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An overview of public relations in Hong Kong and its political, economic and cultural context

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An overview of public relations in Hong Kong and its political, economic and cultural context

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Content AN OVERVIEW OF PUBLIC RELATIONS IN HONG KONG
& ITS POLITICAL, ECONOMIC AND CULTURAL CONTEXT
by
Yeung Iris Yim
A Thesis Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF ARTS
(STRATEGIC PUBLIC RELATIONS)
May 2002
Copyright 2002 Yeung Iris Yim
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UMI Number: 1414892
UMI
UMI Microform 1414892
Copyright 2003 by ProQuest Information and Learning Company.
All rights reserved. This microform edition is protected against
unauthorized copying under Title 17, United States Code.
ProQuest Information and Learning Company
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UNIVERSITY O F S O U T H E R N CALIFORNIA
THE GRADUATE SCHOOL
UNIVERSITY PARK
LOS ANGELES. CALIFORNIA 9 0 0 0 7
This thesis, 'written by
y / y ± ........................................
under the direction of h&r......Thesis Comm ittee,
and approved by all its members, has been pre
sented to and accepted by the Dean of The
Graduate School, in partial fulfillment of the
requirements for the degree of
Dean
THESIS COMMITTEE
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Acknowledgements
11
In the process of writing this thesis, I have benefited from interviews, discussions
and correspondence with a number of senior public relations practitioners in Hong
Kong, including Tony Turner, Joel Laykin, Priscilla Hui, Stephan Engel, Michelle
Herman, Beth Boswell, Laurence Cook, Andrew Laxton, Denise Maguire, Ellen Zee
and Maria Chan. I have also received help from Rose Tang, Jessica Chan, Jarita
Huang and Uffe Bergeton, who gave me invaluable information and support. Lastly,
I want to thank my thesis committee members, Jennifer Floto, Murray Fromson and
Jerry Swerling, for taking the time to read my draft and providing me with helpful
comments.
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Table of Contents
in
Acknowledgements ........................................................ ii
List of Tables v
Abstract vi
Chapter 1: Introduction 1
Chapter 2: Historical Context ........................................................ 3
Chapter 3: The Political Climate
China’s Influence 6
Government Structure ........................................................ 7
Govemment-business Relationship ........................................................ 8
Chapter 4: Economy
Hong Kong’s Economic 1 1
Transformation
Hong Kong as a Location of 13
Overseas Firms
Hong Kong’s Role in Cross-Strait ........................................................ 15
Economic Relations
Chapter 5: Cultural Context
The Concept of Self 18
Ethnic Hong Kong Chinese’s 20
Chinese/Western Value Orientation
and Market Segmentation
Chapter 6: Media in Hong Kong
Overview of Hong Kong Press 22
Falling Popularity and Diminishing ........................................................ 26
Credibility of the Press
Chapter 7: Public Relations in Hong ........................................................ 28
Kong
Foreign Firms 29
Local Firms 30
Competition and Market Share 31
The Myth of Hong Kong as a 34
Gateway to China
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iv
Challenges Facing Western PR 37
Firms
Challenges for Western Practitioners ........................................................ 40
and How They Can Fit In
The 1997 Handover’s Impacts on ........................................................ 42
Hong Kong’s Public Relations
Practice
Chapter 8: Case Study
Marketing VTech to Hong Kong and ........................................................ 45
Overseas Investment Community
Valuing Customer Relaitonships: 50
Hang Seng’s Winning Strategy
Hong Kong and China Gas 53
Company’s Crisis Communication
in the Shek Kip Mei Incident
Bibliography 56
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V
List of Tables
1. PRC contracted foreign 16
direct investment 2000
2. Advertising and related 29
services in Hong Kong
3. Comparison of service fees ........................................................ 31
between local and foreign
firms
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Abstract
The purpose of this thesis is to help would-be practitioners as well as those
who are based outside Hong Kong but represent firms doing business in China to
better understand the territory and the local public relations industry.
The thesis is divided into three parts. The first part is an overview of Hong
Kong’s history, local government, economy, culture and media.
The second part is an introduction and analysis of the local public relations
industry in terms of market share, challenges facing Western public relations firms
and practitioners and the 1997 handover’s impacts on public relations practice.
