[shri]

I am sick and tired of people and companies in Hong Kong complaining about the government not doing enough to help them. Some random thoughts...

Why should the government help them? Has the government now assumed a parenting role, which allows children to run to them, when in trouble? Even parents tend to gently inform their children that its time for them to be independant and deal with their own problems.

Several cases come to mind.

Restaurants: The government does a fair amount of marketing for them -- the whole visit Hong Kong and enjoy the food routine -- during good and bad times. These restaurants have had good times and have recklessly consumed the profits and never planned for a rainy day. Why should the government negotiate on their behalf?

Airlines: Same goes here. The tourism council spends a fair amount of money on marketing Hong Kong and the airlines benefit from this. Now the airlines want government intervention?

Small Businesses: Hong Kong for the longest time has been driven by greed. Now, why are these businesses going to the government for handouts and loan guarantees? Greed? Dare I ask?

Working in the commercial sector, I see businesses being decimated as we speak. Banks are suffering because they have a huge drop in loans and credit card spending. Airlines are suffering because they have a huge drop in spending. Sales people are suffering because they have a huge drop in people purchasing from them (unless you're the sales guy for 3M or one of the pharmaceuticals). All of these people are looking at the government to do something. Why?

With the British government, people did not expect much. Is it a case of a because the government is chinese they must help us? OR.. Dare I ask the question, is it a case that our government does not know how to practise tough love?

Our leadership has been extremely uncharismatic and uninovative in raising the level of confidence in itself. They have never demonstrated lateral thinking (and have infact what is discussed in many an expat conversation practised the uninnovative chinese way of dealing with the problem -- pretending it does not exsist and sweeping it under the carpet).

The lack of lateral thinking in the goverment leadership trickles down to lower levels. I just had a conversation few weeks ago with someone who works for the Productivity Council. He informed me that whenever they did not make quota (he sells courses) their boss yelled at them "as a punishment" in an open room filled with their peers. When I asked him what was his incentive to make quota.. did he benefit? He had no answer.

A recent movie called "Secondary School" highlighted this so called "chinese way" of thinking where students were told that they had to think about the reputation of the schools rather than the their individualism. Destruction of streaks of individualism seemed to be the result.

Why is the popularity of the CEO Mr Tung dropping? Should he care? Is he a true leader of the likes of Churchill? Kennedy? One of the people who can expect to lead their countries out of troubled times? No, I doubt it. Does he need to be? Is he capable of being the CEO of IBM (roughly the size of Hong Kong's GDP (?)) No. Does he need to be? Perhaps yes.....

As expatriates, we never expect to reap the benefits of governmental benovolance -- because we're outsiders. Why do locals... most of them are folks who're not tax payers.. expect a communistic / socialistic response to crisis from the government?

We pray to our gods, yet we expect our government to respond with benefits? Why not just cut the godly middleman out and start burning joss sticks outside Government buildings?

[flyingchair]

I would tend to agree - Hong Kong's biggest issue (see excellent piece by Kevin Sinclair in SCMP today) is its mollycoddled generation.

A great leader leads his people but only manages himself. The government either does nothing or tries to micro manage the economy - neither of which is what made Hong Kong successful in the first place.

Thirty years ago, half the population swam here, had nothing, and worked their fingers to the bone, including some of today's tycoons. Their kids grew up thinking success was automatic, as was buying a flat and making a profit. Now they are committing suicde in record numbers.

The world has not ended. This is my fourth recession, and the worst I have faced. This is the third time I have lost my job and been unemployed. So, I am going to be unpopular with my bank manager for a while. Who cares? The economy will recycle (if it is left alone to do so), jobs will come back, sars will not kill us all and things will get better.

More sheep than new zealand but half the number of legs.

[shri]

We now have the Hong Kong Cinemas association asking for favors because their receipts are down 50%.

Have they thought of attracting audiences with a better selection and better pricing? How about all seats are $40 and only $4 Cityline service charge for showings before 6PM?

[shri]

Jake Van Der Kamp in the unlinkable SCMP with reference to CX.

I have an immediate suggestion for the directors of Cathay Pacific Airways to help them overcome the cash-flow crisis of which they now complain so loudly.
Gentlemen (there being no ladies among your directors, nor even among your executive officers), I note that when you reported your record earnings for last year of HK$3.98 billion, you also announced a final dividend of 56 HK cents a share. By your own reckoning, this will absorb HK$1.86 billion.


I also note that this dividend has not yet been paid. The books close on May 9 for dividend registration and payment is scheduled for June 2.

If atypical pneumonia has reduced you to such dire straits that, yet again, you feel driven to plead with our government for fee concessions at Chek Lap Kok airport, why do you not cancel that dividend immediately as a demonstration that you are doing your bit too?

You tell us that you are "literally haemorrhaging US$3 million per day" at the moment. I am not quite sure what such an imprecise description of loss means in accounting terms but let us assume it is a real cash-flow loss.

In that case, the HK$1.86 billion you still propose to pay out as dividends would cover 80 days of this loss, more by far than you have yet suffered. The HK$13.18 billion of liquid funds in your balance sheet, by the way, would cover it for 1.5 years.

If you want us to help you, why do you not help yourself too? It is not as if your shareholders have any reason to feel hugely put out. Last year, you paid them a final dividend of only five HK cents a share, less than a tenth of what you propose to give them now.

There is a simple message for you here, and I am sure the huge majority of Hong Kong people will agree with me - cancel that dividend or keep your mouths shut.

How can you complain about haemorrhaging US$3 million a day when you say nothing about bleeding out 80 times as much in one go?

