Shih Wing-ching's companies have started hiring staff again this year as economy is beginning to show signs of recovery.

The Hong Kong economy has gone through the worst of times, said Shih Wing-ching, chairman of Centaline Group, one of the leading real estate agencies in Hong Kong. In his broad overview of the financial and economic situation, Shih said that it is still too early to tell when the Hong Kong economy will recover.

And given that the US and European markets have faltered, he advises Hong Kong businessmen to seize new opportunities by rethinking their strategies, while eyeing the lucrative mainland market opportunities, many of which can compensate for dwindling China exports.

"As the US and European economies have dramatically contracted, they will buy fewer products from China. So China, instead of continuing to rely on the export trade, should focus on a transition to the domestic market and on spurring domestic consumption," he told China Daily. "With a 1.3 billion population, the mainland market has enormous potential; so why can't Hong Kong businessmen find out what the mainland people need and serve the mainland market?"

Financial "ice age"

After the onset of the global financial crisis in September last year, Shih pessimistically described Hong Kong as entering a financial "ice age". Almost a year later, he has said that the US and Europe are probably still living in a financial glacial age, in contradistinction to China, including Hong Kong, where rapid recuperation from the economic downturn is evident.

"The pace of economic recovery is electrifying, especially recovery of the real estate market," he said. "At first, we thought 2009 would be a cold, cold winter but it turned out to be hotter than July."

Shih attributed the good signs to both market and policy factors. The central government, apart from launching a 4 trillion yuan package to stimulate the economy, has also asked the banks to provide a huge amount of money in relaxing loans in the first half of 2009.

He also noted that although the US government has doled out rescue measures worth US$780 billion, the money has predominantly been used to rescue such large consortiums as AIG, General Motors and Citibank, and so very little or no new wealth or growth in the real economy has been generated.

In China, the approach and results have been different: the money has been used to subsidize villagers' purchases of home electrical appliances, automobiles and even properties, generating broad, "trickle-down" benefits throughout society, creating broad positive sentiments and boosting the people's confidence in the future, he said.

But Shih suggests that not all of the recent economic rebound activity and spending has been productive. He shares the view of Professor Stephen Cheung, who says that the Hong Kong property market boom does not truly reflect growth in real economy, because no new wealth has been created.

"It is only a change of mind and a change of the form of assets owned by the people," he explained. "When property prices were at a peak in 2008, many people thought that 'cash is king' and sold all their assets in order to hold instant cash. But as 2009 came, they regretted this and feared that their cash would depreciate, so they started buying properties again."

Positive public sentiments

Speaking of Hong Kong, Shih observed that public sentiments here are quite positive. People are still willing to spend money, in stark contrast to the gloomy days of the SARS virus outbreak back in 2003 and the recent meltdown-induced pessimism elsewhere. "Now you have to wait for a table if you dine out on Saturdays and Sundays," he said.

"Furthermore, property prices are rising and returning to the 2008 peak prices," he beamed. "Those who have bought properties over the past 10 years have all made money. Given that 60 percent of the Hong Kong people have their own properties, it means that most citizens feel happy and have the heart to spend."

Shih, who is also a member of the Chief Executive-led Task Force on Economic Challenges, said the six industries that it proposed are the right way forward, but none of them is his own proposal.

The six are economic areas in which Hong Kong has enjoyed clear advantages, namely, testing and certification, medical services, innovation and technology, cultural and creative industries, environmental industry, and educational services.

"The CE perhaps wanted to hear opposite opinions from me," he joked.

Shih also said people should not complain that the task force could not do much, as it was not easy for just eight members to resolve all of Hong Kong's problems.

"It will take a very long time before the six industries can promote economic development in Hong Kong, because they cannot create huge job opportunities in the near future," he commented. "Furthermore, it will be more cost-effective for the private sector to push these industries forward, knowing that it will involve very high costs for the government, inasmuch as civil service salaries are very high."

Shih admitted that his group of companies had laid off more than 500 staff within weeks after the financial crisis had occurred in September.

But as economy is beginning to show signs of improvement, he has now resumed hiring.

He fumed: "I was incurring losses of over HK$50 million per month for more than six months. Had the adverse situation continued, I would have sacked more staff if I did not make brave decisions.

"Was it wrong for me to lay them off while I was still able to pay them full compensations? Should I retain all the staff while I had no money to pay their salaries?"

Only one round of headcount exercise was taken and it was taken very quickly, he said. Without any second or third rounds, all the remaining staff can feel very safe and work comfortably.

(HK Edition 07/31/2009 page4)