Global trends driving transformation of Hong Kong's economy

The Asian economic recovery, China's WTO entry and the Internet are shaping the way that Hong Kong businesses will operate in the region, according to Victor Fung, chairman, Prudential Asia Investment.

Hong Kong is bouncing back the fastest among Asian economies hit by the economic crisis, and China's WTO accession will only accelerate this recovery. It will also pave the way for the greatest transformation of Hong Kong's economy since it merged its production base with southern China in 1987, he said.

"Eighty-five per cent of [Hong Kong's] GDP is derived from services. It is now time and an opportunity for us to rationalise our services economy," Mr Fung, who was keynote speaker at the Venture Capital Conference luncheon, said.

But he cautions that while everyone is drooling over the potential size of the China market upon WTO entry, the other side of the coin is Chinese country of origin exports will be protected by WTO rules. This means that all unfair practices levied on Chinese exports will find recourse, which could result in a surge of Chinese exports flooding global markets.

"For Hong Kong, we will benefit because most of our production base is in China," he said.

Bricks 'n' clicks
The Internet revolution is the backdrop to everything companies are doing today, but the difference now from a year ago is that businesses have clearly decided the model which works is the bricks 'n' clicks paradigm.

Dot-coms will be able to migrate to the bricks and clicks model, but this won't be possible without adding the experience of old-economy managers and laying to rest the "build-it-and-they-will-come" mentality, which is dying hard, he said.

"My idea is, yes you can do it as a dot-com, but you have to pull into the partnership old economy managers who can drive the business forward," he said. "I think the bricks 'n' clicks area is primarily driven by old-world companies that have the flexibility and the openness to adopt the new technology."