I make the suggestion particularly because I also note from your report and accounts that Cathay Pacific and its subsidiaries last year paid Hong Kong taxes of only HK$58 million out of total taxes paid around the world of HK$273 million.

You call this your home base and yet, out of your pretax profits of HK$4.33 billion, you contributed a tax rate to your home base of only 1.3 per cent while our official corporate tax rate was 16 per cent.

Why do you come to us with your pleas for help? Why do you not first go to some of those foreign governments to whom you have contributed almost four times as much in taxes as you have paid us?

And it is far from the first time you have pulled out your begging bowl as the immediate response to trouble. Ever since Chek Lap Kok was built, you have been whining at us for lower fees and charges and you have also got away with it often enough to make it unlikely that we will ever recoup our investment on a facility that has given you enormous private benefit.

It was less than two years ago that we were on the verge of underwriting your entire insurance liabilities as a result of the 9/11 terrorist attacks, a massive risk that we were prepared to take on for you and avoided only at the last minute.

Our government has bent over backwards for years to accommodate your whinges and how do you repay us? You propose to give your mostly foreign shareholders 32 times as much in one dividend payment alone as you paid us in tax for the entire year, leave alone that we are unlikely ever to recoup the cost of an airport we built in large measure to serve you. And then, to top it off, you want even more concessions at that airport. What cheek!

And let me also note that while you have a great deal to say about how bad things are in the passenger business, you have not told us much about the state of the cargo business that contributed 28.4 per cent of your revenues last year and, I would guess, even more in profits.

Is it suffering? I doubt it. With mainland export growth still surging, that business is booming and, judging from the last report we published on air cargo, tight capacity has supported freight rates even though this is a traditionally slow time of year.

You could also have reminded us that oil prices have plummeted recently with the success of the American invasion of Iraq. That should help bring down your fuel bill. Why did you not take this opportunity to introduce at least one small note of cheer?

Instead, you have succeeded in worsening an already bad disease scare by making threats of shutting down your entire fleet. Judging by your record of talk in past difficult times, I call this a bluff. More than that, however, it introduces the question of whether you were prepared for private gain to shake public confidence during a crisis.

I am fully prepared to accept your denial and I recommend a convincing way of making it. Cancel that dividend now.

Brilliant .. would love to by this man a drink.

[shri]

Paul, Dont you think a company that is looking at extreme hardships should conserve cash?

I'll let you know when/if Jake accepts my invitation for a beer. Will have my camera handy ... for candid shots of the fist fight.

[kombuchakid]

http://web.mid-day.com/news/city/2003/april/50417.htm

[kombuchakid]

Owner overcomes virus fears to keep date with Never Headed

'He came for the race and the photo and now he's gone straight back to Canada'


Even the spread of atypical pneumonia was not enough to keep one winning owner away from the Sha Tin all-weather meeting on Wednesday.

Trainer John Moore advised his idiot owner Billy Albert Kan Che-kin, to make sure he was there.

as Moore excitedly recounts-"He had gone to Canada to escape the Sars outbreak and I rang him on Monday and said, 'You'd better turn around and get to Sha Tin on Wednesday'," Moore explained after the Timber Country gelding won the fifth event. "So he got on a plane, came for the race and the photo and now he's gone to airport to get a flight straight back to Canada."

[HKFella]

Before the fisticuffs, here's my $0.02 piece on the soapbox:

In the CX debate I side with JvdK this time. If they have the biggest crisis the chief can remember in his lifetime, and they still choose to undergo a massive cash outflow, they should shut up and stop crying out for concessions and threaten to ground their whole fleet as a pressure tactic. (Or those that are being threatened should simply call their bluff and open the doors of HK to new airlines, not necessarily HK-"based").

They have chosen a certain quality + high price positioning strategy (though sometimes the quality is hype - the only quality I truly give them credit for is their safety record stemming from this same strategy) compared with other airlines. And they have to live with the consequences. The benefit they have recd from CLK not built at their cost has been enormous. They should just shut up and take it on the chin like everyone else. Assume they aren't going to get anything from government, or CLK, or anyone, and then decide whether they can afford the massive cash outflow or not. Agreed, Paul has a vested interest in what CX are hollering for, but trying to settle the debate by getting JvdK to sell out by becoming a shareholder too only trivializes it.

Conceded there are issues with cancellation of dividend that an AGM announces and its knock on effect on trust of AGMs in general, but in the face of self-admitted unprecedented cash-flow crisis, it's not out of bounds. It just adds another rule to share-holder risk (after Enron and Worldcom etc) - an announced dividend is not a given until you cash the cheque.

[shri]

Originally posted by Paul
I suspect you haven't travelled on CX First Class...

I think we're digressing away from the point that CX should cancel their dividend, which was a digression from the point that private enterprises in HK expect way too much from the givt.

If CX is given anything, at the most it should be a loan at commercial rates which will be repaid. There is no need for tax payers to go around subsidising shareholders of the likes of Swire and Paul, ( ) by cutting airport landing rates and other favors that CX want.

Lets face it they're milking the situation and its upto the govt to control its handouts. I sure wish I had the opportunity to ask the govt to subsidise my commission given that business is low and govt departments have slowed down their investments in software / infrastructure projects.

[shri]

The airline told the stock exchange in a statement yesterday its board of directors recommended a reduction in its final dividend to 28 HK cents per share, which would save the company about HK$935 million.

The savings would help provide extra cushioning to help Cathay ride out the downturn, it said, which had so far given no indications of bottoming out.

Cathay said it had liquid funds of about HK$13.3 billion at the end of last month.