| Case for doing business in Hong Kong |
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| JUST AS THE United States and Australia have generally not been great destinations for South African companies, China has also posed enormous difficulties. Main reasons include that foreigners for the most part are offside on the language issue and don’t always fully comprehend local customs and culture. |
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| However, that’s no reason to stay away. Johannesburg- based bank Sasfin – which has long championed the interests of start-up, small and medium-sized businesses – has, through its subsidiary, Sasfin Asia Ltd, opened an office in Hong Kong to spearhead the way for South African enterprises into the Pacific Rim. |
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| Sasfin has furthermore incorporated the IFC’s social and environmental policies and that will involve it developing a special social and environmental management system according to the world body’s guidelines. |
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| MD of the operation is Gary Patterson, who previously spent 33 years with a major South African banking group. He gained vast experience in international and corporate banking, which included postings in London, Hong Kong and Mauritius, and has been “offshore” for 15 years. He was born and educated in SA. |
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| Married with three children (two boys in London and one in Switzerland), Patterson says: “Hong Kong has become home. We always enjoy our trips to SA but this is where we’re now happy to live.” |
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| Leon Kok met Patterson at the company’s 38th floor offices in the Sun Hung Kai Centre on Hong Kong Island, overlooking Kowloon. Sasfin Asia Ltd focuses primarily on trade finance solutions to SA companies wanting to trade in the Pacific Rim, especially China (both exports and procurement), and raising finance in the Hong Kong market. |
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| Having built up a strong reputation in the region over many years, Patterson has enabled Sasfin Asia to conduct trade finance at very competitive rates. That’s likely to be even more crucial for SA businesses in the period ahead. The 1998 Asian crisis and subsequent banking consolidation saw many SA banks withdrawing from Hong Kong, which has in turn opened up an attractive niche for operations such as Sasfin Asia. |
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| Patterson says the company’s edge on other South African banks that previously operated out of Hong Kong is its know-how, dedicated staff, innovative approach and personal touch. He’s confident that Sasfin Asia can be built into a substantial business over the next decade, particularly providing trade finance into the rest of Africa. |
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| “Hong Kong provides scalable access to funds, credit insurers and suppliers. Being stuck at the bottom end of Africa doesn’t always allow you to maximise the opportunities that a local presence lends itself to,” he says. |
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| Patterson says he’s extremely comfortable doing business there. “Bankers and businessmen have a strong can-do attitude, they’re always willing to do a deal and they’re always willing to execute it. People here have a great work ethic. If a typhoon comes (which happened during the writer’s visit) everything closes down. But once it’s passed everyone is willing to work 10 times as hard to catch up.” |
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| Chinese people take great pride in their work, he adds. “They know that if they don’t there are a couple of hundred thousand waiting to snap up their jobs. Industrial action is almost unknown here.” |
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| Patterson says there are strong differences between what Singapore and Hong Kong specialise in as financial centres. “Singapore is best known for its south-east Asian focus and tends to specialise in foreign exchange dealing operations and private banking. It also has a bent towards oil and chemical trading. Hong Kong is more China-focused, with an emphasis on trade finance, capital market activities and IPOs. Many Chinese companies, as we’ve seen in recent years, would now rather list in Hong Kong than go to New York.” |
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| Patterson says corporate governance in Hong Kong is of the highest level. “The ethos dates back to the British model. It’s given a high premium, people abide by it and if they don’t they have to fall on their sword. We also have the Independent Commission against Corruption, which is far more focused and effective than the Scorpions in SA and really feared. Its officials don’t leave a stone unturned and they prosecute to the end.” |
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| The Hong Kong Monetary Authority (central bank) also keeps a tight grip on affairs, and while its officials inspect banks frequently, they’re not overly intrusive and adopt a pragmatic approach to regulation. |
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| Patterson strongly applauds Hong Kong’s taxation system. A corporate entity pays a flat tax rate at 16,5%. It isn’t complicated or difficult to administer and nor is it overly plagued by avoidance and evasion. It’s also source-based, similar to what SA once had. |
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| That’s why the work ethic here is so fantastic,” he says. “Yes, we have a social welfare system but the benefits are pretty limited in the context of Hong Kong’s high cost of living. So people work hard, as it’s a city in which you can’t afford to be unemployed.” |
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| Patterson says residential property rentals are in the region of US$5,60/sq foot/month and food prices around 30% to 40% higher than in SA, as everything is imported. |