Peter Liang looks back on the unique economic era in HK when Li started out and explains that today’s youth live in a very different world with many difficult challenges.
The retirement of Hong Kong’s richest man Li Ka-shing earlier this month was widely seen as an end of an era. One question posed by economic analysts is whether his fabled success story can be repeated in the present economic climate.
Probably not. The fault is not with the young people. In fact, many of today’s youth are better educated and just as smart, if not smarter, than their forebears.
Some politicians and business leaders have lamented the loss of entrepreneurship among younger Hong Kong people, who are sometimes branded as spoilt brats nurtured in the green house of economic prosperity. As such, they are said to lack the many attributes, such as hard work, adaptability and self-reliance that distinguished their forefathers.
To say that is to ignore the fact that Hong Kong’s economic structure has changed many times since Li was a struggling young salesman of industrial raw materials. It is well-known that Li amassed his vast fortune from property. But not many people can remember that he made his first pot of gold making plastic flowers and wigs.
The government is spending great efforts and resources to promote entrepreneurship in high value-added technology industries. But Hong Kong lacks the support industries to build prototypes of a new product cost effectively
In the late 1950s and 1960s, Hong Kong survived on low-cost, labor-intensive industry that had few competitors in meeting the huge demand in the US and European markets. The entry point to entrepreneurship was low. This is because it didn’t need much capital to invest in plant and machinery while the bulk of the assembly work was farmed out to housewives and children who were eager to earn something extra to subsidize their meager family incomes.
Fast forward to the 21st century. Since the wholesale migration of industry to the Pearl River Delta area in the 1980s, the Hong Kong economic growth engine has been powered mainly by finance and property. Domestic exports, shipments of goods manufactured in Hong Kong, account for about 10 percent of total exports. The rest consists mainly of trans-shipments to and from the Chinese mainland.
There have been talks about the re-industrialization of Hong Kong. But high labor and land costs have combined to make it practically impossible for Hong Kong to compete with neighboring manufacturing centers.
To be sure, the financial and property sectors can provide plenty of opportunities for the enterprising young men and women. But they are extremely capital-intensive industries which are dominated by established companies and institutions which can tap into a pool of international funds.
Take property for example. The oligarchy consisting of no more than six property companies have secured a stranglehold on the market by squashing lesser challengers in government land auctions, a major source of supply of development land. In recent years, a few mainland rivals eager to gain a foothold on the property market have successfully outbid some of the largest local firms by paying record-breaking prices of choice sites. But these challenges were too far and few between to make a dent of the oligarchy’s dominant market position.
Some young entrepreneurs have tried their luck in the services sector, opening fashion boutiques, eateries and beauty salons and other shops. But many of them have fallen victim to escalating property prices and rentals.
This has led to some enterprising young people to say with some jest that success for a new business can be a curse because it would almost certainly invite the landlord to raise the rent when the lease expires to levels that the owner cannot hope to afford with the slim profit margin.
The government is spending great efforts and resources to promote entrepreneurship in high value-added technology industries. But Hong Kong lacks the support industries to build prototypes of a new product cost effectively. What is more, the domestic market is seen to be too small to build up a critical mass necessary for mass production at competitive prices.
Some civic leaders have urged young people to wean themselves off the obsession with property and spend their time and energy in self-improvement or other worthwhile pursuits. But their advice has largely fallen on deaf ears. To many young people, buying a property with the hope that it will continue to appreciate in value is the only way to ensure that they don’t fall too far behind in the climb up the social and economic ladder.
Perhaps only the bursting of the property bubble can change their way of thinking. Who can blame them?
The author is a current affairs commentator.