Lastly, three case studies with an emphasis on investor relations, customer
relations and crisis communication are included to give a more detailed view of what
it is like to practice public relations there.
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1
Chapter 1: Introduction
U.S.-based public relations practitioners constantly view Hong Kong as a
“hot” place. It has world-class infrastructure. The territory’s economic restructuring
over the past two decades has turned the former British colony into a sophisticated
service economy. China’s entry into the World Trade Organization in December
2001 means more opportunities for public relations firms based in Hong Kong. With
the world’s major multinational corporations eyeing and investing in China’s
unfathomable market of 1.3 billion people, there will be more demand for
professional services like public relations. The territory’s close business ties with the
Mainland give Hong Kong-based public relations firms in-depth knowledge of
China’s market, while the city’s infrastructure provides excellent logistic support for
public relations operations in China. All these factors contributed to the rosy picture
of public relations’ promising future in Hong Kong.
However, most U.S.-based practitioners obtained this optimistic picture of
public relations in Hong Kong without ever understanding the local politics,
economy, culture and media practices. Therefore, they didn’t get to see the other
aspects: how historical, political, economical and cultural factors have influenced the
industry, and especially how the 1997 handover has impacted media and public
relations practices in Hong Kong. What follows is an overview of Hong Kong’s
history, local government, economy, culture and media that is designed as a primer
for would-be practitioners as well as those who are based outside the area but
represent firms doing business in China. In addition, interviews with several
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2
managing directors of multinational public relations firms in the territory give a more
detailed view of what it is like to practice public relations there.
Despite the strategic location, the infrastructure and the proximity to
Mainland China, most of the public relations firms in Hong Kong primarily deal with
a small, competitive local market. At a time of economic recession, foreign firms are
facing harsh competition from many smaller local firms. Andrew Laxton, managing
director of Manning, Selvage & Lee, Hong Kong, pointed out that since the handover,
the market has become smaller and more price sensitive. China is gradually
exercising more influence on local politics and media, though not in a noticeable way.
Although China’s impact doesn’t lead to immediate changes in public relations
practice fundamentals, changes in political climate — and especially the media — do
influence public relations in a subtle way. For example, Western practitioners will
have to devote more attention to Chinese newspapers and work closely with the local
Chinese team to monitor trends in Chinese newspapers since English language
newspapers are no longer as influential as they used to be.
Lastly, to help U.S.-based public relations practitioners better understand how
the craft is practiced in Hong Kong, three case studies with an emphasis on investor
relations, customer relations and crisis communication are included.
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3
Chapter 2: Historical Context
It all began with a fishing village of about 15,000 people. When Britain
gained control of Hong Kong in Treaty of Nanjing of 1842 after the First Opium War,
Lord Palmerston, Brtiain’s Foreign Secretary of the day, dismissed it as “a barren
rock” (Enright 4). However, the strategic central location in Asia of the “barren
rock” and its vast hinterland of China attracted fleets of British traders. British East
India Company established Hong Kong as a British port of entry to China and used it
to import large amounts of opium produced in India (Martin 39-41).
The British won the Kowloon Peninsula from China in the Convention of
Beijing in 1860. In 1898, Britain acquired today’s New Territories, an area of
roughly 350 square miles adjoining Kowloon, and 235 adjacent islands on a 99-year
lease. The expiration of this lease caused the famous 1997 handover of Hong Kong
(including Hong Kong Island, Kowloon Peninsula and New Territories) to China
(Enright 4).
Bom in conflict, Hong Kong weathered numerous adverse conditions during
the 20th century. Political and economic chaos in Mainland China posed serious
problems to Hong Kong’s stability and economy. Following the Kuomintang’s
(Nationalist Party) defeat by the Chinese Communist army in the civil war in 1949,
more than one million refugees poured into the territory. The United Nation’s
decision to impose a sanction against China during the Korean War in 1950 cut Hong
Kong off from China’s market. Since China was closed to them, Hong Kong
companies were forced to establish export-oriented, transnational production
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4
operations across South-east Asia, building the foundation of the “dispersed
manufacturing capabilities”1 that are distinctive to Hong Kong today (Enright 4-8).
