Meet the New Hong Kong, Same As the Old Hong Kong

September 1, 1997

Mark Miester

A funny thing happened in Hong Kong on July 1, 1997. Nothing. Of course, one event did take place on that day. Under plumes of spectacular fireworks and a steady rain, Hong Kong raised the Chinese flag, ending 156 years of British colonial rule.

But while commentators around the world speculated on the meaning of the transition and gravely contemplated the changes in store for Hong Kong, Chitru Fernando, associate professor of business, says that it is largely business-as-usual for Hong Kong.

"Hong Kong never stops," notes Fernando, who accompanied a group of 10 MBA students to Hong Kong for the event. "Even during all the events and festivities, Hong Kong didn't shut down. This was a historic event, but shops remained open, hotels were fully staffed and restaurants were serving meals. It was business-as-usual. This tells you what kind of place it is--one side of Hong Kong saw it as a great opportunity to make some money. That gives you some insight into the way in which Hong Kong works and what has brought it to the very prosperous level it is right now."

Fernando and the students spent two weeks in Hong Kong as part of the Freeman School's MBA summer abroad program in Asia, which comprises two week-long stays in both Beijing and Hong Kong. For Topics in International Finance, the course Fernando taught in Hong Kong, the students combined traditional lectures with tours of the local stock and futures exchanges, the U.S. Chamber of Commerce and several major U.S. multinational companies operating there to try to understand business's perspective on the handover.

Despite grim news reports that suggested everything short of martial law for the new Hong Kong, the business leaders the class met were very upbeat, said Fernando. None seemed overly concerned with the changeover. The reason? According to Fernando, it is that for all practical purposes, the change had already taken place.

"We thought July 1 was going to be somehow different," Fernando says. "It didn't appear to be like that. [The business executives we spoke with] felt that the handover of Hong Kong, at least from a business standpoint, took place over two years ago, when the agreements were ironed out between the Chinese government and the British government. That's why business people were not concerned. In their minds, that event happened a while back. That was simply the time that the bridge was crossed, and they said that 'this is going to happen and nothing bad is going to come out of it.' I think that's quite different from the way people in the United States viewed it."

Fernando believes that China will do nothing to quash the operations of its remarkably profitable golden goose. "As far as China doing anything to Hong Kong, I don't think they will. If China had wanted to take over Hong Kong, they could have done that a long time ago. They've been patient, waiting for this whole thing to end. Now that they've got Hong Kong, it's unlikely that they'll do anything to jeopardize that valuable asset."

There were also questions of whether political or social rights Hong Kong enjoyed under British rule might be stripped away by the new regime. Again, Fernando says that's unlikely. While fears of an oppressive regime may have been fanned by the Chinese government's disbanding the democratically elected legislature in favor of an appointed one, Fernando believes the poorer residents of Hong Kong are likely to receive better treatment than they did under laissez-faire British rule, in which welfare was almost non-existent.

So if business or social anxiety weren't the prevailing moods of the handover, what was? One of Chinese pride, Fernando says. "I think five years ago, if you had asked residents of Hong Kong what they thought about Chinese rule, they would have been skeptical, largely because of Tiananmen Square," Fernando says. "Now, it seems like most of the people of Hong Kong are very strongly behind their leader, Teng Shi Wa, who is very highly respected. "It was a great, once-in-a-lifetime experience," Fernando summarizes, "although in Hong Kong it didn't look like that. The most important business there is making money. That's very telling about the place and the potential that it has."

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