More excellent luxury retailers’ results

Stan-GloomWe should do these Tuesday-Friday working arrangements more often. Anyway, after an agreeably not-too-long four days of semi-hard-ish slog, what a delight to read the latest wonderful and cheery news from Hong Kong’s luxury retail sector. Dickson Concepts saw its net profit plummet from HK$155 million in 2013 to a scintillating minus HK$110 million for 2014. Whoops.

Boss Dickson Poon predictably blames Occupy Central and moans about the one-visit-per-week cap on Shenzhen residents (which has barely taken effect even now, two months after the end of his company’s reporting period). He doesn’t explain how the Glorious Umbrella Uprising damaged his stores’ business in Singapore. Nor does he mention Chairman Xi Jinping’s anti-corruption purge on the Mainland, which has especially affected regional sales of pricy watches, pens and other Harvey Nichols-type baubles traditionally used as palm-greasing gift-bribes by Chinese cadres.

He does, however, go into Major Mope Mode over Hongkongers’ failure to share his adoration of Mainland shoppers. Why would shoppers come here, he asks, if they’re going to get insulted? (More to the point: why are so many of them still coming here despite it?)

Of course, he does not ask why many Hong Kong people find the Mainland shopper phenomenon so irksome that some are driven to protest and even insult. It could be he has no idea that residents are suffering as their streets and transport facilities are swamped and their neighbourhood stores driven out or forced to raise prices.

Maybe he thinks we all own distribution rights to designer labels. That would explain his puzzlement. Yes, that must be it.

The anti-corruption purge (or Umbrella Revolution, for that matter) only took serious effect in the second half of the last financial year. The 2015-16 period will quite possibly be bad for the luxury tat market for the full 12 months, especially if, say, Mainlanders get wiped out on the stock market. If so, glitzy retail chains have a lot more red ink to come. What a heartwarming note on which to declare the weekend open!

And it gets even better. If it’s too hot or wet to go out, I can recommend The Execution of Gary Glitter, which I think is brilliantly funny (though I have a nagging feeling we’re supposed to take it seriously).

Posted in Blog | 8 Comments

Has this man no shame?

Hong Kong’s once-proud citizens cringe with embarrassment as the city’s Secretary for SCMP-HKasksBJFinancial Services drops to his knees and begs the Chinese government not to sign agreements with other financial centres to allow cross-border sales of investment funds. It is as if KK Chan is saying: “We are so pitiful and helpless that we need a monopoly and a free lunch as a big favour from you, oh wise and merciful Beijing.” The correct response to news that Mainland investors could gain access to German-listed funds would be the merest glimpse of a shrug as we get on with all the important things in our lives. In the unlikely event that our local financial products experts can’t compete with their sausage-munching counterparts in some place called Frankfurt, they can become cab-drivers or burger-flippers. No biggie.

There have been occasions when Hong Kong officials have made a big public show of pleading with Beijing for gifts and handouts and privileges. These contrived displays have had a dual purpose: to give cocky and uppity Hongkongers the impression that they and their city are worthless and incapable and must rely on charity, and to cast the Central People’s Government in the role of father-like saviour and protector whom we must adore and not upset. (The concessions themselves are just step-by-step reforms to gradually open up Mainland markets; they are designed to benefit the country as a whole and would happen anyway.) But in this case, KK Chan’s groveling does not seem to have some subliminal message. Otherwise he would say we need special treatment because Occupy Central wrecked our fund management industry, or something. Indeed, it would be less lame and humiliating. As it is, this request is just… pathetic.

Posted in Blog | 5 Comments

My retail stocks plummet, at long last

Stan-NorthDistrict

Roughly a year ago, I bought a few shares in Belle International, a chain selling ugly shiny shoes for women, and in vaguely cool clothes retailer Bauhaus. They were to be my sacrificial offerings to the Tourism Gods. If Hong Kong enjoyed some relief from its plague of visitors, the value of these investments would fall, I would lose money, and it would be worth every penny – I would kiss the newly vacant sidewalk with gratitude. Conversely, if the deluge of Mainland shoppers continued or even increased, I would profit. My idea of a ‘win-win’.

