Mapping Out a Business Plan
Two leading local businessmen who saw, firsthand, the opening up of the Mainland’s own economy, share their take on the OBOR initiative.
Hong Kong’s entrepreneurs, businesses and government agencies will surely play a key role when it comes to turning President Xi’s OBOR vision into a plan of action.
In determining the nature of their involvement, these local players will first need to make a number of assessments. What are the preconditions for investment in OBOR countries? In which countries are these investments first likely to bear fruit? What initial groundwork and research needs to be done?
Two businessmen with the knowledge and experience to offer answers to these, and a myriad of other questions that are likely to be raised, are Dr Vincent Lo, Chairman of both property developers Shui On Land and the Hong Kong Trade Development Council (HKTDC), and Dr Hans Michael Jebsen, Chairman of the family-owned trading group Jebsen and Co, and a member of the Hong Kong European Union Business Co-operation Committee for HKTDC. Both are also members of the HKUST Business School Advisory Council.
They have business interests within and beyond Hong Kong, as well as experience of setting up in a developing economy- primarily Mainland China of the 1970s and 80s. And both are enthusiastic about the prospects for the OBOR initiative.
“I see One Belt, One Road as such a tremendous opportunity for Hong Kong and for the world,” Dr Lo explains. “With the 65 countries home to 60 per cent of the world’s population, but currently only generating 30 per cent of global GDP, there is a lot of upside.”
Dr Jebsen notes that an OBOR goal is to open up the free flow of trade. “This is a positive thing whether in this, or in any other, part of the world.”
He also points to the profoundly positive effect international trade can have on the minimization of conflict between countries and poverty within them.
This broader view is one that Dr Lo shares. “Right now the world is quite chaotic because we still have a lot of people who are so underprivileged.”
He believes OBOR has to be a mutually beneficial project. “You’re not there to exploit the developing countries, you’re there to share the prosperity with them.”
A Vacuum to be Filled
Given both the Trump presidency’s ‘America First’ policy, and, sparked by Brexit, a similar waning of enthusiasm for globalization that has been seen throughout Europe, the OBOR initiative now looks more relevant than ever to both Dr Lo and Dr Jebsen.
Dr Jebsen sees Beijing’s moves to promote trade, investment and cultural understanding across such a vast swathe of the globe, as indicative of its willingness to take on more international responsibility.
“From being a non-participant on the world stage, to entering the world stage, to being at the center of the world stage, this is a natural progression for China,” he says.
While Dr Lo concludes that, in such uncertain times, someone needs to step up and take the lead. “There is a vacuum to be filled and I think China is in the best position to do this,” he says.
Learning the Mainland Lessons
Jebsen’s roots in the regional economy go back to 1895, when the current chairman’s ancestors sailed from Denmark to establish the company in Hong Kong.
Dr Jebsen’s own introduction to the family business came when the company re-entered the Mainland market in the 1970s, at the tail end of the Cultural Revolution. Initially, the operation was run from a Beijing hotel room with the office filing cabinet installed in the bath.
Like Dr Jebsen, Dr Lo was in on the ground floor of the subsequent boom. In 1984, in a, literally as well as figuratively, ground-breaking move, he built a hotel in Shanghai in partnership with the CPC’s Communist Youth League.
He believes that sort of experience is highly relevant to OBOR countries now seeking investment, as well as anyone negotiating such deals along the routes.
“I think other countries can study what China has done, what reforms it’s made, and why it’s been so successful,” he says.
Based on his experience, Dr Jebsen lists a few of the basic criteria to consider when weighing up investment in less-developed states.
“First, you need law and order, and you need good corporate governance,” he explains.
“Also, you don’t want to be in a place where the electricity supply isn’t assured, and obviously you need people with a good work ethic, who are prepared to work in groups and are loyal.”
The HKTDC has already undertaken research to pick out the most ‘investment-friendly’ OBOR countries at this moment in time, Dr Lo says.
“In Asia, maybe we can start with places like Thailand, Vietnam and Indonesia. In the Middle East we recognize that the UAE and Saudi Arabia are more ready. In Europe we’ve identified Poland, the Czech Republic and Hungary.”
Riding on Hong Kong’s Strengths
Given its status as a regional powerhouse when it comes to finance and the provision of professional services, both businessmen see Hong Kong as a perfect fit for OBOR.
“For Asia alone, the ADB (Asian Development Bank) is estimating the Belt and Road infrastructure costs at US$8 trillion,” points out Dr Lo. “It would be impossible for China to fund all of that.
“I hope we can build a platform to ensure that international resources interested in One Belt, One Road will come through Hong Kong. This can be a new breakthrough for our economy, one that will offer lots of opportunities for our young people.”
A HKTDC delegation, led by Dr Lo, will head to Thailand and Vietnam. “We’re going to identify specific projects rather than just make a courtesy call. I have working groups, made up of investment bankers, identifying these projects.”
Dr Jebsen draws parallels between the transformative effect the OBOR initiative can have on Hong Kong, and the boost CEPA generated.
“In the 1970s and 80s we were a manufacturing outpost,” he notes. “So it was a stroke of good luck for Hong Kong that, as that business model became unsustainable, China opened up.”
“Hong Kong became the trailblazer for many investors from overseas, seen as home to the first movers when it came to investment in the Mainland. And CEPA was a gift to Hong Kong from the Mainland because it gave us a competitive advantage.”
Along with assets such as its legal and regulatory systems, Dr Jebsen believes Hong Kong has other less tangible attractions for business.
He considers it an advantage that Hong Kong has never been in a position to throw any geo-political weight around.
“Engaging with other cultures means you have to be prepared to listen to new viewpoints and to learn. It is easier to refrain from taking a unilateral standpoint if, like Hong Kong, you are used to not being the ‘fat man in the boat.”
“This is also a stress-free place to get together formally, and informally, to hold the sort of discussions that will be needed (in the development of OBOR projects),” he suggests. “There’s a particular Hong Kong mindset that is productive, result-driven and unprejudiced.”
