Wah Kwong’s Tim Huxley writes for Splash on how the Special Administrative Region is a good place to hunker down during a recession.
Maersk Line’s announcement that they will merge two of their Asian regional operations to a single base in Hong Kong is probably not the start of a stampede of shipping companies heading to the SAR, but it is a reminder that Hong Kong is still very much a sound choice from where to base a shipping company. Let’s be clear- this is not an abandonment by the ‘Big Blue’ of their extensive Singapore presence and they were quick to stress that Asian tanker operations, the MCC feeder business and several other functions will remain in the Lion City. But with shipping profits declining (or in the case of offshore and bulk, totally wiped out), tax incentives to relocate to a relatively high cost centre are not quite the attraction they once were.
It’s in tough times like the present that Hong Kong really shows its mettle. There is a sense in Hong Kong’s shipping community right now of dealing with the current recession by rolling up the sleeves, striving for efficiencies, battling through the downturn and looking for opportunities.
China’s slowdown might be getting the blame for much of shipping’s current woes, but it will remain the driver of global commodity demand and the geographical advantage of Hong Kong has never been clearer. Xi Jingping’s ‘Belt and Road’ initiative has got plenty of coverage in recent months, and Hong Kong’s Chief Executive C.Y.Leung was at pains to point out its importance in his recent policy address (he mentioned it 48 times), although he was a little lacking in actual substance as to how he sees it working. One thing you can be certain of – as China expands its presence in regional trade, Hong Kong will be at the centre of the revival of the ‘Maritime Silk Road’ which was a core part of its development as the premier Asian trading hub in the nineteenth and twentieth centuries.
The driver of Hong Kong’s continued maritime presence will not be any government led initiatives but the continued development and use of the city’s best resource: its people. Companies in Singapore regularly cite HR issues, in particular sourcing and retaining talent, as one of the major problems of operating there. A concerted effort to attract young talent to the maritime industries – chiefly led by the private sector – is now bearing fruit in Hong Kong, with an upturn in interest in careers both at sea and ashore the result. There is also a major effort being made to better prepare young people for the workplace.
One thing is clear whenever you hear Hong Kong shipping people talking about careers in shipping – the pride they have in being part of an industry that is a key component of Hong Kong’s DNA. Young lawyers, bankers and brokers all aspire to count the great Hong Kong shipping dynasties as clients and strive to provide the quality services they demand. And you can guarantee, that just as was the case in the ‘80s when recession was the mother of invention and companies such as industry leader Pacific Basin were born, Hong Kong shipping will emerge fitter, more creative and with a new generation of shipping companies to seize the opportunities ahead.
One has to commend Mr Huxley’s cheerleading ability, and his knowledge of the industry. But, as with all cheerleading, it is tightly focused on one team, good or bad. As someone who reported on shipping in Hong Kong for more than eight years, I was always astounded by how little Hong Kong did to support what was the lifeblood of its economy. Let’s not forget, Maersk, and many other global shipping lines, all used to have their HQs in HK not so long ago. They left because Singapore actively offered more than the HK gov would. If HK’s maritime sector is benefitting from anything now, it’s that cost has finally caught up with Singapore.