SCMP-TopBlueChipYesterday the market reacted to China’s announcement of tariff cuts on overpriced foreign crappy garbage. Belle was the biggest blue-chip mover of the day, falling 6%. Oh joy! (Just sold it after it bounced back 3% first thing this morning – still made 20% on the wretched thing, as with Bauhaus, which I might keep for the dividend yield.)

The cut in tariffs on things like shoes, cosmetics and diapers looks relatively meaningless, from modest levels of 5-7% to a ‘why bother?’ 2%. But it seems such a slim fall in prices could be enough to keep some Mainland consumers on their side of the border. This will also encourage the trend towards a more efficient parallel-trading system (forget the Chinese name), by which intermediaries order Hong Kong goodies in bulk online for redistribution to local buyers.

Beijing is not doing this for our benefit. Someone up there has woken up to the fact that if they are ever really going to wean themselves off building ghost cities and developing a more consumption-based economy, they might try not driving people offshore to buy things. (Duh.)

But of course to Hong Kong’s landlord-worshipping media and zombie-bureaucrats, a fall in Mainland shoppers is not a ‘benefit’ at all. Anything that might bring rents down is an evil and a curse (after all, lower rents leave more cash in local people’s pockets, and since when have they counted for anything?).

The press call up commercial real-estate agents for their views. A guy at Knight Frank says SCMP-Propertyrents in North District could come down 10-20% but hopes that Hong Kong products’ reputation for not poisoning people might keep some shoppers coming. The lady at Colliers, wiping the tears from her eyes, concedes that tenants will have more bargaining power. And someone at JLL reckons the locusts will still come here for the ‘shopping experience’ (an issue I thought our young localist groups sought to rectify in Sheung Shui a few months back). A Wall Street Journal headline from a while ago wailed about ‘pain for hobbling Hong Kong’.

The picture with that story shows one of the gold shops whose numbers have expanded maybe five- or ten-fold in recent years next to a shuttered-up property for rent. Monitoring the retail scene in my own neighbourhood – inundated primarily with Koreans – I have noticed a tipping point in recent months. Few if any new stores aimed at outsiders have been opening. A growing number of premises are vacant. And new businesses starting up include a travel agency, a tacky bar, a children-oriented café and a pet-grooming salon; while neither necessary nor welcome, they are at least aimed at local people.

The subject of vacant stores is interesting. A landlord leaving a medium-size street-level space unlet in my district is foregoing maybe HK$1 million a year. In occasional cases, I suspect some sort of family dispute is going on. And as we all know, don’t we, money isn’t everything (my street still has one original, authentic, grimy grocery store selling – or at least offering – faded jars of soy sauce and little else, run by an aging couple apparently oblivious of its 100K-a-month rental value as a cruddy theme-concept restaurant).

The New Yorker notices a similar phenomenon in the West Village, a trendy restaurant etc district near NYC’s own Soho…

…closed storefronts often stay that way, sometimes for years, in an apparent contradiction of the law of supply and demand. If a storefront remains empty for a long time … basic economics suggest that the price being charged is too high. So why doesn’t the owner lower the rents?

In Hong Kong, we assume that it’s because landlords are as cretinously stupid as they are greedy and grasping. In New York, it seems there may be a logic at work: a big financial institution will pay significantly higher rent than a national restaurant or coffee chain, which in turn will pay far more than a local independent café. Rather than sign a lease today with a quirky, charming and fun start-up dining place, landlords will wait for ages in the hope that a big plastic soulless mega-brand tenant will come along.

This is of course a recipe for stripping every neighbourhood of any character and making them all identically bland and tedious. But it also assumes that demand for banks, fast-food and other Big Brand stuff continuously rises. Even in a densely developed place like northern Hong Kong Island, there seems to be a limit to the concentration of branded outlets, with 7-Elevens heading the list at one per 150 yards of street, and Bank of East Asia trailing at one per quarter-mile radius. Many landlords may sit on empty premises in the hope a big brand will come along, but some will be disappointed. Thanks to Beijing’s tariff cuts, maybe many will be. After their first two or three children die of starvation, some might even admit defeat, and rent their stores at reasonable prices to young local entrepreneurs with new ideas.

