, which are now bearing fruit. Microsoft owns Hotmail, Skype and a stake in Apple and Expedia. Facebook picked up Instagram, Lightbox, Oculus and WhatsApp. Alphabet boasts the Android operating system, Google Search, and YouTube. Analysts said this week that YouTube is now worth twice the value of Netflix and accounts for 15 per cent of Alphabet’s revenues. The key to YouTube’s growth is that it is largely free, although Amazon and others are seeking to charge for premium services that used to be free.
The laggard is Apple, which led its competitors in cornering its own ecosystem of hardware, software and retail ware. It is in consolidation mode with US$200 billion of cash burning a hole in its pocket but with an enormous opportunity to do something special.
Part of the success of these tech monsters is because their youthful business models have themselves adapted to change. Amazon began as an online bookshop – but is now the nearest thing to an online department store, selling a wide variety of products. Books pioneered online marketing, payment and distribution and provided a platform for anyone to use.
There is an increasing trend of shops becoming owned by the online providers – the Internet Plus idea that is illustrated by Alibaba’s US$7 billion tie up last year with electronics retailer Suning. Recent figures suggest that as much as one-third of clothing bought through the internet is returned – and that doesn’t include the T-shirt you gave your brother for Christmas that you couldn’t be bothered to return. Returns themselves are big business, tying up cash and driving further impulse buying through the return process. Internet Plus allows customers to see the products in Suning, buy them from Alibaba, and take the returns back to Suning; using the advantages of both online and offline shopping. Shops could develop into megastores; a shopping experience with shelves of goods to sample as a physical window to online shopping, perhaps combined with coffee, books and entertainment.
As if to mock the big innovations of the past 25 years, there are still many just around the corner. 2016 may be the “year of the wrist” with a flurry of digital wrist jewellery. The most commonly downloaded free application from the Apple Store this Christmas was for the Fitbit – the device that tells you when you are asleep, exercising, and burning calories. I was never going to swap my Breitling for a clunky piece of digital plastic until I found a GPS enabled jogging watch that tells me that a 7.25km run up and down Mount Butler (274 metres vertically) is the same calorific value as a cream cake – at least they neutralise each other.
2016 is going to give us visibility on what life will be like in the twenties. Driverless cars are here to stay, the first one having been ticketed by a policeman. They would be here faster if it were not for the regulators – lucky for Karl Benz that he did not have to deal with them. The electric car is invading Hong Kong’s roads, despite being invented and abandoned in the 1830s by Robert Anderson, as being heavy, expensive and requiring constant charging. Hoverboards could develop as a real alternative to walking around Central. Drone technology has revolutionised warfare and is likely to do the same to our peaceful lives. 2016 will see more virtual reality technology, more smartphone apps controlling our lives, and new processes like paying our bills and monitoring our health becoming the norm.
The unspoken negatives are a rapid decline in privacy and security. The GPS already identifies our movements to an arm span’s accuracy. You can be sure that 2016 will bring bigger and more frightening cyber security breakdowns than ever before. The next tech company investment surge may be in that sector – just to protect what we have.
Richard Harris is chief executive of Port Shelter Investment Management