It was almost 20 years overdue when I set my foot in Hong Kong for the first time in January of this year. I planned to visit Hong Kong before the British turnover of the city to China in 1997, as I really wanted to see what it was like before the handover. Too bad I did not get the chance to do so. Then in January, when I did go and chat with my friends and colleagues in Hong Kong, it was sad enough that their concerns about losing liberty, freedom, and autonomy under Communist rule two decades before, but surely it is a certainty today.
In the latest of such incidences, owners of Heung Yee Kuk Tower Theater gave in to Hong Kong government despite a prior, signed contract of the theater with the Hong Kong branch of New Tang Dynasty (NTD) Television. As a frequent guest on NTD in New York, I know what the TV network stands for, and why the Communist government is not so fond of its influence in Hong Kong. We all know the government of China has been the black-hand behind the exclusion and even eviction by the Hong Kong authority in dealing with political dissidents and human rights activists, but this time around, it’s a classical Chinese dance competition for God’s sake! How can a regime, self-claiming to be a world power with GDP second only to the U.S., be so fragile and nerve-wrecking?
The best legacy left over by the British when it gave back Hong Kong to China was its well established legal system, which was pro-business and pro-commerce. And, the fundamental aspect of business operation in the world today, Hong Kong included, is the credit, faith, and integrity instilled in commercial contracts, its initiation and adherence to the court system. What the Leung government just did is to destroy the very foundation of the core competence of Hong Kong, that of a credit and trust system through contractual obligations. If a government can so easily destroy such a binding agreement, Hong Kong will be no different from Mainland China, and next we know, business and capital will flee from this tiny island to seek places with a superior business environment.
The official “reason” for the cancellation of the contract is that the government of Hong Kong needs to use the venue so the contract has to be cancelled, to yield to government’s “higher level” need. Even if that is indeed the case, and let us assume that the HK SAR does serve a larger audience and does have a more urgent need, then the normal, appropriate, and courteous way of handling this is for HK SAR to send someone to talk to NTD Television Hong Kong personnel, to explain the more urgent need of the government, to offer an alternative solution to the need of NTD’s competition, and to offer compensation to the non-profit organization for their inconveniences. This should be the right way of doing things, doing it otherwise would equate Hong Kong government to the regime in Beijing, where depriving citizen’s rights is usual and customary. Is this what the government of Hong Kong really wants to be? Is this the government that the people of Hong Kong wanted to elect and govern this land?
The “reason” cited, in fact, is for an “election” purpose, by the government of Hong Kong. Has it no better way to promote an election than by hosting it in a theater! Mr. Leung Chun-ying, the Beijing approved leader of Hong Kong, could really use some good talents in coming up with better excuses to deprive people of their freedom and to please the regime in Beijing. In America and elsewhere, and even in Hong Kong, election and polling stations are placed in schools or fire stations, but never in theaters or on stages!
As Cheryl Ng, the spokesperson for Epoch Media Group in Hong Kong said, “The unusual cancellation of the contract tarnishes Hong Kong’s status as a financial center,” and not only that, this revocation of the contract and censorship on artistic expression actually undermines and destroys the very foundation upon which the prosperity of Hong Kong has been built over the past 100 years.
When Hong Kong government refused visas to six members of Shen Yun Performing Arts, resulting in the cancellation of seven fully-booked shows at the Hong Kong Academy for Performing Arts in January of 2010, the act hurt the artistic and spiritual life of Hong Kong citizens; but this time, when a contract is withdrawn for no legitimate reason, the act hurts the wallet and bottom line of the people of Hong Kong, as the bottom is falling off of the capitalist system!
Capitalist service economy, low taxation, free trade, and traditionally the mostly passive role of Hong Kong Government has played a major part in establishing Hong Kong as one of the world’s leading international financial centers. But since 1997, government intervention has been on the rise, with the introduction of export credit guarantees, a compulsory pension scheme, a minimum wage, anti-discrimination laws, and a state mortgage backer. While the bright star of Hong Kong is losing its luster, the political intervention by Leung and his comrades only makes it loose faster.
When much of Hong Kong’s exports consist of re-exports, and when breach of contract due to government and political reasons becomes a norm, Hong Kong will no longer be viewed as a viable place to do business, and will not be viewed as a credible, trustworthy window to the Chinese market. Hong Kong’s economy is dominated by the service sector, which accounts for over 90% of its GDP, and in services, the intangible and perishable nature of services also rely heavily on contract and trust. Hong Kong’s largest export markets are the United States and Japan after China, and both U.S. and Japan view contractual obligations and the ability to defend and shield business contract as a key factor in determining the risk of doing businesses in Hong Kong.
The honorable U.S. Congressman from New Jersey, Chris Smith, co-chair of the United States Congressional-Executive Commission on China, did the right thing in meeting with NTD representatives to discuss the theater cancellation, and he promised to bring up the matter with the U.S. Executive Branch, and keep track of future developments. Congressman Smith should also talk to U.S. Chamber of Commerce in Hong Kong about this incident, and remind them of the perilous situation American businessmen may face in Hong Kong in their future operation.
On the other hand, Ms. Clare Orvis, the Foreign Service Officer of the U.S. Department of State in Hong Kong, should be praised for her inquiry into the financial loss incurred with the cancellation, and she should assist NTD in seeking repayment and reimbursement of the losses due to the actions of HK SAR. If and when necessary, the U.S. State Department should intervene to safeguard the financial interests as well as the legal rights of American businesses such as NTD Television and Epoch Media Group.
The reach and extension of Leung and his government has been longer and further recently, first to a young, female singer, then a bookstore owner, and now a dance competition. Every move and intervention by the government is a bad signal, a signal that embodies the diminishing of the legal system and business freedom, and upcoming demise of the Oriental Pearl. In clearer and clearer hindsight, people of Hong Kong will find that Zhongnanhai is ultimately the culprit, and Leung only a figurehead on front stage. However, the breach of contract is so blatant and flagrant, that it is a strong enough signal of the peril that is coming to the island. Simply put, the future of Hong Kong hinges on this contract, and the sooner the 7 million people of Hong Kong will become fed up with such meddling, the sooner the face-off will be.
Dr. Frank Tian Xie is John M. Olin Palmetto Professor of Business and Associate Professor of Marketing at the University of South Carolina Aiken, in Aiken, SC, U.S.A.