The influx of Chinese immigrants seeking haven from the disasters of the Great Leap
Forward and the Cultural Revolution - two famous Communist campaigns — also
provided vast labor sources to Hong Kong companies and contributed to Hong
Kong’s status as a manufacturing powerhouse in the 1960s and ’70s.2
Deng Xiao-ping, the first Chinese Communist leader in the post-Mao era,
opened China’s door to the world in 1978. His economic reforms created two special
economic zones in Southern China: Zhuhai and Shenzhen. The end of China’s
isolation policies and economic reforms in southern China triggered Hong Kong’s
transformation from a manufacturing economy to a service economy. Given its
proximity to the South China and its expertise in packaging and integrating export
goods, Hong Kong naturally became a provider of business skills that China badly
needed and a port for China’s exports. Taking advantage of the cheap labor and
resources in South China, many Hong Kong’s entrepreneurs moved to the Pearl
River Delta in the Guangdong province, with Hong Kong providing logistic services
such as finance, marketing and distribution (Martin 39-41).
Under a joint declaration between China and Britain, Hong Kong was
returned to China on July 1, 1997, when the lease of New Territories expired. The
1 Most Hong Kong-based manufacturing firms have factories or subcontract manufacturers in
Mainland China or Southeast Asia to do the mass production while they provide management,
financing, technology, design, quality control, marketing and distribution service between the
dispersed assembly plants on one hand and retail buyers on the other (Enright 55).
2 This paragraph regarding Hong Kong’s history is partly adapted from “Hong Kong’s History” in
“Introduction,” The Hong Kong Advantage by Enright, Scott and Dodwell.
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Joint Declaration stipulated that Hong Kong would become a Special Administrative
Region (SAR) and that its “capitalist system and lifestyle will remain unchanged for
50 years.”
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Chapter 3: The Political Climate
China s Influence
Whether China would deliver its promises of keeping Hong Kong
autonomous was a subject of continuing debates before the handover. Fear of Hong
Kong’s uncertain future in the hands of the Chinese Communists prompted crowds
of Hong Kong residents to emigrate in the early 1990s. Brian Hook, one of the
editors of “Hong Kong in Transition” and a research fellow of the Center of Asian
Studies, University of Hong Kong, pointed out a broadly positive record, with some
clear instances of excesses on China’s part in his assessment of Hong Kong’s politics
under Chinese sovereignty. He also found that “China had prevailed in conflicts
over political matters, though with some scope for Hong Kong players to take an
active part in shaping Hong Kong’s political system” (Ash et al. 95-122).
To ensure a smooth transition from British rule to Chinese sovereignty and
curb the emigration frenzy in the 1990s, China went to great lengths to assure the
territory’s residents of its commitment to “One Country - Two Systems.” Those
promises are stipulated in the Basic Law, which serves as Hong Kong’s constitution
and was passed by the National People’s Congress in April 1990.
In spite of the assurance of high degree of autonomy in the Basic Law, the
right to interpret the Law rests in the hands of the Standing Committee of the
National People’s Congress. If the Standing Committee decides that a statue passed
by the Legislative Council violates a provision of the Basic Law, the statue may be
repealed. The Standing Committee may also declare a state of emergency and apply
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relevant national laws to the S AR if it decides that social unrest within the territory
will jeopardize national unity or security (Miners 97-98).
There are some positive indications that China means to maintain the
territory’s stability and prosperity. All the most senior civil servants who are local
Chinese have been retained on recommendation of Tung Chee Hwa, Hong Kong’s
first Chief Executive. “No officials from China have been incorporated into the
permanent civil service and there are no Communist Party cadres sitting in the
government secretariat to supervise the activities of the civil service.” (Miners, 99)
The troops of the People’s Liberation Army usually keep to their barracks and never
roam in the streets in uniforms. The laws previously in force are maintained and the
judges remain independent of the administration. The media is able to criticize
government policies freely and no political dissidents have been detained or charged
with subversion (ibid.).
Government Structure
Chief Executive Tung Chee Hwa, a successful shipping tycoon was appointed
by the Central People’s Government (CPG) after being elected by a committee of
400 which had been appointed by China. Therefore, he is responsible to the CPG
instead of Hong Kong residents who can’t remove him from his position (Miners 101
-102). The 23 most senior civil servants, including secretaries, deputy secretaries
and directors of departments, are appointed by the CPG after being nominated by the
Chief Executive (ibid.)
