Here, a who’s who of British retailers – including Burberry, Paul Smith, Aquascutum, Galliano, Mulberry, Links of London, Marks & Spencer and French Connection – compete for the Hong Kong dollars of residents and tourists alongside such other Western luxury brands as Gucci, Armani, Yves Saint Laurent, Calvin Klein, Bottega Veneta, Coach, Zara and Starbucks.
One could scarcely find a more perfect metaphor for the keen interest Western businesses of all kinds are showing in Hong Kong at the moment, a visitor to the city quickly discovers.
Business growth
While the "Hong Kong-as-a-gateway-to-mainland China-and-the-rest-of-Asia" story is hardly new, the stream of foreigners coming to Hong Kong on expatriate visas has intensified recently, experts there say, for a variety of reasons.
Some of these reasons – such as a seemingly universal interest on the part of Hong Kong-based, expat-focused IFA firms in luring top talent from the UK – are being fuelled simply by growth in other business sectors. This is because at the end of the day, ex-pat hotel managers, retail executives and even hedge fund managers need expert advice on their personal finances, just like everyone else.
Take, for example, the ambitious plans by Harrow, one of England’s oldest and best known private boys’ schools, to open a 1,200 pupil, mixed sex boarding and day school on the grounds of a former army base in the New Territories in 2012.
Harrow International School Hong Kong is being set up in response to what the Hong Kong Education Bureau sees as a significant demand in the Hong Kong catchment area for a high end, English language private education. Harrow already has schools operating in Bangkok and Beijing.
When completed, Harrow’s Hong Kong outpost will employ around 90 teachers, according to Harrow deputy headmaster Mel Mrowiec, who will be the new school’s headmaster. Like London-based Mrowiec himself, many of these 90 teachers will be among the 2012 crop of new expats to Hong Kong – and as such, potential new clients for all manner of expat-specialising businesses there, including financial advisory firms.
At the same time, of course, Harrow International itself will cater to expatriates, who, sources say, are now competing for an insufficient number of places at Hong Kong’s existing, and booming, international schools.
Right place and time
“Our tagline at Invest Hong Kong is ‘right place, right time’, but at the moment it really does seem as though everything is coming together right now,” says Simon Galpin, director-general of Invest Hong Kong, a ten-year-old foreign direct investment promotional agency, which last year set a record for the number of foreign companies it helped to set up or expand in Hong Kong.
Of the 284 entities Invest Hong Kong (IHK) helped in 2010, the most – 52 – were from mainland China, 51 came from the US and 36 were British, Galpin noted, with transport and industrial companies represented most among the total, followed by businesses in tourism and hospitality, and next, by innovation and technology firms.
Foreign direct investment flows, which IHK does not take credit for, also hit a record last year, up 32% over 2009’s level to HK$535.3bn (£42bn, $68.9bn).
Such statistics are not the result of luck, Galpin points out. Nor even, probably, to the particularly shrewd use of feng shui when siting skyscrapers.
Rather, like many of the other jurisdictions with which it competes – notably arch-rival Singapore – Hong Kong has gone out of its way in recent years to make its already appealing business set-up package even more attractive.
Easy to start up
The result is that few countries allow foreign businesses to get established as easily or quickly as Hong Kong now does, or enable foreigners to take up residence with so little difficulty.
Yet another reason newbie expats are currently hunting for flats in the Mid-levels and prowling for furniture along Hollywood Road, Wong Nai Chung Road and Queens Road East, is in anticipation of investor interest in renminbi-denominated financial products. Currently Hong Kong is the only place outside of mainland China
that has a renminbi clearing bank, although last month Singapore was reported to have made a bid to handle renminbi trades as well.
Ready for the reminbi
Among the attractions of the renminbi are that it is expected to appreciate over time relative to other currencies, which in turn means that investments acquired now in renminbis may be expected to outperform comparable investments made in dollars, sterling or euros. Some companies also see RMB-denominated products as a way of enticing Chinese investors: last year two US companies – Caterpillar and McDonald’s – issued RMB-denominated bonds.
Galpin notes that quite a lot of the new companies coming to Hong Kong are “in the creative industries, such as design firms, architectural firms and art galleries”, many with their eyes fixed firmly on China.
“We have a lot of mainland companies here that aspire to develop their brands and go global, and they need help to do that,” Galpin points out.
International law firms are also finding Hong Kong an attractive market, as their increasingly peripatetic clients seek legal advisers who understand and are familiar with the various jurisdictions they frequent.
London and New York-based, private client-focused Withers, for example, opened a ‘pathfinder’ office three years ago in Hong Kong with a handful of US and UK tax lawyers.
Now it has around 20 lawyers, providing international tax, trusts and family law advice, and has become “the biggest private client firm in Asia”, according to regional managing partner Joe Field.
What's more, Hong Kong’s status as a wealth management hub is enduring even as some other traditional financial centres have run into difficulties.
Switzerland and Liechtenstein, for example, have had to deal with foreign governments seeking greater transparency; Tokyo has been hit by the collateral damage of its largest-ever earthquake, in March, and tsunami; and Bahrain’s financial centre has gone quiet ever since a fierce government crackdown followed democracy demonstrations earlier this year.
Climbing the index
Hong Kong remains solidly in third place on the Global Financial Centres Index, compiled every six months by the London-based Z/Yen Group think tank, and it ranked second, behind Singapore, out of a total of 183 countries surveyed in the World Bank’s most recent Ease of Doing Business survey.
Last year it led the world in initial public offerings, and although some experts expect volumes to be lower this year, much significance is being placed on the plans of major Italian fashion house Prada to list in Hong Kong this year.
Privately, some Hong Kong-resident expats express concern over China’s recent, heavy-handed approach to activists on the mainland, the most publicised of which was the as-yet-unexplained disappearance of celebrated artist Ai Weiwei on 3 April.
This news comes alongside reports of growing frustration among some of China’s poorest workers.
Then again, as those who were here in the lead-up to the 1997 handover point out, people have misjudged Hong Kong’s capacity to make "one country, two systems" work before.
Fresh opportunities
So for now, at least, financial advisory firms here continue to trawl through stacks of CVs and, in many cases, to fly to the UK to interview prospective job candidates.
Among them is Henley Group chairman and group chief executive Antony Michell, who says he is looking to fill as many as 16 advisory positions over the next three years.
Another is Howard Clark-Burton, chief executive of Hong Kong-based Financial Partners, who believes the combination of Britain’s deficit-reduction strategy and the RDR has left many highly-skilled advisers “actively looking around outside the UK” for a fresh start.
HSBC Bank International has also been expanding its teams of both relationship managers and international wealth managers, according to senior regional manager Paul Richardson.
Echoing others in the UK banking industry here, Richardson explains: “We see a great deal of opportunity in Asia, with more HSBC customers coming over from the UK and elsewhere, who need current accounts, savings accounts, fixed rate accounts and foreign exchange services, as well as advice and investment products.”
IA Fact Box: Hong Kong |
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