Jack Maisano
President
The American Chamber of Commerce in Hong Kong
Speech at the business luncheon jointly organized by the Hong Kong Economic and Trade Office in San Francisco and the Hong Kong Association of Southern California on April 6, 2006 in the Millennium Biltmore Hotel in Los Angeles, USA

Good afternoon, Ladies and Gentleman. My name is Jack Maisano. As President of the American Chamber of Commerce in Hong Kong, I get to meet a lot of people.

Some of them, like you, know a lot about Hong Kong. But many aren’t sure why Hong Kong is the 10th largest trading territory in the world and has one of the highest per capita incomes anywhere.

They can’t see immediately what it is about Hong Kong that works. Until they’ve been there a while, they fail to comprehend how good a place Hong Kong is to do business.

They don’t believe that you can arrive at Hong Kong International Airport (voted Asia’s finest, by the way) at 9 AM, be in the Central business district at 10 AM, and have a company and a bank account formed before lunch.

They can’t fathom that you can have your office, with name cards indicating your new company’s name, address, phone number and email address, ready before dinner.

Hong Kong is without equal in the world. It’s absolutely unique.

People have searched the world over for another place like it. There is none.

Those people have all stayed in Hong Kong.

Why is Hong Kong so special?

* The legal system works. It’s honest and swift. Judges are independent. Their goal is conflict resolution, not retribution.

Hong Kong uses the common law system of justice, as we do in the United States. Precedent matters. So the common law history of the U.K. going back hundreds of years still holds. Even the law of the U.S. can be brought into view when required.

Hong Kong is ruled by law. And the law is the same for everyone. You know what is required. And you know what is forbidden. The law doesn’t change for one person without changing for everyone at the same time.

Hong Kong is a level playing field for business. When you enter Hong Kong, the laws that apply to everyone else immediately apply to you as well.

* Hong Kong has a freely convertible currency, the only one in Greater China.

Hong Kong is banker to both China and Taiwan, which allows them to do business with each other.

Hong Kong has been granted the right to trade RMB. And when the RMB becomes fully convertible, Hong Kong will be streets ahead of any place else in that trade. It’s the only place in the world where you can do three-currency (including RMB) real-time trading.

* Hong Kong has well regulated banks and securities markets and an open and transparent system of doing business.

* Hong Kong is the regional information center. Its free flow of information has made it a movie and film distribution center, an IT and software center, and a center for publishers in Asia, for cable and satellite broadcasters, PR associations, ad agencies, newspaper publishers, designers, architects, the international press, and the main Asian bureau for the New York Times, Time magazine, Newsweek, the International Herald Tribune, The Wall Street Journal Asia, Bloomberg, CNN and others.

* Hong Kong has 21st century infrastructure. Its container port (busiest in the world), award-winning airport, convention and exhibition centers, highways, office buildings and malls, hotels, electricity supply, country parks and other leisure amenities, new towns, ferries, telecommunications and mobile communications, and banking facilities are all first class.

* In trade, no place is better or more efficient. Being open and free, Hong Kong’s supply chain is second to none. Hong Kong is home to thousands of regional offices, with even those of multinationals in Japan starting to report to headquarters in Hong Kong.

You know all this. But what is happening now in Hong Kong that is new? Why are we here thinking about progress and renewed potential in Hong Kong?

Isn’t this the place whose future Fortune magazine famously questioned in a cover story 10 years ago, “The Death of Hong Kong?”

Why didn’t it die? And why is it, equally famously, thriving right now?

There are many reasons:

1. Hong Kong’s growth over the last 40 years has not been an accident.

Hong Kong’s strength is well founded in fair laws, low taxes, open trade, free flow of information, and sound finances. In an earlier era, it was just in the wrong place. China was closed until the late 1970’s. No trade with the US. Little trade with anyone else.

As China blossomed, so did Hong Kong. So we have rule Number One: what’s good for China is good for Hong Kong. And when you ask “Why now?” – it’s clearly because right now (and over the last two decades) China is booming.

2. Hong Kong looks outward.

That has been its role. It’s the trading post, the port – the prow of the ship. It had no hinterland for much of its history, so it imported here and exported there – to and from all over the world – and thus created trading expertise – logistics, law, insurance, finance, information, people – second to none. Its trade volume is still more than 100% of its GDP.

That leads us to rule Number Two: never underestimate the commercial genius of the people of Hong Kong. And if you ask “Why now?” – it’s because world trade volumes have grown by more than a thousand per cent over the last 25 years.

3. Hong Kong has had good government.

That may not sound very interesting. But it’s very important.
It means a lack of corruption. It means sound laws – laws that are followed and enforced. It means government efficiency, a civil service that is studied by other countries.

It means good communication and record keeping – a government that learns. It means a government that is proud of its accomplishments and is keen to improve on them.

It means a citizenry that expects and even demands service and holds its leaders accountable for their actions.

It also means a system that functions in forward gear and constantly looks to the future. So rule Number Three is: Hong Kong is a true 21st century city with deep roots in the best of both the West and the East.

If you ask the question, “Why now?” – it’s because good government remains at a premium in this world. And a government that can fully tap the genius of its people will engender an economy that others can only dream about.

4. Hong Kong thrives in adversity.

Let me tell you a story. I learned more about Hong Kong by being absent than I did by being there.

I was absent from Hong Kong for five years – five of Hong Kong’s most challenging years in living memory – probably since the turbulent era of the 1960’s, if not before.

