An initial report from Hong Kong (written in HK and in mid-air, but published from New York):
If you’ve never been to Hong Kong, you should know that the Brits may be unsurpassed in their talent for choosing their colonial HQ’s. The natural strategic, mercantile, and scenic advantages of HK are oft-remarked, but experiencing it on the ground (and on the water) drive the reality home more powerfully than guidebooks or newspaper articles could ever do.
As a native New Yorker, I could not have felt more at home in HK: Vertical, dense, mass-transit-centric, with a financial district ("Central") even more narrowly circumscribed, concentrated, and mandatory for serious firms than midtown or Wall Street, it has the feel of a mature, well-defined, coherent city. Beijing does not, by the way, and I am told the same is true of Shanghai; they are more works-in-process at the start of the 21st Century, albeit with five or so millenia of history.
Speaking self-referentially, it’s also extraordinarily convenient that English is ubiquitously spoken among residents in all walks of life—cerainly in the circles I traveled in. Again, Beijing stands in marked contrast: One of the most important meetings I had there was with a Deputy Director of the all-important Ministry of Justice, and it was conducted through sequential translation.
Other aspects, some superficial and some not, qualify HK as a Global City in my book:
- The wealth/poverty contrast. Five or ten minutes walk up the hill (Victoria Peak) from Central one finds grimy alleys, wash hanging out to dry from 6th-story windows, and street stalls selling everything from dried fruits and nuts to mysterious and deeply intriguing local vegetables.
- The polyglot districts: Nathan Road in Kowloon, for example (5-10 minutes across the Harbor from the Central Pier on the famous Star Ferry line, which costs 20¢ one-way) reminds me of nothing so much as the bastard child of Times Square and Canal Street, despite the fact that the regal, brand-new, and uber-luxe Peninsula Hotel with its Bulgari, Hermes, Cartier, and Prada boutiques, anchors its intersection with Salisbury Street.
- Its profoundly impressive 1997-built international airport, linked to Central by a 20-minute, $12 high-speed "Airport Express" train, where you can find at the gates listed destinations as prosaic as New York, Los Angeles, Singapore, and Tokyo, and as exotic as Phuket, Kuala Lumpur, Fukuoka, and Ho Chi Minh City.
- Most importantly and impressively and of greatest relevance for the readers of "Adam Smith, Esq.," HK is the first, and perhaps the last, place I’ve been where UK/Magic Circle and US/Wall Street and US/Elsewhere firms compete on what seems to be a level playing field. There are no incumbents, there is no home-field advantage, there is no noblesse oblige, and there is no presumptive superior status in quality.
Is Hong Kong the financial capital of Asia?
Tokyo might once have aspired to that crown, but a decade plus of stagnation, deflation, slowly aging and eroding population, and a profoundly inhospitable attitude towards foreign business (and law firms) seem to have sapped its momentum.
Other cities are mentioned by some, but dismissed by most. Singapore? "Sterile," "ungodly boring," "it works but the same way the German war production worked." Shanghai? "It’s Milwaukee and it will always be Milwaukee—it will never be a financial capital of any account."
One thing is certain: Hong Kong is the financial capital of China. Its advantages are numerous, of long-standing, and hard to duplicate:
- The Anglo-Saxon colonial heritage has lent it an ineradicable, or certainly stout and durable, orientation towards open markets, economic freedom, and the rule of law.
- While Mandarin (and to a far lesser extent Cantonese) are important, and in some eyes non-negotiable linguistic skills for transactional lawyers, English remains the lingua franca.
- Geographically, it’s happily situated more or less at the center of gravity of the region: Vietnam is actually closer than Beijing, and access to and from Taiwan is unfettered (it’s prohibited from the mainland PRC, meaning a trip between Taiwan and the mainland involves a day-long detour through HK).
- By all accounts, it’s simply a lovely place to live: "I came for two weeks and stayed for 20 years" was recited more than once, and there’s a genuinely deep and enduring Anglo-Saxon infrastructure of everything from social clubs to pre-schools.