Or maybe I’m wrong, and everywhere will end up crammed full of bank branches and plasticky restaurant chains. In which case, the tourists will surely drift away out of boredom. Either way, another win-win!

 

Posted in Blog | 8 Comments

The thoughts of Fred

The South China Morning Post efficiently squeezes two news stories out of one interview with former Secretary for Financial Services/Commerce Frederick Ma. In the Hong Hong establishment pantheon, Fred ‘Fat’ Ma fits into the middle-class-to-success bracket. In other words, he is one of the 1940s-50s middling-born kids who went on via HK University through talent and/or timing to greater things (typically banking – as in his case – or the civil service). More to the point: not part of the tycoon caste, nor a member of the Communist-worshipping patriotic Red sub-culture.

Unlike some officials of the 2000s, he did not leave the administrations of Tung Chee-hwa and Donald Tsang under a huge cloud. He had to take responsibility for the ‘penny-stocks affair’, though the wider blame probably lay with a range of bureaucrats. And he left prematurely for health reasons, so everyone felt sorry for him. He also became an Evangelical Christian, but more on the fuzzy Isn’t-Jesus-nice? wing of the movement than the mouth-frothing, gay-bashing, Creationist Biblical-literalist wacko side.

So in a nutshell, we’re talking about the sort of person many Hongkongers can more or less relate to and respect: local, moderate, successful and basically decent. But in times like these, it’s hard to be all these things. A more calculating man might keep his head down, but by opening up to the SCMP reporters, Fred has no choice but to take sides.

So he has to endorse the increasingly desperate-sounding pleas to pro-democrats to pass SCMP-GameOverthe political reform package. He claims that Hong Kong will be finished without these reforms, citing the recent warning (via a Chinese government ‘think-tank’) that Shenzhen is overtaking us, etc, etc.

He suggests that the mandate resulting from the package’s ‘one-man-one-vote’ system would make a difference and enable the next government to tackle ‘burning issues’. The issues he mentions are the aging population and ‘tax reform’, neither of which is strictly critical (and which are to some extent two sides of the same coin). But it is an implicit admission that the current system – which Beijing and its local supporters have insisted on preserving for years – doesn’t work. And it is a relatively rare claim that the proposed reform might impact the quality of governance.

Rather than probe him on this, the SCMP interviewers invite Fred to intone on recent remarks by Lau Ming-wai – the property tycoon’s heir whom some idiot-official made head of one ‘Youth Commission’, and who says young people should save hard to buy an overpriced tiny apartment. And poor Fred takes the bait, saying that people are picking on Lau Jr for being rich.

SCMP-RichYouth

But Lau’s sin is not being born into a rich family: it is being born into a family that got rich off the Great Hong Kong Property Scam and urging the next generation to become serfs in order to enrich the family further. Fred, ever the nice guy, concedes that upward mobility and property prices have changed since his day. But the damage is done, and the reporters have their angle.

There is an interesting dilemma for the SCMP here. As and if the paper slides further into propaganda, how should it modify material that superficially bolsters the pro-Beijing/establishment line but is so crass it probably undermines it? The editorial puppet-masters at the paper presumably made a story out of Fred’s ‘defend Lau’ position in the hope of convincing readers that Lau Jr is an innocent and that his detractors are a bunch of pro-dem beasties. Yet this article if anything highlights the hypocrisy and lack of empathy of the property cartel and the tycoon caste. (Or maybe rebel pro-dem editorial staff were at work, and that’s what we’re supposed to think. How weird is it that we can’t tell?)

