Hong Kong and its competitors have one thing in common: International business isn’t wanted in local power plays. Until now. Hong Kong can only suffer from dragging them in.
Hong Kong was established as an international trading centre and is now indisputably ‘Asia’s World City’, its biggest centre of regional headquarters, and its financial capital. On Monday, when asked by a visiting student about competitive threats from Singapore and Shanghai, HT dismissed these perennial concerns. Ain’t going to happen. All smoke, no fire.
Ignorance is bliss
But the last month has seen a worrying development that could see the flight of international business to those two centres and others in the region. One equalising actor in all these places is that international business was not expected to engage in local power plays. While they could safely opine about financial regulations, quality of international schools and participate in happy-clappy innovation promotion, local
power politics were strictly off limits.
National governments, represented by Consul Generals, would represent the national values, business people had only to play by the local rules and get business done.
As strangers in a strange land, foreign business people were happy with this arrangement. While their national governments, represented by Consul Generals, would represent the national values, business people had only to play by the local rules and get business done. They were invited to provide technical input and expertise through transparent and professionally conducted channels. Participants were sometimes happier than others with how well government heeded the advice, but it was a business like, honest arrangement.
However, events of the past month suggest that walls are coming down and people are taking notice.
Dragged into the muck
Local business groups have been outspoken regarding Occupy Central for some time now. Representing business interests with vital operations in mainland China, no one is surprised when they speak out on positions favoured by the Central government. As noted in these pages, this includes not only obviously local and China connected interests, but also those that may look international or foreign on the outside, but are really deeply Hong Kong. The Indian and Bahrain Chamber of Commerce are examples previously explained in these pages.
The real surprises this month have been international companies and Chambers weighing in on Occupy Central. Of course, none of them are purely international in that their members and staff contain many big and small players from Hong Kong with deep or tenuous connections to the ‘international’ part of these groups.
The most noticeable incidents have been the letter published (first reported here) by the HKGCC, Indian, Bahrain, Italian and Canadian Chambers, and the letter published the Big 4 accounting firms. Even HSBC is taking a hit in this sense.
Chambers
While the letter issued on June 10th was not remarkable for the local Chambers, the presence of the Italians and Canadians surprised many – not least among their own membership. The traditional aloofness was suspended for at least one day. If it remains so a question for the future.
While the Chambers in question have not commented on the issue since then, HT earlier reported that there was a previous effort to get all international Chambers to get on board. HT has it from multiple off the record sources at other Chambers that indirect appeals have been made, on behalf of the Liaison office, for international Chambers to step into the fray. Rewards and punishment were not indicated, and most politely declined. Again, the Italians and Canadians have not commented on the
letter or any aspect of how it came to be.
While the Italians seem to have gotten a pass in the public sphere, the Canadians have not been so fortunate. A minor social media storm arose in part due to a common misunderstanding, that the Consulate and Chamber are somehow jointly funded. While some countries may have closer Chamber-Consulate connections, the Anglosphere Chambers (UK, USA, Australia, Canada, NZ), maintain a strict independence, mostly just cooperating closely with their Consulates on business promotion. The Consulate, drawing negative fire regarding the Chamber’s position, had to publicly explain that they are a distinct body and the government of Canada is in fact “strongly supportive of democratic development in Hong Kong.” Even the Minister of Foreign Affairs, John Baird made a Twitter statement to his over 31,000 followers. While not a part of Hong Kong’s political scene, Twitter is considered a viable channel for official rapid response in North America.
With over 300,000 Canadians here, the Consulate needs to be sensitive to public opinion from this large constituency – and the most vocal were not happy at all. The statement, however, was received with enthusiasm across print and social media.
Other international Chambers politely declined to sign the letter. They likely knew that a statement would prove divisive and have uncertain benefits. Many members would have been bewildered as to why they were even stepping in. The mixed nature of membership, local and international, would impact on any discussion on local politics- if it even happened. Most leadership just don’t have membership asking for it and they don’t want to go there. Everyone agrees on low taxes, clean air and good international schools – local politics, not so much concord.
The Big 4
The major accountancy firms also stepped into the fray with their own letter signed June 27th – in Chinese only.
Again, sources tell HT it was direct appeals from the Liaison office to step in and make a statement. All four acceded. Already struggling with questions about the quality of their mainland audit for firms hoping to be listed in places like New York, their departure from standard political stand-offishness was a shock to many. While those with Central offices clearly have valid concerns about interruption of business, their prized independence as auditors could be damaged by taking political views.
Employees were not impressed, publishing a contrary letter to dispute their superiors.
Employees were not impressed, publishing a contrary letter to dispute their superiors. Unsigned, it can’t be known if it was junior staff, senior partners, or even accountants at all. But clearly not everyone is happy.
Upside, downside
What is unknown (to this writer) is what the upside/downside is in this equation. If there are concrete benefits to be had, or direct threats being made, HT has secured no indication either way. It may not even be necessary. Authorities ask, people do.
HT sees it when hiring. Many in our journalism schools in Hong Kong are from mainland China. While often great writers and hard working, most frankly state in job interviews that they would of course self-censor. How else should the world work?
Politics does strange things to business, creating lobbying monsters that serve government, not customers.
Most international business people don’t take to it that easily. The cognitive dissonance in members of the international business community is growing. Western and Latin business people mostly come from countries with democratic traditions and hold those values dear to their hearts. Again, as strangers in a strange land, they hold those values closely and quietly. But asking them to support or make public statements to the contrary brings them under internal fire from staff and members in Hong Kong who see them as sell outs. External colleagues are perplexed as to why they have stepped into a fight that isn’t theirs, bringing their company or national business community into disrepute by home country standards. In their hearts, they know something isn’t right.
People accept that business isn’t a place for politics unless a firm is run by an entrepreneur whose business is tied up in their values, like Jimmy Lai or Mark Daly in Hong Kong, or when the government makes you do something contrary to an owner’s belief system (the subject of weekly court cases in the USA, reference Hobby Lobby and wedding cake makers). Generally, if executives,managers and rank and file employees have strong political, religious or other beliefs, the company is not the place for them until a broad community consensus has been reached – or legislation imposed.
Most people expect to do the business, serve the customer and make money. In places like Shanghai and Singapore, that is the case. Local permits and such may need to be negotiated, but that is a normal, if annoying, part of doing business. Local politics is trouble they do not need.
It isn’t just Chambers and accountants. For international (and locally based) firm HSBC, an accusation of yielding to pressure regarding advertising has hurt their credibility on other fronts. Their recent analyst report suggesting a downgrade of Hong Kong due to Occupy Central was instantly and roundly criticised, forcing a revision. But the previous accusation, founded or not, means that now people wonder if they can trust its analysis on Hong Kong where it runs counter to political winds blowing from the North. Reality doesn’t matter, perception rules.
Divide and conquer
A house divided against itself cannot stand.
This may all be classic Art of War style thinking. If “a house divided against itself cannot stand,” then houses are being divided. Whether it is local outfits like the Law Society and Bar Association, semi-local accounting partners and their staff and international colleagues, or international Consulates and Chambers from the same country, it doesn’t help any of them to have others drive a wedge through their companies and communities.
Some have said Occupy Central will damage Hong Kong’s economic interests and others have dismissed these claims. There is only one way to find out. But if international business feels they have to contend with getting dragged into local fights, Shanghai and Singapore are going to start looking very attractive indeed. Politics does strange things to business, creating lobbying monsters that serve government, not customers. The beauty of Hong Kong is that international business could get on with business, even while individual workers could pursue their interests outside work. Jeopardising that state of grace will only do ill for Hong Kong. It should stop now.
