We have much to learn from high standard of service in Taiwan

Recently I spent a long weekend in Taipei; I once traveled to Taiwan about nine years ago. At that time I was amazed by the local cuisine, but this time I had more time to get a “feel” for the city, its culture and people.

What “amazed” me was the people working in the service industry. They were all so kind and pleasant: The taxi drivers, bookstore workers and also people who work in department stores, hotels and museums.

The first time when I stepped outside of my hotel in Taipei and got into a taxi, the driver said “thank you, thank you for taking my taxi…” For a second, I didn’t know what to say in response. I’ve never received such appreciation from a taxi driver before. I’m used to being asked by taxi drivers where I want to go and then there is a good chance they will tell me they do not want to go to a particular place and that I need to get another taxi.

I wonder if it was the softer tone in their dialect making the conversation more pleasant or it’s just that the people there are more patient, polite and kind. I enjoyed every minute I spent in Taipei, where I shopped, spent more money than I planned, just because the shopping experience was so nice.

When I was shopping in Taipei, I didn’t mind waiting, as people seemed more relaxed there. When it was my turn and the clerk was talking to me asking what I needed, other customers were also very patient and polite. 

After I returned to Hong Kong, I started to think that maybe there is room for our service industry to improve; the city is known as a “shopping paradise” after all, and let’s face it, we’ve all had bad shopping experiences! We’ve all heard complaints from our friends about employees at cosmetic or luxury bag counters who did not provide good service because they think “you will not buy anything”.

Government data show that retail sales in Hong Kong have been declining year-on-year for three consecutive months from February to April, so now might be a good time for us to pause and think about how can we improve the shopping experience for consumers, and this could be helpful to the entire retail industry.

Chinese mainland netizens mock a sign used to be seen in stores decades ago in mainland cities, which read “do not beat or insult customers”. The sign speaks for itself about what the service industry was once like on the mainland!

But we all see how far the mainland has come, from “don’t beat the customers” to “be delightful”. If you have dined in Haidilao, the famous Chinese hotpot restaurant chain, you know what I’m talking about. The waiters and waitresses are so charming, so polite, always smiling; they really seem to enjoy their work. So even the restaurant charges more, people still prefer to go there. It is very difficult to get a table there during peak hours.

I consider people who work in the service industry in Hong Kong very professional and they clearly respect their jobs, so maybe companies in Hong Kong need to improve their “corporate culture”, and do more team building, or just go to Haidilao and ask the owner what he has been doing to make his employees so happy.

Once the employees are happier, I believe they will treat their customers better.

The author is business editor at China Daily Hong Kong Edition.

Trump’s trade fight with China creates pain for all, including Midwest farmers

When he set out to extract concessions from China and other countries, President Donald Trump assured Americans that “trade wars are good, and easy to win.” He regarded previous presidents as easy marks for devious foreign governments, and he thought his tough tactics would force those rivals to back down.

But after two years of negotiations with Beijing, victory has proved elusive. What was mostly an exercise in posturing and demands is turning into a full-fledged battle that threatens to produce mass casualties. AdvertisementRemaining Time -0:22

On Thursday, the president abruptly announced that he would slap a 10% tariff on $300 billion in Chinese goods starting Sept. 1, in retaliation for Beijing’s intransigence. This was in addition to the 25% levies he put on $200 billion worth of other goods in May — which prompted Beijing to impose new tariffs on U.S. products.

Monday, China escalated the battle by letting its currency sink to the lowest level since 2008. Beijing also indicated it won’t make those big purchases of American farm products that Trump promised. The administration hit back by formally branding China a currency manipulator. Skirmishing is giving way to trench warfare, which could go on a long time.

“The Chinese have sent a strong signal that they are ready to rumble,” Paul Blustein, a trade analyst at the Centre for International Governance Innovation, told The New York Times. Stephen Moore, who has played the dual roles of Trump economic adviser and defender, told The Washington Post, “We’re learning that maybe China has a higher pain threshold than we thought here.” [Most read] Licensed gun owner shoots and kills 14-year-old boy during attempted car theft in Lake County; 5 arrested after chase into Chicago: authorities »

The biggest potential victim is the U.S. economy, which has enjoyed a recordlong expansion now in its 11th year. The stock market had five straight down days, and Monday was the worst this year. Disrupted markets and rampant uncertainty can only deter businesses from investing and hiring, which fuel economic growth.

In July, the Federal Reserve cut interest rates, a step Chairman Jerome Powell said was “intended to ensure against downside risks from weak global growth and trade tensions.” Those dangers just got bigger. The Fed may be reluctant to bail Trump out of his self-created mess, and its tools may be inadequate to keep the economy cruising through the storm.