The pan-dems should be seeing the property scion’s comments as Everything Wrong handed to them on a plate. The disaffected young in particular should be getting their teeth into Lau like Rottweilers, loudly and bloodily flinging him from side to side, refusing to let go. Yet the opportunity passes; the movement’s lawmakers are pondering a grandiose shadow cabinet, while the young carry on splintering into dozens of localist and student groups. With this lot as opposition, and the hapless Fred Ma and witless Lau Jr as obedient followers, the Chinese Communist Party – like the rest of us – probably doesn’t know whether to laugh or cry.

Posted in Blog | 6 Comments

Tycoons’ kiss of death

SCMP-90pcEven if you would really, really, deep down prefer to support the quasi-democracy being offered to Hong Kong – even if you are the most cheery and optimistic person ever born and see only the good side to everything – the government’s reform package gets harder to like by the day. The clincher for any remaining waverers must surely be the buffoonish-looking leaders of chambers of commerce, including the Real Estate Developers Association, advising us that the proposal is wonderful…

Stan-BusinessesCome

Stan-BusinessStanleyThis is a recommendation? If these guys like it – most reasonable and fair people will naturally and instantly assume – it must stink.

This comes a few days after Beijing officials repeated the old line about protecting business interests as a reason not to change the corporate voting system that allows some company owners multiple votes in small-circle functional constituencies. This particular electoral mechanism is just one of various convoluted ways Beijing controls the results in ‘election’ or ‘nomination’ charades. But coming now, the reminder about corporate votes strengthens the impression that the political reform proposal is essentially this:

Before: Beijing chooses a person who then runs Hong Kong in the interests of the property tycoons.

After: Beijing lets the whole electorate choose a person who then runs Hong Kong in the interests of the property tycoons.

I declare the long weekend open with the question: surreal, parody or sick joke? Or is someone in officialdom secretly working for the Occupy-Umbrella movement? They LauMingWahappoint the son of a property tycoon as head of a thing called the Youth Commission (succeeding our old friend Bunny Chan). This billionaire’s heir then proceeds to give young people ‘advice’ on being able to afford the overpriced little boxes with which he and the rest of cartel turn homebuyers into mortgage-slaves. Just when you thought they must have run out of ways to be idiotically provocative…

 

Posted in Blog | 8 Comments

More censorship, or something, at the SCMP

For well over a decade, the Chinese authorities have increasingly mishandled Hong Kong. They have appointed idiot leaders in the city, enabled its rampant cronyism, swamped the place with Mainlanders, and undermined values and institutions like police neutrality and freedom of the press. It is hardly surprising that people have become hyper-sensitive to possible threats from Beijing.

For example, a plan to station Mainland immigration staff at the Hong Kong end of a new cross-border rail line – a common arrangement around the world – is guaranteed to cause controversy and alarm about Chinese security forces operating in the city. The closure of a university’s post-graduate ‘Creative Writing’ programme prompts panicky claims about a plot ‘plainly intended to limit free expression’.

It is inevitable that a decision by the South China Morning Post to ditch four veteran columnists will be seen as censorship.

Asia Sentinel – founded by one of the four – calls it a putsch carried out on express orders of Beijing’s Liaison Office. The Liaison Office has undoubtedly been interfering far more in Hong Kong in the last couple of years. And the SCMP ’s pro-establishment bias has been getting increasingly obvious and even clumsy. So perhaps there’s overwhelming circumstantial evidence. Asia Sentinel also mentions a familiar list of departures from the SCMP over the years, usually cited as proof of politically inspired gagging. (Though it’s a bit of a stretch, and an insult, to suggest that the loss of unfunny humorist Nury Vittachi is on a par with the axing of Willy Lam.)

On the other hand, we have to wonder what these four departures will achieve for the glorious motherland. Did the Communist cadres at the Liaison Office lie awake at night fretting about the dangerous and subversive rabble-rousing of Frank Ching’s columns? Does the Chinese Communist Party feel more secure knowing that Stephen Vines’ complaints about the challenges faced by small business and the dumbness of bureaucracy will no longer appear? The two worth reading were Kevin Rafferty, an ex-FT Asia hand SCMP-columnPBmore likely to be scathing about US policy than anything else, and Philip Bowring, a truly incisive and meticulous critic of Hong Kong government policy. Bowring’s wife is a prominent pro-democracy politician, but then Ching’s is a member of the Executive Council.

