Big Lychee, Various Sectors

People have been chatting about Prizemart – an independent chain of stores in Hong Kong. The website doesn’t tell you much about what to expect. The emphasis on food safety suggests some sort of trendy organic health-fad scene. The list of branches suggests something on a more industrial scale. And what do they sell, other than olive oil, milk and pistachio?

So along I go to Li Yuen Street West, one of the little alleyways full of stalls selling ultra-cheap touristy tat like kids’ kimonos and plastic watches. And there the store is: I must have passed it dozens of times, yet it had never registered, despite having an open front and the distinctive logo above it.

It is just one standard shop unit – in other words, not much bigger than an average 7-Eleven. And for a claustrophobe of dazzling financial means like me, this is where the attraction wanes. Imagine the most packed-with-items, narrowest-aisled Watson’s; now double the density of piled-up, and piled-down, merchandise, and let a dozen Filipino ladies on a leisurely shopping spree occupy the remaining floor space. It is physically possible to make a circuit round the two-aisle store (no doubling-back possible) in maybe 8 minutes, but you need to be patient. A girl stands on a chair by the front to make sure you don’t start stealing things out of impatient boredom.

But if you want bargains, you’ll find them – or at least an eclectic range of them. Some pretty decent-looking olive oil, a wide range of chocolate (like Ritter Sport), noodles galore, nuts and other items, at 50% or less of what they would cost in the normal supermarkets, in my sketchy experience.

I am advised a Wanchai branch is more user-friendly. It is almost worth any discomfort to take a swipe at the local duopoly. And for anyone on a tight budget, you’d be crazy not to look at Prizemart.

“Many [iPad] apps for kids are designed to stimulate dopamine releases…” As is crystal meth, though it uses a less convoluted method than the Apple product, which works by “…encouraging a child to keep playing — by offering rewards or exciting visuals at unpredictable times.”

One of the more curious international youth movements we’ve seen for a while as ‘Hong Kong and Singapore unite against ‘locusts’’.

Asia Times notes some interesting parallels between the Big Lychee and the Lion City as their young, fearless and proud citizens join on-line to defend their homelands from the invasion of Mainlanders. Nice examples of Hongkongers’ on-line Chinglish, which puts the better-known Singlish dialect in its place.

If you still haven’t seen it by now, scroll down to see the rather impressive YouTube clip of one Mainlander’s calamitous driving in Singapore. Incredibly, the city-state’s government-controlled press (the ‘154th’) praised the Ferrari driver who jumped the red light at Mach 3 as an investor. He was subsequently alleged to be a Szechuan mafia boss’s brother, living in Singapore after spending years in Hong Kong painstakingly laundering funds. Some on-line gossip speculates that the money was post-earthquake reconstruction funds. Whatever turns out to be true, the hard-to-forget video has been viewed by pretty much every native Singaporean aged 10-60. Now Hongkongers are taking a good look at it too. What’s happening with that cross-boundary private-car ad-hoc quota thingummy scheme?

That gorgeously sexy aircraft, by the way.

Depending whose numbers you believe, between 5,000 and 10,000 children perished in the Sichuan earthquake, most because corrupt officials had built substandard schools. The Hong Kong government and a United Front teachers’ union each sent HK$2 million to replace one institution, the Mianyang Bauhinia Ethnic [presumably Tibetan] Secondary School. And now we find the building has been knocked down to make way for a luxury residential project or, as Xinhua coyly puts it, a plaza. The Standard says the HK Federation of Education Workers isn’t trying to get its money back; the South China Morning Post says it is. It must be awkward, being good patriots, to complain about what can only be local officials’ bribe-taking. The Hong Kong government seems to be made of sterner stuff, and is demanding its – our – cash. Obviously, no-one is going to get arrested. That only happens to parents of the dead children.

We like to think that such things couldn’t happen here. But we are probably less sure about Macau, our diminutive fellow Special Administrative Region across the Pearl River Delta, where a court has given prosecutors the go-ahead to do Hong Kong property tycoon Joseph Lau for bribery and money-laundering. The accusation is that Lau’s company bribed now-imprisoned Macau official Ao Man-long in connection with the awarding of land, now being developed as a (Oh my God, how incredibly original) luxury residential project. There’s no link with the tantalizingly sloth-like corruption investigation into Sun Hung Kai Property’s Kwok brothers, but it’s somehow gratifying to remind ourselves of it anyway.

I was once briefly introduced in passing to a Macau judge. He was 26. This may be good news for the prosecutor, or maybe for Lau.

Correction: Administrative Officers and their admirers rush to tell me that Home Affairs Bureau official Florence Hui, tipped to be first boss of the new Culture Bureau, hasn’t a drop of civil service DNA in her blood. I knew I’d heard the name somewhere; she was one of those outside political appointees hired to be groomed as ‘talent’ a few years ago.

