[shri]

While HK remains strategically important for the next few decades, a couple of things have happened over the last few days which have begun the erosion of its importance.

-- Opening of the Lok Ma Chau border for 24 hours.
-- Direct flights (even though the flight did touch down in HK) between Taipei and Shanghai.

Comments?

[HKFella]

Re direct flights, don't know how much impact the trend (if it expands) will have on HK - airport landing fees for sure, some on duty-free shopping in transit. Nothing compared to the devastation that Macau airport will face.

But if direct links go beyond flights and cover banking services as well, then a fair bit of HK's intermediary role (which currently produces no instrinsic economic value-added to the original Taiwan-PRC parties in the transaction) in that area will disappear - so will some jobs for bankers, lawyers, accountants and people who manage office functions for HK offices of Taiwan cos.

[shri]

I was in a meeting with one of the airlines in Taiwan and they are pretty sure that they'll be able to fly directly to China within the year.

-- Impact on Dragon Air for sure
-- Smaller impact on CX
-- Larger impact on Macau which is the cheaper of the two hubs for airlines switching passengers

Now we also have to start looking at freight. Many Taiwanese companies still use Hong Kong for shipping / freight forwarding. Will they be able to ship direct?

[shri]

I think this sums it all up.....

From http://www.geocities.com/hkhemlock/diary-08feb03.html

A UK reporter visiting S-Meg Tower to interview the Big Boss is dumped on me. “Isn’t Hong Kong becoming just another Chinese city?” he asks eagerly. No, I tell him. We drive on the left, and in all the other cities they drive on the right. Oh, and we have 10 times as much money. “Isn’t Shanghai going to take over from Hong Kong?” In terms of ugliness or emptiness of skyscrapers? Yes. In terms of contrived, plagiaristic, showpiece projects like TV towers, opera houses, exhibition centres, maglev railways and the 2010 world tiddlywinks championship? Yes. In terms of numbers of peasants walking around spitting everywhere? Yes. In terms of newspaper/Internet censorship? Oh yes, they’re leaving Hong Kong in the dust. All we have is a freely convertible currency, a functioning banking system, property rights, a police force that doesn’t kidnap people’s relatives at the behest of tycoons, and, um…10 times as much money. And don’t forget Singapore – a centrally planned economy with a huge, redundant manufacturing base and a lynch mob of 300 million Muslims for a hinterland. We’re miles behind them, too. “Clearly, Hong Kong’s doomed,” I tell him. I think that’s what he wanted to hear.

[flyingchair]

I think people judge the doom of Hong Kong in too short a timescale.

For the mainland to surpass Hong Kong they have to get a few things in order; legal framework, etc., ad nauseum.

BUT, as the mainland sorts out its foundation for offering international business a viable base, and as the Hong Kong government spends more time keeping the central government happy rather than keeping Hong Kong vibrant because, afterall,that is what keeps them employed, I reckon within 20 years Hong Kong will just be another Chinese city and Shanghai will be the place to be.

Personal opinion but I am pretty convinced I am right.

[goodfood]

I guess there are two things here. One: all said and done, Shanghai has a long way to go. One hears so much about comparisons with HK but when you're there you realise that they are still far behind in terms of infrastructure, business culture, systems etc. And the one thing that disturbs me about Shanghai is that it is too 'me-too'. In their desperation to catch up with HK they're copying just too many things form the SAR and ending up looking like a second grade version of the SAR.

But that's as of now. No doubt Shaghai is progressing and fast. Not necessarily in all the right directions but undoubtedly there is significant progress. Things are moving.

The worst news for HK isn't that it is declining today and that things are tough, but the fact that there seems to be absolutely no direction for the future. The govt seems to have really funny ideas about meeting the budget deficit. Public and financial
policies seem to be strangely bereft of any serious thought; in fact some of the measures considered by the govt are getting more and more ludicruous. Article 23 and the Maid Tax have dominated media and government attention for too long at the expense of more serious action on reviving the ailing economy. Some decisions and policies seem to be coming in fits and spurts and some seem to be coming from nowhere. The political system and its players are seeming downright comic with Tung electing himself and Anthony buying cars on the sly and Regina changing her hairstyle. Is there a vision, is there a concrete plan to move forward ? If there is, present action certainly does not reflect that. Confusion reigns.

At this rate I think the biggest fear is not whether Shanghai or KL or Singapore will overtake HK in 20 years but where exactly will HK be in 20 years and what form it will take. Will it still be a serious entity in the business and commercial stakes ? I don't think anyone has the answer now.

[flyingchair]

I think we are saying the same thing but coming from different directions

[shri]

Sounds like an Amtrak accident waiting to happen.

I try not to draw analogies to Indian train accidents.. thats way too common an occurance.