All four are 60+, if not 60++. It’s probable that as old-school hacks all expect to be paid – which isn’t the case with many SCMP op-ed columnists. The same goes for another recent departure from the paper, Howard Winn a month or so back; he has been replaced by such stuff as an astonishingly lame ‘Market Talk’ compilation of stock-related Tweets. The word is that reporters recently leaving are not being replaced.

(I know of a fifth SCMP columnist who has also been dropped. That individual doesn’t fit the profile of the above four, but the word came at the same time; the reason given was ‘redesign’. There may be others.)

So what’s happening? Search me. The newspaper industry in general struggles to keep its head above water, and the SCMP needs to put any resources it can spare into the on-line product. So it would not be surprising for them to trim costs desperately. But beyond a point this surely becomes counter-productive: Bowring’s commentary was one of the few reasons to buy the paper on a Sunday.

One of life’s greatest little amusements in Hong Kong is watching for the SCMP’s weekly gratuitous and egregious pre-emptive shoe-shine – typically an absurdly obsequious report on China’s visionary leadership. For all its faults, the paper does plenty of straight reporting, so such items stick out. This material is clearly not aimed at influencing readers, who can only heave at such ludicrous and unsubtle pap. It is obviously intended for consumption elsewhere: either the editors put this stuff in to impress the owners, the Kuok family, or the Kuoks put it in to show Mainland officials. Perhaps the Kuoks hope to impress the Liaison Office by being able to say, ‘look we got rid of these pesky foreign columnists and their lack of positive energy’.

The peskiest smart-ass foreign writer in the SCMP is Jake van der Kamp, and he survives.

Whatever is happening, we can be reasonably sure it won’t benefit the Kuoks. The old man bought the SCMP when it was one of the most profitable papers on the planet, and the share price has since shriveled. More to the point, owning a newspaper as a way to pay tribute to the emperor is a massive headache. You are petrified that by doing its job properly it will cause offense, but you are left with a bigger and bigger reader-shedding dud if you make it so bland that a Frank Ching column is too edgy. And at the end of the day, the Communist Party will kick you in the teeth anyway, because no-one’s usefulness lasts forever.

To end on a bright note, these four guys are not being censored in the actual sense of the word (which excitable people should look up in case they really need it one day). Willy Lam and Jasper Becker are writing as well as they ever did to appreciative audiences. Philip Bowring writes for other outlets, like Asia Sentinel. And if the SCMP is destined to banish what remains of its readable content, the launch of HK Free Press looks perfectly timed.

(I’m still trying to get my head around how much more amazing Shakespeare would have been if he had done a City U Creative Writing degree.)

SCMP-MarketTalk

Posted in Blog | 20 Comments

Exploited workers protest too much

I really was determined not to mention the South China Morning Post’s excruciating ‘Moving Forward’ epic year-long series of interviews of rich old people saying the young are crap. But today’s is irresistible. Manufacturer and Beijing-fan Eddy Li comes up with the usual blather about how the kids should quit whining and grab opportunities and (without a hint of irony) how the government should build up and promote luxury brands (he owns Mainland watch factories).

SCMP-EddyLi1

SCMP-EddyLi2The exciting bit: the SCMP photographs him posing before a large framed picture, showing several hundred figures in rows attending a gaudy fantasy 1997 handover. All the most upstanding members of society have a copy of this painting – a fact I can prove by snapping the newspaper in front of the one we just happen to have here.

It is one of the most tawdry and putrid excuses for an artwork that I have ever seen. One curious thing about it is that all the heads of the Important Patriotic People (painted from photos) are pretty much the same size, so there’s something jarring about distance and depth in the composition. As a special treat sometime, I will photograph it in detail and highlight the best bits. Inevitably, a few of the tycoons, officials and shoe-shiners have since fallen from grace in some way or other.

Big news of the day is on the labour front.

