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June 1st, 2011:

Acid News

June 2011

Download PDF : AN2-2011

Smog Hinders Hong Kong’s Hiring Efforts

June 1, 2011

Bloomberg NewsThe outmoded engines powering many cars and trucks contribute to Hong Kong’s air pollution.

Hong Kong prides itself on its status as Asia’s leading financial center, home to tens of thousands of bankers. More money was raised in stock market debuts there last year than on any other stock exchange, including New York’s.

The city’s air quality, however, is badly lagging, with some estimates putting pollution at three times the level in New York. With some blowing in from mainland China and some generated by the woefully out-of-date engines powering many Hong Kong trucks and buses, smog regularly exceeds levels recommended by the World Health Organization.

A survey of more than 200 international and local companies operating in Hong Kong, released on Tuesday by the office-space provider Regus, suggests that the problem is negatively affecting businesses. Three of four companies said that the city’s air quality was making it harder for them to attract and retain employees from abroad.

‘‘Hong Kong’s position as the premier destination in Asia for top expatriate managers is under threat due to poor air quality,’’ Regus said.

Respondents ranked Hong Kong above Bangkok, Shanghai and Beijing in terms of air quality, which is not surprising, given the choking pollution in those cities. But Singapore was deemed far better. That should give policymakers pause, given that Singapore is Hong Kong’s chief rival for the Asian finance crown.

To be sure, we’re not talking about a mass exodus of workers as a result of air pollution. The Hong Kong economy is buzzing, business confidence is high and consumers are spending. In fact, high rents and property prices, rising wages and a shortage of suitable staff members in some sectors are among the things that companies here complain about most.

Still, the air quality issue is gaining ever more prominence. As I have notedhere before, doctors and scientists have warned repeatedly that the city’s pollution are a threat to public health, associated with hundreds of deaths a year.

Pollution levels in Central, the main business district, have topped 100 points on an official air pollution index on 81 out of 150 days so far this year, according to the Clean Air Network, a campaign group.

Levels above 100 are classified by the Hong Kong environment department as ‘‘very high.’’ On Wednesday, despite generally blue skies, the index in Central stood at 102.

The Regus survey is not alone in highlighting the issue. The United States Chamber of Commerce has reported that American companies have difficulties persuading staff to come to or remain in Hong Kong.

More than half of the people questioned by AmCham in 2008 said they personally knew of professionals who had declined to come to Hong Kong because of the environmental issue.

And last year I received an e-mail from a reader who said he had shifted his investment-risk consulting business to Singapore some years ago because of the air quality issue.

‘‘It is true that all five of these Asian cities are still attractive business destinations with increasing level of economic growth, despite their varying track records when it comes to the environment,’’ said Hans Leitjen, regional vice president for East Asia at Regus.

‘‘However, to ensure continued long-term prospects for their cities, the relevant authorities would be wise to prioritize their environment in order to shore up their competitive advantage,” he said, “and in particular to face up to the challenges of poor air quality. The time to act is now.’’


HKIA unveils duty-free customer research

1 June 2011

A survey of over 2,000 passengers conducted earlier this year reveals high penetration rates at Hong Kong International airport

Airport Authority Hong Kong has unveiled the results of a comprehensive survey of its core duty-free customers ahead of the upcoming retail tender for those categories at Hong Kong International airport (HKIA). The research, which interviewed 2,093 passengers in January, revealed high penetration rates, average customer spending and cross-purchasing levels.

According to the survey, 47% of respondents had planned their purchases prior to their arrival at the airport, while the remaining 53% were unplanned shoppers. General merchandise has the highest penetration rate at 75%, followed by fragrances and cosmetics (50%) and liquor and tobacco (46%).

The research also revealed a high rate of cross-category shopping: purchasers of general merchandise tend to also buy beauty products (38%) or liquor and tobacco (31%), while buyers of fragrances and cosmetics are equally inclined to purchase general merchandise (23%) or liquor and tobacco (23%). About 30% of tobacco and liquor buyers also purchase general merchandise, while 25% also buy beauty products.

In terms of motivations, convenient locations are key browsing motivators to shoppers at HKIA, with general merchandise and liquor and tobacco products often purchased as gifts. Buyers of beauty products and general merchandise are driven by variety and prices, the survey added.

The average spend at HKIA’s core duty-free shops is HK$832 ($107), with perfumes and cosmetics buyers the biggest spenders at an average of HK$1,050 ($135) and liquor and tobacco purchasers spending the least—on average HK$608 ($78). Average browsing time at the stores is 52 minutes, according to the research