Most residents of the Big Lychee take it for granted that, in return for paying no more than 16% salaries (as opposed to the broader ‘income’) tax, they must lie back and enjoy being rigorously screwed by a wide range of monopolies, duopolies and cartels controlled by a small group of immensely wealthy local families. Even if you bought and paid for your home years ago, buy groceries from old ladies in street markets and order consumer goods on-line from overseas, you cannot help paying these conglomerates whenever you switch on the stove or light, or take a bus or ferry. Or make a phone call.
It is an unwritten but blatant government policy to support and defend this system. The exact reasons for this are murky and go back to colonial times, but it is probably not a coincidence that the cartel-operating dynasties began to pay exaggerated obeisance to the communist rulers of China in the years leading up to the transfer of Hong Kong from the UK in 1997. It may be that at the time the families successfully fooled China’s unworldly leaders into thinking that they create much of the city’s wealth, when in fact all they do is skim it off. Today, the PRC is increasingly run for such tycoons.
How strange, then, that our officials have taken the side of the ever-exploited consumer after hearing complaints that mobile phone networks are essentially cheating customers through high hidden charges attached to text services. Of the telecoms companies involved, four are part of the property-cartel-family complex and one is owned by the motherland herelf:
- 3, part of Hutchison, property developer and supermarket/drugstore duopolist, and part of Li Ka-shing’s bigger empire, which includes other retail, electricity generation, construction materials supplies, ports, radio broadcasting and anything else where there isn’t much competition.
- PCCW, part-owned by Li Ka-shing’s number-two son, Richard.
- CSL, ultimately part-owned by New World, the property developer that also runs Citybus and various ferry services, part of Cheng Yu-tong’s empire, including Macau gambling interests.
- SmarTone, ultimately majority-owned by Sun Hung Kai, giant property developer run by the three Kwok brothers.
- Peoples, ultimately owned by the famous apostrophe-using Republic of the same name, via the state-owned China Mobile group.
Telecoms are almost unique among major domestic business sectors in Hong Kong in that it is an area where the authorities specifically abolished a monopoly – a process set in train under the British. It is also one where competition is relatively simple to enforce and where the government has taken an interest in ensuring consumer choice; attempts by residential property developers to force households on their estates to sign up to their own conglomerate’s telecoms services have been slapped down. (It is possible that policymakers understand the economy-wide benefits of cheap communications, but then wouldn’t cheaper rents, food and transport boost the city’s competitiveness as well?)
The sector is also unusual because the property tycoons goofed up massively by getting into it. So accustomed were they to rent-seeking or otherwise sucking profits from captive markets that they piled in without realizing how deregulation and new technology could provide a real, level playing field. Bewildered by the need to create value, they have floundered, with at least a few either trying to sell out or digging themselves into deeper holes through overseas expansion and/or early adoption of unpopular technology. And, it now seems, preying on children and the mentally feeble through text-message scams.
Although the authorities are resorting to weak-sounding ‘urging’ and some sort of voluntary code of practice, their swift response indicates that they are serious. (Put briefly, officials are newly aware that the rapaciousness of the tycoons – exploiting pro-green loopholes to boost property profits, for example – is testing the public’s patience.) So the poor telecoms firms have lost what was probably a nice little effortless revenue source.
What unbearable sadness: I will break down in tears of grief for them if I think about it any more.