SCMP-ButGovernment

Civil servants’ unions do their annual ritual of mouth-frothing and freaking out over their SCMP-UnionsSeetheunacceptable pay increases. The 3-4% hikes seem unremarkable. Bear in mind that these people are also on a pay scale that goes up with length of service (independently of promotions), so this is a hike upon a hike. The 3-4% is supposedly based on private-sector adjustments, and you are supposed to think ‘fair enough’ – the two should be linked, right?

But actually that’s a distraction from the true picture, which is that when you include pensions and other perks, civil servants’ remuneration can be two or even three times the private-sector equivalent. If I were them I would seriously shut up about ‘bad morale’ and all the other baloney.

Then we have the latest complaints from Cathay Pacific cabin crew. Like cuddly furry animals and nurses and trans-gender teens who take their grandmothers to the senior prom, CX flight attendants are supposed to make us feel all warm and fuzzy because of their caring and hospitable nature and beauty-and-brains and ‘service from the heart’, etc. So when we hear that their evil employers are cutting their lunch allowance in Melbourne, our natural inclination is to be outraged at this terrible exploitation, injustice and cruelty.

The lunch allowance was cut from A$60 to A$35 and back to A$55, and is apparently in line with prices on the hotel menu. So we’re talking HK$250-300 for lunch, which doesn’t seem bad.

However, the last time I checked, what really happens with these allowances is this. The crew buy instant noodles before leaving Hong Kong (of course, they would never swipe the cup noodles from the galley because that’s company property). They prepare these delights in the hotel rooms and lustily devour them instead of going down to the coffee shop to eat. They pocket the cash, which the Hong Kong tax authorities never hear about, because it was a meal allowance, obviously. The net result, after doing this every time you overnight in an outport, is a nice tax-free 20% or more on top of your official monthly salary.

Forget the glamorous smiles and ‘Tea sir? Coffee sir?’ stuff – they’re evil and cunning, or you may think, sensible. The point is: as with the civil servants, it would probably be best for them to keep quiet about this. (Interestingly, the other thing the HK Civil Service and CX have in common apart from whiny employees who are never happy is a large surplus of applicants lining up to get jobs with them.)

SCMP-EddyLi3

Posted in Blog | 21 Comments

Interesting ways to sell things

Today’s South China Morning Post comes with a big stiff heavy thing inside it. It turns out to be a translucent envelope containing three booklets ‘H’, ‘M’ and ‘T’, in diminishing size…

HMT1

When you open them, you find they are interlocking. The smaller one opens onto a picture of a guy next to a swimming pool. The medium-size also opens onto the same picture of the guy next to the swimming pool…

HMT2

Also inside the booklets are various other pictures – arty black and white architectural shots, vacant-looking women, and a kid asleep with a furry white cat. No prizes for guessing where all this stuff ends up…

HMT3

What did it cost to design and print? What was its purpose? What was it trying to sell? We will never know.

At least it doesn’t make you feel ill. At the other end of the marketing/design bad-taste spectrum comes this offer to subscribers of the SCMP Online – free access to a publication called the Edge Review. Of all the magazine’s many past covers, they choose the one that will make you recoil in horror…

ReviewYing

What first looks like one of those shock-value pictures of a battered wife is in fact a Photoshopped image of ousted Thai Premier Yingluck Shinawatra. Presumably this is how the (apparently Malaysian) magazine doesn’t get censored by the Bangkok junta.

As it happens, anyone can see Edge Review free of charge here, if they like keeping up with a KL-biased view of the infantile squabbling that sometimes passes for intra-Southeast Asian affairs. Don’t all rush. (I think it’s Photoshopped – not sure what the generals are SCMP-PolRefPackagedoing with her right now.)

Over in the SCMP’s op-ed page, former Home Affairs Secretary Patrick Ho pens a refreshingly different sort of piece on Hong Kong’s political reform package. Rather than repeat the tired and dreary pro-reform arguments that are driving us up the wall, he criticizes officials and supporters for being so apologetic about it.

