The swagger of Hong Kong is undeniable. Investment bankers have a certain confident uniform – and given there are a lot of them here, it is not surprising that Piguet has its highest selling shop of $30,000 – $200,000 watches here.
Hong Kong seems to successfully blend the British expat community of colonial days with modern Chinese culture. I was surprised to learn there were only about 200,000 expats in the city.
Previously a fishing village, now a financial and insurance powerhouse for Asia, Hong Kong presented us with meetings:
Burra Foods Australia
Stanhay Webb (China) Ltd
Hong Kong Jockey club
For those unfamiliar with HK, a few stats:
* Mainland China’s second largest trading partner (after the USA);
* accounts for 64% of all foreign investment into China;
* Largest centre of Chinese currency (RMB) outside of China; and
* Accounts for 62% of Chinese investment into overseas assets.
The role of HK is certainly changing, as the ‘west’ becomes more comfortable dealing directly with Beijing or Shanghai – although, and it depends on who you spoke to – it seems HK may remain a key strategic foothold into the Chinese market for companies who prefer to have their financial headquarters held in a jurisdiction underpinned by the rule of law, and more ‘familiar’ than the Chinese legal jurisdiction.
There was definitely a feeling for most of the expats we met with, in business or socially, that for them, and their families, the quality of life for them was better in Hong Kong, than “Shangers” or “Bangers”… not just socially, but also because of the increasing causation links between air quality and pollution related cancers.
An investor in the Nuffield Scholarship program in Australia, it was fantastic to meet Andrew Whitford, Regional Head of Greater China, Westpac Group. Having lived in Shanghai for a number of years, Andrew’s insight into a complex and culturally sensitive business environment was evident.
Whitford provided solid statistics not only on the interaction between mainland China and HK, but also the current and future state of Australian and Chinese trade, as well as New Zealand and Chinese trade.
Given the significance of Chinese – representing nearly 40% of Australia’s total sales, the export of Australian agricultural product to China amounts to just over AU$10Billion (as at 2015).
The impact of the Free Trade Agreement which came into effect December 2015 – negotiated by Andrew Robb on behalf of the Coalition – is a serious game changer for Australian farmers. Getting your head around the broad brush stokes of the FTA is essential reading, especially as the deadlines when some of the dairy tariff reductions come into play – effectively increasing the competitiveness of the Australian dairy industry to stay head to head with our Kiwi dairy stalwarts over the ditch and the impressive quality of Ireland and the Netherlands.
I could write all day about the ability for an Australian farming family to fundamentally change their business if they decide to take direct advantage of ChAFTA. My Nuffield Report is looking at financial literacy of Australian farmers, and after 2 weeks of looking intensely at the Chinese market, I think every Australian farmer should hop on a plane to China and see first hand the opportunities and potential “pain points”. Australian farmers who bank with Westpac have an extraordinary Lilly pad with Whitford at the helm of the Chinese operations…
Burra Foods Australia
Meeting Dale O’Neill, General Commercial Manager was a perfect segway after the Westpac big picture introduction into Australian agricultural exports into the Chinese markets: Dale is leading the charge of high quality dairy ingredients into the Chinese market. Based in Hong Kong, Dale moved his young family from Victoria recently after the Victorian dairy company successfully entered a Joint Venture (JV) with a consortium of Japanese and Chinese interests.
Dale represented what we later learned in mainland China was the key to successful business into China – you need to have a local presence, and keep your finger on the pulse. Market demand for product can change quickly, and if I was a dairy farmer supplying milk to Burra Foods Australia I would be celebrating the successful inroads Dale and his team have made into the Chinese market.
A good amount of the presentation with Dale would be information I consider commercial in confidence, so I provide a picture of Burra’s inspiring business vision. I am excited to see where this company goes in the next decade.
Stanhay Webb (China) Ltd
John and Sally Evans are an English couple who represent that next layer of the reality of doing business with China. Stanhay Webb manufacture precision planting gear and would revolutionise the cropping potential for Chinese farmers. Again, commercial in confidence material, so I note John here as an example of some of the challenges that can be faced entering the market. They were extremely generous with their time and insights and I’ve made a note to look at their gear for next time we need a new planter as they supply Australia and NZ.
Hong Kong Jockey Club
We accepted an invitation to be trackside at dawn at the Hong Kong Jockey Club to see horses being worked in readiness for that nights race.
I can now see why James Packer had a serious crack at the Asian gambling sector.
The Hong Kong Jockey Club had $13.7Billion in race takings go through the till. For one racetrack. When you compare this to the race takings for all the horse races in the USA ($10.6Billion), it gives you a fair idea of the love the Chinese have for gambling.
We flew out of Hong Kong for Shanghai, where my next blog begins: Nuffield Blog #6: the return of the world’s mightiest Empire: China.