With Edith Cheng, MBA ’97

Cheng is a general manager with Kado Development Ltd., the distributor of a vitamin C health drink. She lives and works in Hong Kong.

Q-How is business at Kado?

A-The business was generally affected by the global financial meltdown in the first quarter. The business began to pick up in the second quarter, partly due to the H1N1 virus. Our customers understand the importance of vitamin C in maintaining a good immune system, so sales have gone up steadily since April. I think another reason was that the market sentiment in the second quarter improved slightly in Hong Kong, perhaps due to the fact that people already had overcome the shock of the collapse of many giant companies around the world. People got back to their normal life, though they are more careful in spending.

Q-Can you describe the atmosphere in Hong Kong? What’s it like to live there?

A-I would say it is one of the best places for doing business, and many global companies have set up their Asia Pacific headquarters in Hong Kong. It has efficient banking systems, an efficient workforce, low income and corporate tax, a free port, and no tariff on general imports.

The infrastructure is good with an extensive bus and minibus network. The subway and the train network is one of the best in Asia. The airport is also one of the best in the region. People travel easily from the suburban area to the city’s downtown for work and for recreation. We can travel easily to other countries. Many Hong Kong people are frequent travelers for business or for vacation. I would say Hong Kong is a very good and safe place to work and live.

[On the downside, it’s] crowded with 7 million people living in a tiny place. So for people who are seeking a quiet life, this is a very uncomfortable place that’s too noisy and too polluted. Also, it is not a city for people who wish to pursue cultural interests. We do not have the same class of museums or performing arts centers as are available in London, Paris, or New York. Nonetheless, the countryside of Hong Kong is indeed very beautiful. It takes you less than 30 minutes in nonpeak hours to go from downtown to one of the finest beaches here.

Q-How does the economic growth in Hong Kong compare with what is going on in the rest of China?

A-The economic growth of Hong Kong is now largely affected by mainland China. From the ’60s to late ’90s, the role of Hong Kong had been to serve mainland China as the export and trade hub, as there was no direct export then from China to other countries. Since China has built up its own export facilities in the past 10 to 15 years, Hong Kong has taken up another role as the financial center for China. Many Chinese companies came to Hong Kong for public listing to raise capital. Hong Kong now actually rides on the economic growth of mainland China. If China has less growth, Hong Kong suffers more. When China has better growth, Hong Kong fares even better.

Q-When people talk about economic growth in China, do they often mention Shanghai or Beijing and leave out Hong Kong?

A-When people talk about the economic growth of China, they generally talk about the metropolitan cities like Shanghai and other cities along the coastline opening up for international trade since the late ’80s. They talk about the primary cities where foreign companies have set up their joint ventures with Chinese companies since the ’90s. They also talk about the secondary cities where the factories are built for producing exports to the major trading partners like the U.S.

Most of the time Hong Kong is not included in the discussion because it is already a highly developed metropolitan city with a long history of doing business with other countries. Mainland China’s economic growth also has had significant impact on the global economy, so it is natural that Shanghai gets the attention.

In the past, all foreigners had to go through Hong Kong to get into China, but since China started to open up the cities and build international airports this decade, foreigners can go into China with direct flights from their home countries. It is quite natural that once they arrive in mainland China, they do not have to pay much attention to Hong Kong.

In the past 10 years or so, people started to compare Hong Kong with Shanghai. Shanghai is seen as the future financial hub of China, replacing the role of Hong Kong in raising capital. Beijing is seen as the political center, like Washington, D.C.

Nonetheless, some foreign small and medium enterprises still find Hong Kong companies and people as preferred business partners. For one reason, there is restriction on money transfer from mainland China to other countries. Another reason is that intellectual property rights are better protected in Hong Kong than in China. Moreover, the legal and judiciary systems in Hong Kong are similar to that of developed countries.