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Hong Kong’s public service has a reputation of efficiency and of
implementing policy under budget and on time (Scott, 154). Recognizing the
importance of sustaining Hong Kong’s administrative capacity in maintaining the
territory’s stability, the Chinese government kept its commitment to not interfering
with its civil service’s practices and procedures. According to an analysis of Hong
Kong’s public service in transition by Ian Scott, a professor of politics and
government at Murdoch University in Perth, Australia, the SAR government is likely
to sustain the characteristics which make the government machinery strong and
effective, such as balancing budgets, “clear lines of authority” and “a public service
recruited on the basis of merit” (Scott, 154-159).
Government-business Relationships
Historically, the government-business relationship in Hong Kong has been
close. Business representatives were included in the Legislative Council since 1850
(Ngo, 28). Traditionally, the heads of several leading firms have been
representatives in the Executive Council. Industry constituencies have been well
represented in the Legislative Council. In fact, the close government-business
relations have been recognized as one of Hong Kong’s competitive advantages to
ensure a successful economic future for the territory (Enright, 29-34).
The Chinese government has not only adopted the colonial government’s
strategy of wooing business elite by incorporating corporate representatives into
policy-making but also reinforced these strong government-business relations.
“From the drafting of the Basic Law, the setting up of the Preliminary Working
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Committee, the Preparatory Committee and the Selection committee, to the selection
of a shipping magnate as the Chief Executive and the creation of a Provisional
Legislative Council, business interests have been well represented” (Ngo 26).
Half of the seats of the SAR legislature are reserved for functional
constituencies, which are intended to represent “the economic and professional
sectors of Hong Kong society which are essential to future confidence and
prosperity.” (qtd. in Miners, 103). Some of the functional constituency members are
elected by companies, chambers of commerce and trade unions; others are elected by
professionals such as doctors, lawyers and accountants. Twenty seats are to be
directly elected by universal elections, which is subject to manipulation. Ten
members are to be chosen by an election committee in which business interests are
also well represented (Miners 103).
According to a member of the Preparatory Committee, the electoral laws
were deliberately designed to ensure that “at least for a decade after 1997 the
legislature will be dominated by pro-business, conservative and pro-China
politicians.”(qtd. in Miners 105) The antagonistic relationship between the
Executive and the Legislative Council, which characterized the last five years of the
British rule, has now disappeared. Although the Democratic Party won a majority of
the twenty geographical constituencies in the 1998 elections, they are a minority
within the legislature and are too weak to voice their opposition (Miners 103-107).
Concerns about the SAR government’s impartiality arise because many
business owners have close business relations with the Mainland government.
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According to Tak-Wing Ngo, a lecturer in Chinese politics at Leiden University and
editor of “Hong Kong’s History: state and Society under Colonial Rule,” in his
analysis of the government-business relations in Hong Kong, most business
conglomerates in Hong Kong “have established joint ventures with various levels of
government, party or even military authorities and enterprises in the Mainland.”
(Ngo, 38) Many Mainland enterprises, which belong to central or provincial
government, have also established a presence in Hong Kong and have close relations
with local businesses. Skeptics are concerned about potential problems of corruption
within these ventures. Ngo noted that the question not only depends on whether the
SAR government is able to battle corruption, but also “whether it can prevent rent-
seeking of the powerful who want preferential treatment in exchange for political
support.” (Ngo, 38)
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Chapter 4: The Economy
Hons Kong’ s Economic Transformation
Over the past five decades, Hong Kong’s economy has undergone a
remarkable transformation from trade to manufacturing and finally to a service
economy. In the 1950s, Hong Kong gradually developed its industries as a result of
the influx of labor and capital from China and a business-friendly environment
created by the British administration and the laissez-faire practice (Chen 3-14).
Soon after the Second World War, the civil war between the Nationalists and
Communists in China led to the establishment of a Communist government in 1949.
The Communist takeover of China caused scores of refugees as well as capitalists
who were mostly textile tycoons from Shanghai to flee to Hong Kong from 1948 to
1951. The influx of human and financial resources formed the foundation of Hong
Kong’s modem industrialization (Chen 4).