Any business that depends on exports to China is at risk. Lamented American Farm Bureau Federation President Zippy Duvall, “We stand to lose all of what was a $9.1 billion market in 2018, which was down sharply from the $19.5 billion U.S. farmers exported to China in 2017.” Illinois manufacturers like Boeing, Caterpillar and Deere also stand to forfeit sales.

No one denies that China has engaged in practices that harm American companies, such as theft of intellectual property and subsidies to state-owned companies. But the president gave up a powerful tool of leverage when he pulled out of the Trans-Pacific Partnership, which would have created a huge free trade entity of 12 nations. China would have felt pressure to seek admission, submitting to rules that would have compelled reform.

Instead, Trump has tried to cow a Chinese government that increasingly relies on nationalism and resistance to foreign demands to maintain public support. China will suffer economic pain as its exports decline and companies move to Vietnam or Thailand to escape U.S. tariffs. But an authoritarian system is better able to weather public discontent than Trump, who has to answer to voters next year.

China /US Trade Issues

U.S.-China economic ties have expanded substantially since China began reforming its economy and liberalizing its trade regime in the late 1970s. Total U.S.-China merchandise trade rose from $2 billion in 1979 (when China’s economic reforms began) to $636 billion in 2017. China is currently the United States’ largest merchandise trading partner, its third-largest export market, and its biggest source of imports. In 2015, sales by U.S. foreign affiliates in China totaled $482 billion. Many U.S. firms view participation in China’s market as critical to their global competitiveness. U.S. imports of lower-cost goods from China greatly benefit U.S. consumers. U.S. firms that use China as the final point of assembly for their products, or use Chinese-made inputs for production in the United States, are able to lower costs. China is also the largest foreign holder of U.S. Treasury securities (at $1.2 trillion as of April 2018). China’s purchases of U.S. debt securities help keep U.S. interest rates low.

Despite growing commercial ties, the bilateral economic relationship has become increasingly complex and often fraught with tension. From the U.S. perspective, many trade tensions stem from China’s incomplete transition to a free market economy. While China has significantly liberalized its economic and trade regimes over the past three decades, it continues to maintain (or has recently imposed) a number of state-directed policies that appear to distort trade and investment flows. Major areas of concern expressed by U.S. policymakers and stakeholders include China’s alleged widespread cyber economic espionage against U.S. firms; relatively ineffective record of enforcing intellectual property rights (IPR); discriminatory innovation policies; mixed record on implementing its World Trade Organization (WTO) obligations; extensive use of industrial policies (such as subsidies and trade and investment barriers) to promote and protect industries favored by the government; and interventionist policies to influence the value of its currency. Many U.S. policymakers argue that such policies adversely impact U.S. economic interests and have contributed to U.S. job losses in some sectors.

The Trump Administration has pledged to take a more aggressive stance to reduce U.S. bilateral trade deficits, enforce U.S. trade laws and agreements, and promote “free and fair trade,” including in regard to China. On March 8, 2018, President Trump announced a proclamation imposing additional tariffs on steel (25%) and aluminum (10%), based on Section 232 national security justifications (China is the world’s largest producer of both of these commodities). On April 1, China announced that it had retaliated against the U.S. action by raising tariffs (from 15% to 25%) on various U.S. products, which together totaled $3 billion in 2017. On March 22, President Trump announced that action would be taken against China under Section 301 over its IPR policies deemed harmful to U.S. stakeholders. In addition, he stated that he would seek commitments from China to reduce the bilateral trade imbalance and to achieve “reciprocity” on tariff levels. On June 15, the United States Trade Representative (USTR) announced a two-stage plan to impose 25% ad valorem tariffs on $50 billion worth of Chinese imports. Under the first stage, U.S. tariffs would be increased on $34 billion worth of Chinese products and effective July 6. For the second stage, the USTR proposed increasing tariffs on $16 billion worth of Chinese imports, mainly targeting China’s industrial policies. China released its own two-stage list of counter-retaliation of equal magnitude. President Trump then threatened 10% ad valorem tariffs on another $400 billion worth of Chinese products. On July 6, the Trump Administration implemented the first round of tariff increases and China retaliated in kind. These tit-for-tat actions threaten to sharply reduce U.S.-China commercial ties, disrupt global supply chains, raise import prices for U.S. consumers and importers of Chinese inputs, and diminish economic growth in the United States and abroad.

