Economist.com Cities Guide: Hong Kong Briefing - June 2006

News this month

Riding the dragon

In an effort to tap the growing market for flights to the mainland, Cathay Pacific Airways, Hong Kong’s biggest carrier, announced in June that it would take control of Dragonair, a key rival. Cathay, which already owns a 17.8% stake in Dragonair, will pay HK$8.22 billion ($1.06 billion) in both cash and stock issues to buy stakes held by other regional airline companies.

Cathay has long craved Dragonair’s mainland routes: while Cathay has only two mainland flights, to Beijing and Xiamen, Dragonair boasts more than 20, including the profitable Shanghai-Hong Kong route. Airlines must win government permission for mainland flights, and Cathay—with its roots in colonial Hong Kong—had struggled to gain access to cities on the mainland. Greater demand for air travel from the mainland, owing to rising personal incomes and freedom of movement, has made the market more appealing. If the Dragonair deal goes through (it must be approved by the government), Cathay will become the largest foreign airline working in the mainland. At the same time, Air China, a mainland carrier, and Cathay will increase their stakes in each other by 10%—strengthening their relationship at a time when the industry is becoming increasingly cut-throat.

Place your bets

Hong Kongers love a punt, and the World Cup football tournament in Germany is a prime opportunity for the gambling man—and those who stand to profit from his losses. Officially only the Hong Kong Jockey Club, the government’s non-profit gambling monopoly, can accept bets, but the World Cup will also be a boon for the city’s illegal bookmakers, who offer a higher rate of return than the Jockey Club. The government has estimated that the city's 6.8m residents illegally wager between HK$50 billion and HK$60 billion on horse racing each year. Figures are not available for illegal football wagers, but industry insiders suggest that the sport could attract a similar flood.

There is widespread concern that illegal syndicates are targeting the city's football-mad youth. Parents and teachers nervously point to children who use football-betting terms on the playground. Hong Kong’s police announced on June 1st that, while the problem was “not serious”, they would crack down on rogue gambling during the World Cup. Efforts include monitoring internet bookmakers, increasing police patrols and handing out pamphlets warning against illegal betting. Perhaps the most powerful dissuasion, however, is the punishment for the crime: fines of up to HK$30,000 and nine months in jail for the casual gambler, while illegal bookmakers face a HK$5m fine and seven years in the clink.

Money talk

Speculation that Hong Kong might abandon its currency peg mounted in May, only to be dashed by the end of the month. Hong Kong’s economic ties to the mainland have become stronger since a trade pact came into effect in 2004, and there had been calls for Hong Kong to take advantage of the mainland’s burgeoning economy by dumping its peg to the American dollar in favour of one to the yuan.

But Donald Tsang Yam-kuen, the city’s chief executive, snuffed out the idea, noting that such a move would be out of the question until the yuan becomes fully convertible. Even then, he argued, Hong Kong’s status as a world financial centre would suffer if it moved away from the greenback and aligned itself with the mainland’s underdeveloped financial system. With that in mind, Mr Tsang said any discussion of a move away from the American dollar was premature.

A call to action

Telemarketing calls are never particularly welcome, but a new breed of call in Hong Kong is all but unbearable. Some companies have begun employing automatic telemarketing systems that call consumers’ mobile phones to play recorded advertisements. The calls are not only annoying, but expensive: Hong Kong has two-way billing for mobile-phone calls, so that consumers must pay each time they answer the phone. If a call is ignored, the advert rings through to the subscriber’s voice-mail system, which promptly notifies him about the message, incurring a further cost.

Lawmakers introduced an interim measure on June 5th to target the worst offenders. But critics say that the new rule, which switches off advertisers’ phone lines if two complaints against them are substantiated, does not go far enough. The problem has become so widespread that even Donald Tsang Yam-kuen poked fun at the nuisance: when a mobile-phone call forced him to interrupt a meeting with the governor of Yunnan province on June 4th, he reportedly quipped, “It must be the advertisement calls.”

Keep the cows

It is easy to forget that Hong Kong—now packed with skyscrapers, traffic and crowds—was once completely rural, and remains so in some places. After some debate, a reminder of the region’s pastoral history, a herd of cows on Lantau Island, will live on. The Lantau cows, which share the island with a herd of water buffalo, are a hangover from a time when small farms covered most of the land. The Agriculture, Fisheries and Conservation Department had planned to cull the cows after receiving complaints that they obstructed traffic and damaged gardens in and around the seaside village of Mui Wo.

But while the cows are large, smelly and ignorant of road rules, the island’s residents said they were against the cull. Bob Bunker, chairman of the Living Islands Movement, a local environmental group, explained that people and police like having the cows around, as “mobile speed humps”.

Catch if you can

June 2006

Hong Kong Shopping Festival

June 24th–August 31st 2006

It seems only fitting that Hong Kongers, who have turned shopping into a fine art, would choose to dedicate a festival to it. Hundreds of retailers across the city have conspired to eliminate any excuse visitors might have for not splashing out. Special offers and prizes abound, and many restaurants have hopped aboard to ensure a consumer’s appetite for food, not just shoes, is indulged as well.

Once your wallet is empty, head to the waterfront at Tsim Sha Tsui to witness Aqua Fantasia, a multimedia light show displayed on a curtain of water, which begins every half hour from 7.30pm-9.30pm.

Throughout Hong Kong. Visit the festival’s website for more information.

More from the Hong Kong cultural calendar