The decline in Hong Kong’s role in intermediating trade between China and
the rest of the world as a result of the Communist takeover of China and the embargo
imposed on China by the United Nations during the Korean War in 1951 also forced
Hong Kong to develop its own industries. Both historical factors led to a dramatic
drop in Hong Kong’s trade with China and Hong Kong’s traditional importance as a
conduit for China’s foreign trade (ibid.).
The manufacturing sector’s expansion came to an end in the early 1980s as a
result of Hong Kong’s limited resources of land and inexpensive labor and China’s
open-door policy in the late 1970s. The manufacturing sector’s portion of
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employment fell from close to 50 percent in 1980 to 9.7 percent in 1997 (Chen 7).
The limited available land has restricted the development of the manufacturing sector.
Increasing wages also made Hong Kong’s products less competitive than those of its
Asian competitors. China’s opening up gave Hong Kong’s manufacturers a relief in
maintaining profit in traditional industries such as clothing, footwear and toys.
China’s low-cost labor, inexpensive and plentiful land and resources enabled them to
relocate the relatively low value-added, labor-and land-intensive processing
operations there while providing support services such as packaging, design and
marketing in Hong Kong (Chen 5-13).
While the industrial sector was on the decline in the 1980s, the service sector
was expanding rapidly. Employment in the service sector rose from 42 percent of
the work force in 1980 to 79 percent in 1997 (Chen 7). Over the years, brisk
expansion of the service sector led to the establishment of an effective financial and
commercial infrastructure, a highly developed telecommunications system and a
well-functioning and efficient local network of transportation, which gave Hong
Kong an important competitive edge. Now, Hong Kong is a renowned finance,
trading and services center (Chen 7-9).
•3
According to the SAR government, the service sector generated 85 percent
of Hong Kong’s Gross Domestic Product (GDP) in 1998. The largest group in the
service sector includes wholesale, retail and import/export trading, restaurants and
3 “Hong Kong as a Service Economy,” the “Hong Kong Fact Sheets” series. Published by the SAR
government annually. Available online at http://www.info.gov.hk/hkfacts/servecon.pdf.
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hotels, with a share of 24.6 percent of GDP in 1998. It was followed by financing,
insurance, real state and business services, accounting for 24.1 percent.
Hons Kons as a Location of Overseas Firms
Hong Kong’s proximity to and business connections4 with the Mainland have
attracted firms from all over the world to the territory. Its sophisticated infrastructure
and central location in the Asia-Pacific region are also strong incentives. As on June
1, 2000, a total of 3,001 overseas firms have established their regional headquarters
or offices in Hong Kong.5 “Many of these firms use Hong Kong as a location for
conducting marketing and sales, procurement, and logistics management operations
across a broad geographic region” (Enright 62).
Certain advantages of Hong Kong make it a site for overseas companies,
among them a fair legal system, strong transportation and communications
infrastructures, an efficient government, free and open trade, and a simple taxation
system (Enright 64). The rise of importance of China and Asia in global economy
has also attributed to Hong Kong being the location for overseas firms’ regional
4
Hong Kong is the first to take advantage of China’s economic reforms and invest in China. Since
1978, Hong Kong has been the largest investor in China. According to Hong Kong statistics, the
stock of Hong Kong's outward direct investment in the Mainland amounted to US$80 billion at end-
1999, accounting for 25% of Hong Kong's total outward direct investment.
According to the Mainland's statistics, the cumulative value o f Hong Kong's realized direct
investment in the Mainland reached US$179 billion at end-June 2001, accounting for about 49% of
the total external direct investment there (Hong Kong Special Administrative Region of The People's
Republic of China - Government Information Center).
5 Invest Hong Kong. Available at http://www.investhk.gov.hk/ENG/FAC/index.htm. In spite of the
territory’s slow recovery from the 1997 financial crisis, most of the companies which have regional
headquarters in Hong Kong plan to maintain their operations. The American Chamber of Commerce's
twelfth annual Business Outlook Survey2001 shows that, 82% o f the AmCham members which have
regional headquarters operations in Hong Kong plan to maintain the SAR as a regional center - a drop
o f seven percentage point compared to the year 2000. Only 3% o f the 238 respondents to this question
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headquarters (Enright 62). China’s enviable economic growth amid global recession,
its accession to the WTO and Beijing’s successful bid for the 2008 Olympic games
are likely to result in continuing economic growth in the Mainland.