He dislikes the ‘Pocket it first’ slogan, the notion that the package is ‘the best we can do’ and the lame promise of a better deal in the future. All these imply that the proposal is somehow substandard, and this plays into the pro-democrats’ hands. Instead, he essentially says, campaigners for the package should be jumping up and down at how wonderful it is – the best possible arrangement to serve the interests of both Hong Kong and the nation.

It’s a bit late now, of course. The official communication strategy was doomed by the ham-fisted mouth-frothing psycho-act that Beijing officials put on for us last year. The superfluously restrictive conditions of the plan’s nomination process seemed to surprise even our own government leaders, leaving them scrambling for excuses. To pretend the proposal was brilliant and amazing and better than we could have imagined would have taken acting skills worthy of an Oscar – and still wouldn’t have sounded convincing. A reluctant, hand-wringing admission that the package is basically pretty crappy was probably the only credible way to go. But it’s an interesting point, Patrick. Thank you.

SCMP-LuAlso

Posted in Blog | 8 Comments

A bit of reading between the lines

The South China Morning Post continues to test the reader’s gag-reflex with its embarrassing ‘Moving Forward’ series. In which, we recall, a ‘silent majority’ wax visionary about Hong Kong after the Occupy-Umbrella movement. The whole exercise seems designed to push a fantasy. This ‘silent majority’ is somehow nearly all rich, middle-aged and pro-establishment. And the premise of the project is that the Occupy-Umbrella phenomenon is oh-so over and conveniently behind us.

(Fans of ‘Moving Forward’ will note that this is the second wave of interviews, following a torrent of them a few months back. There is a third to come. And, apparently, a fourth! This is shoe-shining on steroids. Will they finish it before Umbrella Revolution II begins?)

Last week’s ‘silent majority’ included Pansy Ho, heiress to the old multi-billion Macau casino monopoly and therefore worthy of adulation befitting a Princess Diana/Einstein hybrid (it was just an extended puff-piece for tourism). Today it’s the turn of Winfried Engelbrecht-Bresges, head of the Jockey Club. Again, there’s plenty of toadying about the success of his organization as if it isn’t a money-printing monopoly, and the usual blather about how young people must ‘grasp opportunities’.

But, as is so often the case in a city where a million irritating problems come down to just a few basic structural flaws, a glimmer of insight manages to escape this black hole. Herr E-B states that the housing crisis is the result of the land premium that developers have to pay the government. He is oblique about this (hinting at ‘compensating people for their significant SCMP-JockeyClubinitial loss’), and the SCMP puts these remarks in a different box and isn’t going to probe. It would be easy to turn the page and forget about it. Don’t.

The land premium is a hidden, huge, up-front tax on private-sector housing. By keeping smaller developers out, it enables a property cartel to flourish. And by raising revenue in big uneven clumps, it gives bureaucrats a theoretical excuse to blow public funds on pointless infrastructure projects. But the really crazy thing is this: the more expensive housing becomes (because of supply shortages, or low interest rates), the higher the tax gets. Higher housing prices lead to higher land premiums, which means… even higher housing prices – and therefore a faster and higher, even exponential, pace at which housing becomes more unaffordable. Little wonder that most of the middle class are now priced out. The SCMP isn’t alone in sweeping this under the carpet: have you ever heard the pro-democrats make a fuss about this obscenity?

Out of the mouths of babes and innocents… Another spark of truth appears through the murky darkness in comments from Environment Under-secretary Christine Loh. She says that roadside pollution comes from traffic congestion, which is caused by unrestricted growth in private cars. This is common knowledge. She then says that the Transport Bureau is in charge here, and so inter-departmental cooperation is required. The implication is that such cooperation is not in fact happening (which we can confirm by standing on any street). Christine’s comments are bureaucrat-speak for ‘the Transport Bureau is a malevolence’, which again we all know.

And so, again, we could just turn the page. But again, don’t.

Why is the Transport Bureau keen to allow more and more cars onto our crowded streets? Part of it is pure selfishness. These officials all drive around in those ugly seven-seater things and therefore consider the 90% of the population on buses and sidewalks as a nuisance and obstruction. But the big picture is about money.

