I visited Hong Kong at the end of Feb 2011 for a short holiday. I made the following observations, but they are not really for investment purposes, though the title may be a little misleading. Oops!
According to this website, Hong Kong had a 21.8% increase in tourists in 2010 from 2009. Tourists’ expenditure had went up 30.5%. This puts Hong Kong at second spot, behind China, as the most visited country in the Asia Pacific in 2010. Hong Kong is a very tourist friendly place which is why there is no qualms about this. I personally experienced this when I first touched down at the Hong Kong International Airport. A tourism board’s staff was stationed at the exit to serve as a customer service centre. Not sure of how to get to the hotel, and being a pretty unknown hotel, I had doubts if he knew where it was. To my pleasant surprise, he was able to even find a prepared piece of paper that consists of a zoom-in map and “how to get there” details specifically for the hotel I am going to. Given the number of hotels, I wondered how many different sets of guides did they have. Wow, they really did their homework to make your experience better.
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Modes of transportation
I notice Hong Kong had many modes of transportation. Based on the “how to get there” guide to my hotel, there were already 3 ways to do it. I could take the train, taxi or the free airport service bus. Of course, being young and able, I took the harder way but saved quite a sum of money. Getting around Hong Kong was not a problem. The Mass Transit Railway (MTR) service in Hong Kong is similar to Singapore’s MRT. Besides the usual taxis and buses, Hong Kong had trams and ferries, which had been functioning more than 100 years. The best thing is, we could use the contactless card (Ezlink card as we know it in Singapore) on MTR, buses,trams and ferries which makes traveling easier. And if you have not known, Hong Kong is the first country in the world to introduce this contactless card for public transport in 1997. We have know that a good network of transportation is crucial to facilitate trade and commerce. It facilitates transportation of goods, and when well planned, it just make traveling fast and efficient. People could spend more time on more productive stuffs.
The contactless card used in Hong Kong was operated by Octopus. Octopus Holdings was a joint venture by 5 major transport operators in 1994. In addition to use the card for transport, one can use it for everyday transactions. Would such contactless card pose a competition to VISA and Mastercard? It has also started to expand into China via Shenzhen. You can now use the same card in Shenzhen and Macau. If Octopus could increase its presence in China market, it is a no brainer that it could very well increase its profitability tremendously. Based in Hong Kong, it is in a better position than anyone else to tap the market in China. Octopus is not listed publicly yet but it is very probable when it requires capital to venture into China.
The trams serve the public in Hong Kong Island over 100 over years. Not only it has historical value, it is still a practical mode of transport today. The trams are always packed and usually people take it for short distances. Veolia Transport had full ownership of the company in 2009.
I love the Star Ferry and its history. Hong Kong was very much a trading port and the ferries would have played an important role in the past. Like the trams, the ferries still transport people between islands daily. It was also a full house when I board it in the evening. Most of the passengers were working adults which I supposed were going home from work in the business district. Star Ferry is owned by Wharf Holdings. Wharf Holdings also owns Harbour City and Times Square, and is a subsidiary of Wheelock. Peter Woo is the man behind Wheelock, ranked #8 richest in Hong Kong in 2011 with $5.4bn.
Health and Beauty Retailing – There is an abundance of health and beauty retail shops. You would see a Watsons, Mannings (Guardian in SG), Sa Sa or Bonjour almost every 5 mins. I wonder if there is such a big market. The supply is way to much in my opinion. The dominant one would be Sa Sa, and it has made founders Simon & Eleanor Kwok #34 richest in Hong Kong in 2011 with $1.19bn. Watsons is owned by Hutchison Whampoa, which in turn belongs to Hong Kong richest man Li Ka-shing‘s Cheung Kong Group. Mannings (or Guardian in Singapore) is owned by Dairy Farm International (DFI). DFI has other retail operators like Giant supermarket, Cold Storage, Jasons, Shop N Save, and 7-Eleven, and is part of the bigger group, Jardine Matheson.
Banking – Traveling around Hong Kong has made me notice that most of the ATMs are from Hang Seng Bank. I cannot recall seeing other banks as frequently. It felt like an everyday bank similar to POSB of Singapore. Hang Seng Bank is the second largest bank in Hong Kong and HSBC has majority stake in it.
ESPRIT – Michael Ying had sold his remaining stake in the company. He is #16 richest in Hong Kong in 2011 with $2.5bn.
Cafe de Coral – This is a popular food chain in Hong Kong and it serves about 300,000 people in Hong Kong daily. Michael Chan is the founder of the chain and is ranked #35 richest in Hong Kong in 2009 with $560m.
Filipino Maids – There are about 140,000 Filipinos in Hong Kong and most of them are working as maids. Similarly to Singapore, I saw many of the maids hanging out on Sunday.