Commentary

Today, most big businesses in Hong Kong will have some form of in-house legal function. In an environment where regulation and legislation are constantly changing and more companies are operating on a pan-Asian basis, it is essential.

"Asian markets and customers are much too price sensitive!" "We are experiencing 20%+ growth. Why do we need to fix pricing? In Asia, it's about growth!" These are common beliefs about the Asian market. However, they are generic and in many cases inaccurate. This article will look at why pricing in Asia is different to the rest of the world, and how to manage those differences. Asia consists of four major regions, China, India, North East Asia (Japan and Korea) and South East Asia (ASEAN). There are significant differences with respect to pricing between these regions. Hong Kong is not only a big regional center but also quickly becoming an important route into China. This article will reflect mainly the perspective of the chemical industry, focusing on each region separately. Four unique elements of pricing in Asia There are four unique elements of pricing in Asia: 1. The GTM and channel model makes pricing complex. 2. There is an over-reliance on volume-based rebates as incentives in pricing. 3. FX volatility has an ongoing impact on pricing. 4. Cultural norms influence how price discussions are made. We will evaluate the relevance of these elements in each of the four regions in Asia. 1. GTM and Channel The GTM and channel model tends to be complex in Asia, especially in China and India. First of all, the number of channel partners is high. In some cases, like in agro-chemicals in China, it's not unusual to have ten channel partners between the supplier and end customers. Each channel partner takes a share of the commercial terms offered by the suppliers, this makes it difficult to estimate the share of each and the price to the final user of the product accordingly. Hong Kong based corporations would be better at managing the operations in China vis-à-vis corporations based in the Europe and US.

There is no secret of the tumultuous times in Hong Kong right now. Almost one third of the Hong Kong population has protested in the streets, fighting against the proposed Chinese extradition bill.

Hong Kong topped the list as Asia’s most natural disaster-prone city in 2015, according to the Sustainable Cities Index. A few years have passed by, but business risks caused by disasters, such as storms and floods, have only expanded. Last September, Super Typhoon Mangkhut has caused damages and broken windows of even grade-A commercial buildings, including two of the city’s highest structures, International Finance Centre and International Commerce Centre. With over 60,000 reports of fallen trees and more than 600 road blockages , traffic was largely disrupted and so was business operations.

Hong Kong’s seasonally adjusted unemployment rate currently stands at 2.8% the same as it has done for fourteen quarters. This, together with a shrinking talent pool and skills shortage, has meant that the HR sector as a whole has become adept at initiating creative strategies to identify, recruit, nurture and retain talent. All this whilst fending off other companies eager to hire staff away in a market driven by the job-seeker.

The new Individual Income Tax Law, which came into force in China on 1st January 2019 (“New Tax Law”), is a strong response to the strong criticism and social discontent under the previous legislation.

A smart city vision can be at the center of Hong Kong enhancing its public sector mobility.

According to Hong Kong Police statistics, financial losses due to cybercrime reached $2.77b in 2018 in the territory, almost doubling the figure for 2017. As technology becomes more sophisticated and ubiquitous, cybercriminals’ skills and tools are evolving and cybersecurity experts are having to work harder to catch up.

Hong Kong is emerging as a digitally sophisticated nation being named by The Digital Evolution Index, the third most advanced digital economy in APAC, and the ninth in the world. The city was named as one of just 10 digital elites, characterised by high levels of digital development and a fast rate of digital evolution. Further, according to the Asian Digital Transformation Index, Hong Kong is recognised as one of the top thriving economies thanks to new-age, digital capabilities– only behind Singapore, South Korea, and Japan. It’s predicted that digital transformation will add $70.6b (US$9b) to Hong Kong’s GDP in the next three years, and increase the economic growth rate by 0.5% every year. Digital technologies such as cloud computing, Internet of Things and artificial intelligence contributed only 5% to Hong Kong’s GDP last year, and is expected to grow in value by a whopping 60% by 2021. If that doesn’t paint a clear enough picture, another telling sign that Hong Kong is a digitally ready nation is that consumers are themselves adjusting rapidly to a digital future. Additional research conducted by Verint and Opinium Research LLC, drawing on interviews with more than 2,000 people in Hong Kong, show that Hong Kongers are more comfortable than their regional neighbours having their enquiries attended to digitally. Whilst they like to speak to someone in person or on the phone for support at times (55%), this will drop to 50% in the next 5 years when 1 in 2 customers will turn to pure digital channels for support include AI-driven technologies, chatbots and virtual personal assistants.

By Wen CHEN, Principal at Oliver Wyman

There is an uncertainty in the retail landscape with wildly differing views on where 2019 is headed, as leading economists are writing off 2019 as a bad year for retail whilst other reports stated that retail improved between December and January due only to seasonal factors.

The new international accounting standards on treatment of leases will have a serious impact on the financials and operations of many companies in Hong Kong.

The 2019 Standard Chartered Hong Kong Marathon saw a record number of participants take part in this annual race. After the event, social media feeds were flooded with posts from marathon-going friends and friends of friends; complete with high-quality photos from professional and amateur photographers.

Data hacks, security breaches, vulnerable IT systems – these are all hot topics in Hong Kong at the moment. With high-profile data security stories dominating headlines, the importance and fragility of personal data are very much in the public eye and have turned everyone’s attention to what businesses are doing ­– or not doing – to safeguard this data.

Governments around the world are putting policies in place to curb carbon emissions in line with the Paris Agreement on climate change. With a significant proportion of the urban population spending much of their time in commercial buildings, the onus is on the real estate industry to provide sustainable properties that will mitigate negative environment impacts. Many countries in the Asia Pacific region are implementing aggressive measures to address environment challenges such as rising carbon emissions, which is spurring the introduction of incentives to construct green buildings. Hong Kong is no different; it continues to make strides to protect its world class status through its sustainable development as a ‘smart city.’

Over the past few years, Hong Kong has established itself as one of the hottest global hubs for startups. As the region’s financial hub, as well as being a springboard to the burgeoning Mainland China market, local and international startup founders alike are using Hong Kong as the base to establish and launch their businesses.