Pegasus set to cruise high above the bay

Pegasus Fund Managers Ltd, one of Hong Kong’s leading fund management and professional financial advisory firms, is confident about the economy and markets of the Chinese mainland and Hong Kong this year as it eyes opportunities from the Guangdong-Hong Kong-Macao Greater Bay Area.

“Economic growth in both China and the US is still quite strong, there is no concern of recession this year, and I believe the two countries will eventually reach an agreement on the trade dispute,” Pegasus Managing Director Paul Pong Po-lam, who is also chairman and founder of the Institute of Financial Technologists of Asia, told China Daily during an interview.

Pong founded Pegasus in 1990. Having weathered numerous global financial crises, Pegasus has accumulated vast market experience and established a market-leading position over the past three decades.

egasus manages funds and provides management services for Mandatory Provident Fund (MPF) accounts — those tied to Hong Kong’s mandatory pension fund. Pegasus’ total MPF assets under management (AUM) stand at HK$2.2 billion (US$280.27 million).

Positive economic outlook

“I am quite positive for this year, the A-share market (Shanghai Composite Index) could go up to 4,500. The reason is that fundamentally, the central government is doing a very good job, they are stimulating the economy, and they are doing it better than they did in 2008,” during the global financial crisis, Pong said.

He said that last year, market sentiment was dampened by uncertainties about the global economy and the Sino-US trade dispute. The SSE Composite Index declined 24 percent in 2018, but Pong said he believes the situation has turned around and that overall sentiment has turned from negative to positive.

The Sino-US trade dispute may eventually reach an agreement, and the biggest uncertainty for the investment community has been partially lifted, which is why the market has shown a significant rebound since the beginning of this year.

In addition, interest rates in the US are likely to stay put at the beginning of this year. The market expected that interest rates will continue to rise, but the US Federal Reserve has indicated that no more hikes will be coming this year, which is more good news for the stock market.

Pong said he believes the Hang Seng Index will surpass 30,000 points this year.

But he warned that all these forecasts are based on the assumption that China and the US can reach an agreement and settle their disputes. If the negotiations were to fall apart, the Hang Seng Index may drop to 23,000, Pong said.

Despite all the uncertainty externally, Pong is very confident about the Chinese economy this year. The tax reduction introduced by the central government at the beginning of this year is benefiting ordinary people and companies, and domestic consumption is still quite strong, he said.

Pong said that most Chinese investors are being too conservative — they are holding too much cash or bonds while they should be buying stocks of good companies.

“The valuation of the Chinese A-share market is still very low. If the trade dispute can be settled in the coming months, export related industries will outperform,” he said. He added that cyclical stocks, like shipping firms, commodities and energy, will also start to do well.

Consumption-related stocks, like diary company Vitasoy and hotpot restaurant chain Haidilao, will also be good choices, he said.

Pong said he likes new-economy stocks. The share prices of new-economy stocks like Xiaomi have dropped a lot, but the leading Chinese tech firm is starting to make a lot of money this year, and if one of its joint ventures is granted a virtual banking license from the Hong Kong Monetary Authority, that would be great for Xiaomi’s share price.

Pong is very excited about the opportunities emerging from the Bay Area.

“There are a lot of great companies in the Bay Area worth investing in; for example, the property companies, as well as Hong Kong-listed insurance companies and banks. If they can extend their services there, they would benefit greatly from the development of the Bay Area,” he said.

The only question left to be answered is when free flow of capital in the region will happen. “If we open up the Bay Area, Pegasus’s AUM could grow 10 times from now, from HK$2 billion to HK$20 billion,” Pong said.

Financial planning service

In addition to fund management assistance, Pegasus had been providing high-net-worth clients with asset management services and helped its clients to plan their finances based on their different stages of life and goals.

In the future, financial planning will be a key to Pegasus’s business, said Pong, explaining that in the past, people didn’t have many financial-planning choices in Hong Kong.

“The products are so simple and the property investment has been so successful, a lot of people have already made a fortune from investing in properties. They do not need financial planning. If you have money, you buy property,” he said.

But nowadays in Hong Kong, with the aging problem and the special taxes imposed by the Hong Kong government to prevent people from speculating in the housing market, financial planning has become increasingly important.

The special administrative region’s government has also introduced more investment products like the iBond and silver bond, as well as medical insurance, providing more and more choices for people to consider and to help them plan for their future, Pong said.

“In the future, when the total amount of the MPF gets bigger, I believe that the government may relax the rules and allows MPF to invest in property market, particularly for the young people,” he said.

Pong suggests that the MPF should be allowed to allocate a certain portion of the capital to invest in the Lantau Tomorrow Vision project and the construction of Hong Kong International Airport’s third runway. Not only will Hong Kong people enjoy the fiscal returns from these mega projects, they also will be able to participate in them and thus share the pride of ownership, he said.