In 2000, when I left for New York, the Asian Financial Crisis still negatively affected Hong Kong. Nations surrounding Hong Kong were all still shell-shocked by the aftermath of the crisis.

Hong Kong was suffering from round one of bird flu, facing the bizarre international humiliation of having to cull millions of chickens to avoid an epidemic.

Hong Kong was dealing with the unprecedented aftermath of its return to China and its separation from Britain.

When we just change administrations in the U.S. after a presidential election in this country, it’s a big deal. When we change parties, it’s a very big deal. Changing governments is traumatic to societies where it happens, though we haven’t experienced that here in America for over 200 years.

Hong Kong changed sovereignty on July 1, 1997, and we were expected to go to work on July 2nd as though nothing had happened.

Well, something had happened. But we didn’t know what it was, and it affected our identity, our confidence – if not our sense of purpose.

There was also the 2000-2002 recession in the U.S., Hong Kong’s biggest market, and the huge drop in international travel after 9 / 11.

Then in 2003 there was a little thing called SARS, which – among other inconveniences -- virtually stopped all tourism, Hong Kong’s number one industry.

Hong Kong also went through a period of political malaise, a crisis of leadership, which insinuated itself through all of the crises above, making them even worse.

What did Hong Kong do during that time?

It built the West Rail, another link with China, mirroring the East Rail of the KCRC.

It built a new town in Tinshuiwai, now housing 250,000 people.

It built a new spur to the MTR to Cheung Kwan O, one of several.

It built highways around the New Territories, linking all the existing new towns.

It built Science and Technology Park, near the Chinese University, which houses some of the most advanced R&D facilities in Asia, and is close to completing phase two.

It built Cyberport, another advanced IT facility, which has spawned its own, sold-out, mini-new town on the southwest side of Hong Kong Island. It built the Asia Expo Center and started construction that will double the capacity of the airport.

It elevated tertiary facilities so that there are now seven (nearly eight) universities in Hong Kong, all with students from both China and overseas, as well of course as from Hong Kong.

It built a world-class hotel school, big enough to enroll 1,000 students at a time. Today in Hong Kong, more than 50% of all high school graduates go on for some sort of tertiary education.

It built a beautiful museum, and saw the opening of some 50 or more art galleries.

It built IFC (the International Finance Center) – a colossal office tower and mall – two towers in fact. Five-stars hotels were constructed that opened last year: the Mandarin Landmark and the Four Seasons (the first five-star hotels to open in Hong Kong in 15 years).

The stock market became the place to list for Chinese companies, and Hong Kong solidified its position as the most important financial center in Asia.

And yes, there was the little matter of opening a new Disneyland, bringing entertainment and tourism (as well as electricity and other infrastructure, and two more hotels) to a previously deserted part of Lantau Island.

All of that was happening when Hong Kong was doing badly, and these are just some of the more visible changes.

That brings us to rule Number Four: Hong Kong lives in the real world and looks adversity squarely in the eye. And if you ask “Why now?” – the answer is that Hong Kong has faced difficult external problems, and always found the inner strength to succeed.

There are other new advantages to Hong Kong.

5. Hong Kong now has the hinterland it lacked before.

China is open for business – through Hong Kong.

Hong Kong is no longer an island. Hong Kong businesses hire five times more people in China than they do in Hong Kong.

What China lacks – usually described in terms of skilled human resources and efficient world-class systems -- Hong Kong supplies. In a recent Business Outlook Survey by the American Chamber of Commerce in Hong Kong, our members said that location was among the top four reasons for investing in Hong Kong.

In a similar survey of the American Chamber of Commerce in Guangdong, their members said that proximity to Hong Kong was one of the top two reasons for investing in Guangzhou.

That is total complementarity.

People in Hong Kong who couldn’t speak a word of Mandarin 10 years ago – and weren’t sure they wanted to – are now giving speeches in Mandarin…and helping Chinese companies go public in Hong Kong.

The press is freer. Political and economic autonomy is greater. The currency is stronger. Confidence is higher. Hong Kong has reinvented its identity.

Yet Hong Kong isn’t just Hong Kong anymore. It’s part of China and is taking every possible advantage of that fact.

Hong Kong processes people into China through its advisory services.

Now it is getting ready to process Chinese companies back out to the rest of the world through its capital markets and worldwide information and trading system. The Bank of China will list on the Hong Kong stock exchange this year.

This is a multi-directional juggernaut that is providing win-win-win solutions for everyone who wants to play.

So rule Number Five is: Never underestimate the unity of the Chinese people. And if you ask “Why now?” – it is because the all-important One Country, Two Systems rule is working better than anyone had ever anticipated.

James Baker, a former U.S. Secretary of State, said at the recent official opening of law firm Baker Botts in Hong Kong: “Hong Kong’s lights are brighter, its buildings are taller, its streets and shops are busier than perhaps ever before.

“Hong Kong can continue to contribute substantially to positive and stable Sino-American relations as well as to the global economy…. I believe that Hong Kong will influence China to become more politically liberal with greater emphasis on freedom and the rule of law….”

As you can see, I am proud to live in Hong Kong and call Hong Kong my home. Hong Kong has given me much, and I work hard every day to give as much as I can back to Hong Kong.

I’ll end with more words from James Baker: “Hong Kong’s compelling values of the rule of law, and economic opportunity – championed by its able, energetic and persistent people – can (and I think will) influence China’s future development in a clear and positive way.”

That in brief is “Why Hong Kong? Why now?” And why Hong Kong will be important long into the future.

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