Why won’t Beijing as the capital of the PRC supplant it eventually?
Of course, if China truly emerges as a 21st-Century superpower, that may happen, but speaking for myself, on the ground in both places this past week, it was hard to detect incipient pressure for a move.
"Beijing is Washington and Hong Kong is New York" may be too glib by half, but the truth at the core of the tossed-off phrase is that HK is the funnel for China investments inbound and outbound, and Beijing is where you need to know the right ministers and the right regulators to assure that no unexpected impediments arise. A presence in both seems indispensable if one is serious about China. This assumes, of course, that your firm’s practice in China has, or aspires to have, a real "local law" component, indigenous capability in China, and is not just a foreign branch acting for US and UK clients on their Anglo-Saxon legal issues, and farming out to co-counsel any tangential China questions that arise.
Beyond Beijing and HK?
It depends on your practice and your clients, and it’s difficult for me to generalize or offer pointed advice beyond that.
Other miscellaneous observations:
Culture and mores. Need I remind you that China is a foreign country? And foreign in ways that the UK and the EU are not to Americans or America to Brits and Europeans. Examples from the trivial to the omnipresent:
- You (well, at least I) can tease out meanings, more or less, in reading Italian or German; leave any pretense of that at the border.
- That said, in being a bystander to conversations proceeding in Mandarin, your body-language reading skills will enjoy a quantum leap.
- Information is filtered. Google is notoriously "unavailable" for unpredictable periods for unknown reasons, and I think it’s fair to say that every time a conversation in Beijing veered towards the political (even on such seemingly neutral topics as the metaphysical question of the "rule of law"), comments became guarded and were often accompanied by a knowing gloss to the effect that this would have been difficult to discuss five years ago, or in the company of a foreigner, or even with candor in public today.
- The country lacks an ideology. I mean that on at least two levels.
- The first and most profound, and most alien to an American, is the absence of a Constitution. An essential, perhaps the essential, component of what it means to be an "American" is our bedrock belief in our Nation’s core identity on the world stage of history. We represent the first and we believe finest attempt at affirming the principle of aspiring to and striving for the distant horizon of "all men created equal."
That, as well, has more concrete implications, from the bedrock and profoundly unremarked assumption that Presidents will bow to the Supreme Court (US v Nixon) to the miracle of commerce and business which takes place tens of millions of times a day across the country in transactions from the 7-11 to the front page of the Journal in which strangers come together in presumed trust and good will.
In China, such fluid functioning of the gears of deals is not to be assumed. If you think that "relationships matter" (and they do), wait until you see China. Relationships matter.
- The current political leadership in Beijing, in the post-Deng Ziao Ping era, is philosophically adrift. Long ago not-Marxists, and far far from a potential future as Jeffersonians, their reigning ideology, so far as an untutored and ignorant observer can discern (but informed by numerous conversations) is one of feeling-their-way between the gravitational pull of firm control, which is recognized as impractical and outdated, and the beckoning call of pragmatic surrender to inchoate democratic forces.
- The first and most profound, and most alien to an American, is the absence of a Constitution. An essential, perhaps the essential, component of what it means to be an "American" is our bedrock belief in our Nation’s core identity on the world stage of history. We represent the first and we believe finest attempt at affirming the principle of aspiring to and striving for the distant horizon of "all men created equal."
- Be prepared, of course, for the usual quotidian disconnects from the familiar: Coffee and wine are exotic, beer and tea are the order of the day. The entire country, which by rights would span several timezones, is all on Beijing time. Eat and drink first, do business later (or only after eating and drinking two or three or four times). Geographic backgrounds matter. If Americans’ first question is most likely to be, "What do you do?", the equivalent in China is "Where are you from?" (unless, of course, in cases like mine, it’s pluperfectly obvious).
Bottom line?
Go.
See.
Experience, feel, talk, react, analyze, assimilate, experience some more, distill and try to reach your own conclusions. I can promise you only this: You will never reach a "conclusion."