Perseverance brings success to the investment expert

Paul Pong Po-lam said he was very lucky he got sent to St Paul’s Co-Educational College as a child, even though it was a two-hour trip there and back.

Pegasus Fund Managers Ltd’s founder and managing director, who grew up in the Sha Tin district of Hong Kong, said it is a great school in the city.

“The journey did make me stronger as I had to walk very fast or even run… During those six or seven years, I wasn’t late for school even once,” he recalled.

 Pong later went to the Chinese University of Hong Kong to study electronic engineering. After he graduated, he joined Jardine Matheson as executive trainee. It was not easy to get into that company at that time because Jardine Matheson was the biggest company in Hong Kong, according to Pong.

“Then I worked at Jardine Industrial Limited as product manager. At my position, I saw that Jardine sold their products to all Hong Kong manufacturers, and my job enabled me to know all kinds of manufacturers,” he said.

That was in 1981. Pong said many of the manufacturers had yet to relocate their factories to the Chinese mainland, but most of them had started to move north.

The turning point

In 1985, Pong became very interested in investing as he found it more fun and challenging, and at that time, not many people know what fund management was.

In 1986, he joined a British fund management company. It was not easy to get in, and he had to put in double the effort once there.

“At that time, we got all of the money from overseas to invest into Asia, so they didn’t need Chinese-speaking managers,” Pong said. “Many of my colleagues were sons or daughters of super wealthy families, as their family want them to learn how to manage fund so later they can go back to their family to manage their family funds.”

Pong said that most of his colleagues had graduated from Cambridge, Harvard or Columbia universities. He was one of the few from a local university.

All his hard work paid off, Pong founded Pegasus in 1990, and now he is an investment expert with more than 30 years in the fund managing industry.

For young people in Hong Kong who want to get into the financial industry, Pong’s suggestion is that if you have the resources, you should invest in yourself first and try to get certification as a chartered financial analyst, certified public accountant, certified financial technologists or associate financial technologists as soon as you can.

“Nowadays, getting a law degree is very good if you want to work in the financial industry, as everything is law,” he said.

“After you have invested in yourself, you can make more money, and after you have the money, you can start to invest,” Pong said.

“It is not a bad idea for young people to buy a house. If you have the money, it is still a good investment. If you don’t have enough money to buy property, then you can at least invest in property stocks,” he said.

For those who want to be a fund manager someday, experience is quite important, Pong said. First, one has to study hard and learn about this industry. It also would be very good training if one can invest and try it with his or her own money, or the family’s money.

“Then you can analyze the stocks, and analyze your own investment experience. You can show your record and what you have learned to your potential employer, to show that you are truly interested in the industry and fully committed,” Pong said.

Managing brands with a license to thrill.

LG Partners focuses on affordable luxury brands and ultimately globalizing them

After successfully exiting his latest tech venture in 2011, Ryan Garelick was on a United Airlines flight to Shanghai about a week later curious if he could ply his experiences in the fast-paced, rapidly-evolving tech world to an old economy business dynamic facing an uncertain future. Between inflation, currency fluctuations, global trade tensions and the appetites of consumers changing in the wake of fast-fashion brands he understood the dilemma facing Chinese capitalists exporting goods out of China. But as a serial entrepreneur he also understood that pressure breeds opportunity and catalyzes new ways at tackling problems.

After serving as the Managing Partner for LG Partners Group for the last several 5 years, Garelick is now running LG’s spin-off branded fashion firm LG Brands Group Holding, LLC. He said he likes fashion, likes the challenges presented by his work and wants to make the company a large multinational enterprise.

Recently, Ryan Garelick spoke with China Daily about the company’s strategy and its business opportunities in the Chinese market. The following are edited excerpts from the interview.

What does LG Brands Group do? What is the company’s focus?

LG Partners is one of the largest brand companies in the world. We focus on affordable, status US brands and we are globalizing them-brands like Nike, Under Armour, Polo Ralph Lauren, Hugo Boss, Calvin Klein-those are the kind of brands we manufacture and/or have licenses for.

We shifted our model in 2014 and the past two and half years have been good for the company. We have been very focused on our new model, changing our portfolio of brands – getting further into licensing and distribution – improving it and improving our margins.

What is the company’s business model?

We manufacture for and license many brands. After that we control the brands and we pay a royalty. But we design, we produce, we do the logistics, and we act like a brand company would do and we sell, depending on the type of the brand, to everyone or certain types of stores. The higher the brand is, the fewer retail stores we sell to and we may sell lower brands to mass market retailers and department stores.

