HONG KONG'S reputation as a fair and open environment for business is looking increasingly shaky, according to retailers angered by the Airport Authority's slashing of rents at Chek Lap Kok. James Hurley, president of duty-free giant DFS Group in Asia, said the issue was of international importance from the business viewpoint. 'Foreign companies might be wondering whether they shouldn't be going into Hong Kong when they don't have the support of one of the big property developers,' he said. The issue is whether Hong Kong is an impartial place in which to do business. Johnson Ko, chairman of First International Resources, which had the bureaux de change concessions at Kai Tak from 1980-87 and 1990-97, backed Mr Hurley. 'The way the concessionaire's fares are cut has ruined the spirit of the tendering process in Hong Kong. They [Airport Authority] have chosen to underwrite the business risks of tenants,' he said. Mr Ko said there was a danger that these practices could spread. 'It is hurting the future of Hong Kong,' he said. The comments came in a week that property tycoon Li Ka-shing sparked controversy over the extent of influence held by business interests in the community. Mr Li warned that his group might pull out of a multibillion-dollar project because of worries about the 'political environment'. He said criticism of his companies, Cheung Kong (Holdings) and Hutchison Whampoa, was unfair and raised his concerns about the investment climate in Hong Kong. In particular, he said a small number of people were trying to undermine the contract-based system. This was an apparent reference to criticism by the Democratic Party of Cheung Kong's decision to sue buyers who had defaulted on purchases of its Kingswood Villas flats in Tin Shui Wai. Cheung Kong has said it would take legal action to recover the difference between the original selling price and the resale price. Mr Hurley said these remarks were interesting in the context of the Airport Authority row. The terms of the contracts for airport concessions did not provide for licensees to quit, he said. 'It was made clear to bidders that they should gauge their own risk, there would be no recourse to the Airport Authority should the environment prove hostile.' For small players, there is an opt-out clause after 36 months; for big players, there is no such option. 'It is absolutely clear on every third page' of the tender documents that the risk of any change was to be borne by the concessionaires, Mr Hurley said. He said this understanding of the risks involved should have tempered the bids. 'Five years is a long time, you've got to look at what could happen. In the course of five years, something is going to happen,' he said, adding that during DFS' tenure at Kai Tak, the concessionaires had to ride out the disruption to business from the Gulf War and Tiananmen Square, and that at no time were they given any reduction in their rents. For Chek Lap Kok, bidders should have taken into consideration the evidence of a long-term slowdown in Japanese passenger arrivals, the issue of Taiwan and whether at some stage direct flights will be permitted. The failure to include these negative factors in the equation led to unrealistic bids being accepted by the Airport Authority. Mr Ko agreed, saying the authority was encouraging poor business practice. 'The Airport Authority is underwriting the business risk undertaken by the successful tenderers,' he said. 'We are talking in this situation of parity in a public tender exercise. A fresh call to bid for space becoming vacant is the only way forward. 'This solution would preserve Hong Kong's position as a free market and its reputation as a level playing field.'