The phrasing of her Wikipedia entry (not to mention the fact that it exists) suggests she wrote it herself. Or am I just being nasty here? It is a brief bio – a list of rather too many universities, banking jobs and assignments in Donald Tsang-establishment temples of worship – but I could précis it further: wannabe pol on the make. This explains her defence of her suitability for the culture role, which would have been a most unladylike thing for an AO to do.

Incoming Chief Executive CY Leung would be fully entitled on taking office to sign a political appointee’s gratuity cheque, show her the door and wish her well in ravenously climbing all the private-sector greasy poles she likes. Or maybe her ominous ambition will remind him of himself in his younger years, and he will harness her lust for power to make life miserable for some or other poor group of bureaucrats.

This site will go into semi-hibernation over the next couple of weeks, with occasional dribs and drabs and not much else, as I make my biennial state visit to the English-speaking world.

As the Hong Kong Legislative Council’s pro-democracy camp emerges from its filibuster mire, it prepares for its next battle with whoever happens to be in charge over whatever he happens to be doing. The joys of a system where the people can’t elect the government but can elect the opposition!

That battle looks set to be with Chief Executive-elect CY Leung over his proposed government reorganization. The last restructuring of policy bureaus several years back was a routine bit of bureaucratic plumbing work, of little consequence to the public at large. And I don’t recall the pro-democrats taking much interest in it, either. But this time, the pan-dems have decided to insist with all their might and devotion to principle on a public consultation.

What exactly they hope to achieve by making an enemy of CY Leung before he even takes office is hard to say. The process by which he won the quasi-election may have stank, but less than on previous occasions when popular opinion had no influence over the outcome. He hates the bureaucrats and the property tycoons, which can only be a good thing. And although it’s probably just PR, he has invited applications from all-comers for assistant-type posts in government, which is a refreshing break from the overt cronyism of the outgoing regime (I’ve heard that 70 people have written in wanting to be ministers’ flunkeys).

The main part of the restructuring involves the appointment of deputy Chief and Financial Secretaries and a consolidation of responsibilities for land and housing. It looks like a way of sidelining uppity civil servants; former CS Anson Chan hates it; most of all, it’s too complicated for most people to understand or care about.

If the pro-dems don’t want to look like idiots, they might be advised to focus on the proposed Culture Bureau, which looks like an ideal teacup in search of a storm. The first name to be mentioned as our first high-level arts and media czar was lawyer and longstanding arts enthusiast Ada Wong. This would have been a minor but impressive dash of inclusiveness. Then word came that pro-Beijing elements objected to Ada because she had voted with pro-dems long ago on Wanchai District Council, and so a civil servant at Home Affairs called Florence Hui might get the job. Rather predictably, bureaucrat Florence attracted criticism from the ‘arts community’ for never going to concerts or galleries. She is commenting that, along with arts professionals, “…the cultural sector [needs] other talents who can organize resources…” Hey – do you think the Sistine Chapel came about without someone organizing resources?

The pro-dems have an opportunity to loudly demand whether a religious test will apply to government posts, designed to bar people who have, for example, failed to vote along United Front lines on district councils. They can also allege that such discrimination suggests the new Bureau will in fact be about propaganda. In fact, the pro-Beijing folks’ objections to Ada Wong are almost certainly due simply to spite (they are still seething at being largely sidelined since the handover). And measures that look sort-of like precursors to propaganda, like National Education in schools, often also look like measures designed just to appear that way to mollify Beijing. But it’s an attention-grabbing charge, and too good for the pro-dems to miss.

Then they can also join in the chorus of criticism about poor Florence, a no-doubt harmless and well-intentioned administrative officer who is about to find out the hard way why only a fool would even think about crossing that line marked ‘political appointment’. (The South China Morning Post story mentions that Civic Party legislator Tanya Chan “is also a stage actress.” Anyone who has seen her flouncing around on the Mid-Levels Escalator during election time will wonder if there’s ever a time she isn’t a stage actress.)

This way, the pro-dems could create a stir over the government restructuring that might just achieve something. But they won’t. They’ll fuss about the cost and bore everyone to death and do whatever else they can to persuade us to stay at home on Legco election day in September.

What are things worth? Saturday’s Financial Times had a diagram bundling comparable companies together so their combined stock market capitalization equaled that of just-launched Facebook’s US$100 billion. Thus the biggest telecoms operator in each of Germany, France and the UK total Facebook in value, as do three big UK banks and each of the pairs Eli Lilly-Bristol Myers Squib and Boeing-Caterpillar.

Maybe banks are unpopular and pharmaceuticals companies controversial, but most of us would say that Boeing and Caterpillar make products that have made the world a better place. The idea that something as idiotic as Facebook has the same market value as both equipment manufacturers put together is almost ludicrous. Yet people were paying US$45 for Facebook on Friday, before it ended up at $34 yesterday.