The beauty of our company is that we have a very wide distribution network and our business is predominantly to sell to other retailers.

What is your opinion about the global market?

The US is the largest market of our business, and the US market is strong, relatively speaking. The economy is good, generally, the US is in a great shape for consumption, and it is the largest per capita consuming country. The unemployment rate is going way down, the interest rate is low.

Europe is in the early stage of recovery and the recovery process will take many years. Our business there is considerably smaller than the US, but we had a very good year in Europe, compared with the previous year.

How about the Asian market, particularly China?

Asia is very new to us, ironically. We’ve been here 25 years, but we always produced here, we didn’t sell here, we didn’t design here. But in the past four years, we have been developing our Asian business and we have offices in different parts of China. Our China headquarters is in Shanghai. Currently in Asia we are focusing on China and South Korea.

What is LG Brands future plan in China?

We are going step by step in China. It takes time to get the right people in China, and to build the right platform, what we don’t want to do is fail. It is easy to say that we can do it.

It is all about people in our business. We are hiring and we are developing people. As our platform is built out more, we will bring more and more US brands to China.

Ultimately, we also want to take Chinese brands to the US, when there are more famous Chinese brands. Our network should not be just one-way; it is going to go two ways to help develop Asian brands in the US and in Europe.

What is your business philosophy?

The one thing I believe in is doing the right thing. So everything you do should be right for the partners, right for the shareholders, right for your employees, right for the customers. That’s very important. In order to get there, I have tried to surround myself with creative problem solvers. I also tend to give people a lot of freedom – relatively speaking – to let them drive value.

My employees and I all know that we are part of a bigger story. We are in this together, and creating something that is bigger than all of us. We are changing something, changing the industry.

In the sourcing business, we changed the industry. I want to change the brand industry and I think all the people around me want the same thing. They are excited about it.

What has led you to your success?

One thing for sure is we all work very hard. Not just me, the whole company, the people around me. Being a good person is also very important. Being honest and always doing the right thing, even if it costs you money, because your word and your name are more important than money.

The more you do that the more you can build your own brand and people believe in you.

The key is not to lose that goodwill.

At the end of the day you only have your brand and your image.

What suggestions would you give to ambitious youngsters getting out of school?

The world has changed a lot. I always believed in being a pioneer in whatever I do. It could be to start something in unserved or under-served new market, or it could be a new type of technology. If you want to go into business, you need to find something that people don’t know they want yet.

Getting into your own business is very difficult. I would suggest students getting out of school at any level go work for somebody first before they start their own business. Youngsters should work hard, they should think for long term, and they may have to work for somebody for 10 years before they have the background and experience to go out and have their own business, because starting a business is very tough.

‘You should always believe in your dreams’

Roger Staeheli, who hails from Switzerland, did not pick up the coffee aroma at school or in his childhood. He majored in economics at university and was in the banking field in his early career.

Nespresso’s booming business in 2005, particularly in Switzerland and France, was a clarion call to him – coupled with his “natural attraction” to food and beverage and quality items.

“So, it was a natural choice for me,” says Staeheli.

He joined Nespresso in 2005 as commercial coordinator before being relocated to the group’s headquarters in Lausanne, Switzerland, where he spent more than five years in charge of global partnerships – a job that entailed extensive travel around the world.

He says it’s very interesting exploring diverse consumer behaviors in Europe, the United States and Asia as it gave him the opportunity to gain insights into different cultures.

The executive, who moved to Hong Kong in 2014, sees Nespresso as a company that’s able to keep the spirit of being an innovation-driven enterprise which wants its staff to be empowered and engage more with the management in coming up with innovative ideas.

“It’s fascinating seeing how the company is able to sustain its growth over the past years.”

In business, Staeheli believes, ambition is crucial and one should always believe in his or her dreams.

“I always say that if you’re not afraid of your dreams, then your dreams are not big enough. I think that’s very interesting and your dream will always push you to the boundaries.”

He hopes the younger generation in Hong Kong will stay optimistic, as he thinks the city is fascinating in many ways, in terms of energy and constant changes. So, people must have faith in their dreams and, in Hong Kong, everything is possible. Here, the barrier of doing business is minimal, everybody gets a chance. When people fail, they don’t make a big fuss about it, but learn more.

Staeheli sees long-term prosperity and sustainability as more important, as success is not something that can be measured in the short term.

“You need to have a short-term focus to achieve some business goals, but you also need some longer-term ambitions to understand more about your company, the brand and the impact on society and consumers.”

Create your website with WordPress.com
Get started