The transport and planning bureaucracy wants more traffic because it wants to build more roads. Why would it want to do that? Partly because it means more work and bigger budgets and empires for the officials. But mostly, we can be fairly sure, because of the pervasive influence of private interests, namely the engineering and construction industry. At best, we are talking about civil servants going to work for the private sector after retirement. At worst, we are, or could be, talking kickbacks. The outcome is a system that diverts public wealth (raised from those land premiums) into the pockets of construction interests, often owned by the same property tycoons who run the housing cartel.

As a government minister, Christine Loh can’t say any of this. The SCMP aren’t going to go there, either. But then again, the pro-democrats are also silent on it.

Rather than see political reform as an issue of rigged housing prices, corrupt transport and infrastructure priorities and overall governance, the pro-dems have always been fixated on the structure, theory and symbolism of democracy. Their latest high-minded arguments for vetoing Beijing’s political reforms are the most pointed and efficient yet. So confident are they in the popular accessibility of their abstract reasoning, they are planning to bombard public housing estates with these leaflets. The pro-Beijing camp’s tactic, by contrast, is to back fake democracy with fake signatures.

Posted in Blog | 9 Comments

Nightmare scenarios

Here’s a plan of part of a large shopping mall. There are five open-front clothing and electronics stores around a large common area, and three corridors connecting the whole space to the rest of the mall…

SCS1

Under the tenancy agreements, the store owners are allowed to use the three feet of space in the common area adjacent to their premises…

SCS2

Some – indeed most – of the stores tend to abuse this at times and use even more space in the common area. Shops 1, 2 and 5 in particular tend to claim to have some sort of right to do this, though no-one else in the mall takes them seriously.

However, the people in fast-growing and profitable Shop 1 have recently started to get particularly greedy and even threatening. Although they are a bit vague about the specifics, they pretty much insist that they own not only the whole of the common area, but even parts of the other stores’ three-foot extensions…

SCS3

The once-effective security guard who used to keep order in this area has grown fat and lazy. He seems to spend most of time right at the other end of the mall, in a zone full of energy products stores with chaotic managements. He has now started to mumble something about coming over to the clothing/electronics zone more often and essentially make it clear to Shop 1 that it can’t take over the whole public area. The owners of Shop 1, who are notoriously sensitive, are already showing signs of going into Major Foot-Stamping Tantrum Mode.

We are, of course, talking about this (and this, this, etc). There is no polite or euphemistic way to put this. In theory, this is a struggle for regional dominance between the US and an emerging China. But to some extent it is probably a three-way conflict, with the Chinese military (and maybe supportive factions) tussling for power with the Chinese government of Xi Jinping. Most likely, this time all parties concerned will step back a bit and muddle through for a while. But sooner or later something has to give, if not in the South China Sea, in one of the less extreme and outrageous of China’s expansionist claims. Ideally, the civilians in Beijing will assert control over their generals and focus on their monumental economic, environmental and demographic problems closer to home. The alternative is – not pretty.

I declare the weekend open with a non-allegorical retail clash: another look at the slowly changing neighbourhood scene, where businesses aimed at locals seem to be resurgent against the tourist-oriented outlets that threatened to eat the whole district. A flyer in my mailbox invites me to this…

ChildFriendlyCafe1

I suppose it had to happen. Just when you thought it couldn’t get any worse, with all the dog cafes everywhere, someone opens one for kids. While it obviously sounds abominable – like something that would loom before you in a nightmare about Discovery Bay – we can at least say with confidence that this is not aimed at the Mainland and Korean visitor-pestilence. Hopefully, the business is owned by some up-and-coming plutocrat monopolist who will crush any competitors who try to break into this new and scary-sounding market. The alternative is that the concept will spread through the surrounding streets like a rat-borne plague, and we will become Asia’s Child-Themed Retail Hub from Hell.

(Do kids even drink coffee? I have no idea, but you don’t really associate the two.)

ChildFriendlyCafe2

Posted in Blog | 16 Comments