(It probably doesn’t help that I still can’t work out what Facebook is for, or find a reason to obey the emails begging me to visit my own virtually abandoned Facebook page. Recently, I’ve noticed that unrelated websites have started featuring little Facebook panels saying someone I know enjoyed this or that feature, which is annoying, if not almost creepy – as if Mark Zuckerberg’s people are following me around.)

Glorious Tuen Mun has its own version of Facebook: Century Gateway, a Sun Hung Kai Properties residential development. All yours (as of a couple of weeks ago) for HK$13,000 a square foot. Obviously, no-one in their right mind is going to pay that much for a home in one of the less desirable parts of Western New Territories; if you need to live there – someone might – you buy a place for half that, or rent. So the idea here is to lure in suckers who think there is more upside, that more quantitative easing is going to debase the currency, and that people with impoverished imaginations will continue to pour into Hong Kong property regardless of how out of step prices become with other asset classes, from gold to art to farmland to Facebook shares. They might be right; then again, they might be overlooking something, like the deflationary impact of trillions of global debt. But what is an apartment in Tuen Mun worth? What is the value of its economic benefits to humanity, as a badly located and no doubt poorly designed shelter?

We could ask the same about an outdated Scandinavian system for heating homes and cooking food. How much will the Chinese pay for a kitchen range that is always on, and thus uses more energy in a week than a standard oven does in nine months – namely the Aga?

Apparently, the manufacturers are working on models that can be switched off. I can imagine their CEO, William McGrath, slapping the side of his head and saying, “Duh, I wish we’d thought of that before.” I can imagine it because he has plans to sell the huge contraptions in the Mainland and has said: “In China, most standard kitchens just have two big burners in them … That’s a long way away from a western-oriented kitchen, but I think that could be radically changed in the next few years.”

If there were an Ethno-centric Western Businessman of the Year Award, he would win. He thinks Chinese kitchens will triple or quadruple in size in the next few years, while a billion people will throw their woks away and will never stir-fry anything again and start eating only stodgy stewed and baked gwailo food with gravy all over everything. The only possible way to sell Agas in China would be to stress how overpriced, wasteful and pointless they are, so people might brag about having one; the Aga company survives because it managed to position its product as a status symbol among the nouveau-riche in the UK. This brings us to the alternative universe where microeconomic laws of demand yield to psychology, if not biology.

In reality, Agas have no (non-scrap) value to the Chinese because, as this ad man points out, Mainlanders pay a premium for things they consume in public but penny-pinch on household appliances and things others don’t see. Status symbols boost their owners’ sense of self-worth – and try putting a dollar valuation on that. The rest of us will see them carrying a pricy item, the theory goes, and we will, to cut a long story short, want to mate and breed with them so their clearly superior DNA will give our rather humdrum self-replicating proteins a free ride to continued existence.

In practice, a highly visible status symbol might impel a prospective mate to run away screaming in terror, clutching his credit cards. Like this thing in the window of Italy Station, the second-hand handbag store. The unique nastiness of the colour scheme, partly day-glow chartreuse, partly puce, grabbed my attention at first. Then I saw the price tag: HK$268,000 – and that’s fixed, so don’t bother haggling. I thought it was a joke or a mistake, but Hong Kong retailers don’t do either. Maybe the colours are misleading, and the item reflects an ancient tradition of exquisite Italian workmanship, but even so: what are you getting for the other 267 grand?

Let’s be charitable: it’s 1,000 shares in Facebook; it’s around a couple of Agas (including what they call ‘commissioning’); it’s probably just about the down-payment for a little second-hand apartment in Tuen Mun. Seen that way, it’s a bargain.

It’s not often someone flips out around here, so it was refreshing to see some comments ‘straight from the heart’ here and then here. No mention, though, of my original point, that Cathay Pacific union activists who claim or hint that flight safety is at risk because of mundane – if unpopular – changes in working practices or conditions of service are scoundrels. Most people know that regulatory authorities around the world would ground the airline if this were true. Spokesmen claiming, in effect, that management decisions might lead passengers to die sound desperate and weaken their argument.

Airlines are prone to labour relations troubles. Part of the problem is that it is a perennially loss-making industry, though CX is unusual in that it makes decent profits most of the time, thanks to Hong Kong government policies that limit competition. Even so, global recession, oil prices and Hong Kong’s high cost base mean that CX management struggle to deliver the returns the owners expect.

It is a highly cyclical industry. On several occasions over the decades, demand has exceeded supply and CX has splashed out on new aircraft and staff in order to grab its share of Asia’s fast-growing market. But when the downturn comes, the company is stuck with excess capacity, high-paid manpower and a major price-competitiveness problem alongside most other Asian airlines. The upshot is that successive generations of staff have been hired on decreasingly generous conditions. Longer-serving crew, hired on relatively fat packages over 20 years ago, have been pressured into helping the company economize in other ways, such as measures to reduce expatriate housing costs.

In theory, everyone at CX should be reasonably happy; how many airlines in the world have a profit-sharing system? But a number of pilots, mostly of fairly long service, are virtually consumed with hatred for their employer. They tend to be clannish, geographically – and some would say culturally – isolated, not too hot on business and financial affairs, and have rest days to fill. After flying aircraft, fighting the company seems to be the centre of their lives. (Moving to another carrier isn’t an option, as they would lose seniority.) Indeed, management suspected around 10 years ago that some of these ultra-disgruntled crew were battling the company from the cockpit, deliberately causing commercial losses by, for example, delaying flights. They were fired, leading to a messy court case and an even more entrenched warfare mentality on both sides. And that hyper-sensitivity.

A rule of thumb in all companies is that industrial relations problems are by definition the fault of management, whose job is to make sure the problems don’t arise in the first case. Cathay Pacific is run by a cadre of managers technically seconded from Swire, who thus should bear ultimate responsibility. Traditionally these guys have often had curiously similar backgrounds: obscure British boarding schools, often with a spell in the Army. The Swires’ policy has been to recruit more than is needed and then let them fight or grovel their way up the management ladder. One, I was once seriously told, had the psychological profile of a wife-beater. It was he who was the big softy who urged that the 100 or so pilots originally due to be fired 10 years back be halved in number. Which makes you wonder what the rest are like.

Perhaps the most surprising thing about the abrupt ending of the Great 2012 By-Elections Bill Filibuster Outrage is that Legislative Council president Tsang Yok-shing didn’t push his emergency ‘halt’ button sooner. It is possible to draw all sorts of depressing conclusions, and we haven’t heard the last of it, and it’s a Friday – so we turn to some arguably more cheerful news, which only the exceptionally alert among us noticed a few days ago.

Supermarket chain Park N Shop is pulling out of Shanghai; at its peak, it had 21 outlets in the city. They say they will be back, but it seems they have an uphill struggle ahead of them. The retailer has had problems adapting…

“ParknShop started out as a standard supermarket, which was effective in Hong Kong because of limited space and high rental fees,” said an executive from a local supermarket. “But that model does not apply well in China, where hypermarkets are the norm. ParknShop has not been able to adapt to that norm,” he added.

As all shoppers in the Big Lychee know, this part of Li Ka-shing’s sprawling business empire shares a near-duopoly with Jardine’s Wellcome. The two players’ prices often fluctuate in tandem, suggesting that either they are engaged in cut-throat competition with each other, or they are colluding to keep prices up – or (I have a sneaking but unfounded suspicion) they maintain a semi-rigged but not overly exploitative blend of the two designed to rip us off gently but forever. We do know for a fact that they lean on wholesalers not to supply independent stores that undercut the big boys, an act that would be completely illegal in most developed capitalist markets.

These store closures could be part of an industry-wide consolidation affecting lots of other big merchants. But reading between the lines of the news reports on this (also here and here) it is hard to avoid coming to the conclusion that Park N Shop’s main problem in Shanghai was that it couldn’t handle a market where space is affordable and competitors are allowed to exist. At least they tried: the other conglomerates that dominate Hong Kong’s consumer market mostly don’t even bother expanding operations overseas, no doubt knowing they wouldn’t last five minutes. Amusingly, one of the companies beating the Hutchison subsidiary in Shanghai is the French Carrefour chain – which failed in Hong Kong essentially because our property and retail cartels froze it out.

Global Times points out that Park N Shop still does well in Guangzhou. Presumably the chain established itself in the Pearl River Delta at an earlier stage, and local consumers were and are very familiar with the brand from watching Hong Kong TV. That’s a nice-size region to complement the mature Hong Kong market, but letting Carrefour, Walmart et al have the other 90% of the country to themselves is hardly what we would expect of our beloved ‘Superman’.

I think Ming Pao mentioned this story, but I don’t recall seeing it feature prominently – or at all – in much mainstream Hong Kong press. (It’s there, but hardly obvious.) Even if the closure of a couple of stores is relatively trivial, Li Ka-shing is always worth a few column inches. Perhaps we are seeing a bit of Hong Kong’s famous media self-censorship here: Park N Shop is a huge advertiser, as are several other Hutchison/Cheung Kong retail, property and telecoms interests.

And we wouldn’t want to read too much into it, would we? CY Leung usurps the Chief Executive quasi-election at the last minute; anti-graft police kick Henry Tang’s basement door down at midnight; Sun Hung Kai’s Kwok brothers are led off in handcuffs; and now… KS Li’s Mainland empire mysteriously disintegrates. On what happier note can we declare the weekend open?