According to a survey of multinational firms in Hong Kong in 1996, regional
headquarters of overseas firms in the territory generally do much than Hong Kong
and Mainland China business:
Over one-half of the regional headquarters of overseas firms
in Hong Kong serve a geographic region that extends beyond
Hong Kong and Mainland China. Nearly one quarter serve
South-east Asia, including Mainland China; nearly one-
quarter serve the entire Asia-Pacific region, including Japan,
Korea, Australia, and New Zealand; and one-tenth serve East
Asia, excluding Australia. Thirty-four percent of regional
headquarters focus exclusively on Hong Kong and Mainland
China (Enright, 62).
Being part of the economy, overseas firms have made substantial contribution
to Hong Kong’s competitiveness. Their extensive in-house employee training and
importation of professional services skills have helped enhanced the quality of
human resources in the territory (Enright, 64-65). Overseas firms are also an integral
part in Hong Kong’s highly developed and competitive service sector, both as a
service provider and employer - their business operations in the territory generate
sophisticated demands for support services and infrastructure; they are top-notch
competitors for local firms in their own business sectors and offer abundant joint-
venture opportunities (Enright 65).
said they will relocate their regional center. (Survey available at
http://www.amcham.org.hk/hongkong/business outlook survey.html#Regional)
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Hons Kons s Role in Cross-Strait Economic Relations
Hong Kong also serves a trade conduit for Mainland China and Taiwan.
Political antagonism between the two political entities didn’t stop cross-Strait trade
development. Despite tumultuous political relations, economic ties have drawn the
two increasingly closer in terms of trade and direct foreign investments. Since China
initiated economic reforms and opened its door in 1979, it has encouraged economic
communication with Taiwan (Lin 83). Communications in trade, travel, and
academic cooperation increased dramatically after Taiwan lifted its ban on visiting
China in 1987. Since there were no direct cross-Strait flights and navigation,6 Hong
Kong has been playing an important intermediate role for trade flow between China
and Taiwan.
In the 1990s, Beijing sought to increase cross-Strait economic
communications and attract investment from Taiwan’s corporations to further its
economic development and foster “three direct links” (trade, postal and shipping).
Since Taiwan’s late president Chiang Ching-kuo lifted the ban on visiting China in
1987, Taiwan has increased its investment in China and has been a major player in
China’s economy. In 1992, Mainland China became the top destination for Taiwan’s
foreign investment (Lin 83-86). As of December 2000, Taiwan was the third largest
investor in China, after Hong Kong and the U.S. For Beijing, the strategy not only
advanced its own economic reforms, but is also a pragmatic means to pursue its
6 With increasingly frequent cross-strait exchanges, the Taiwanese government implemented the so-
called "Three Small Links" policy (direct transportation, postal, and trade) between the Chinese
Mainland and the offshore islands of Kinmen and Matsu on January 1, 2001. According to the
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national unification goals and therefore prevent Taiwan from declaring independence
(qtd. in Lin, 83).
Table 1
PRC Contracted Foreign Direct Investment
(Cumulative till 2000. Total Amount: US$575.1 Billion)
Hong Kong
48%
Others
25%
Singapore
5%
Taiwan
Source: Intertrade. Ministry of Foreign Trade and Economic Cooperation, People’s Republic of China,
December 2000.
Graph: Department o f Economic Affairs, Mainland Affairs Council, Executive Yuan, Taiwan,
September 2001.
For Taiwan, the reasons for fostering cross-Strait trade are merely economic.
Faced with the pressure of economic restructuring in the 1990’s and keen
competition from other developing Asian countries, many small and mid-sized
enterprises in Taiwan, which had been the driving force of Taiwan’s economic
miracle, had to relocate their operations to China. The inexpensive land, cheap labor
and abundant raw materials enable them to maintain profit in low-added value and
labor- and land-intensive manufacturing. Taiwan’s growing economic dependence
on China has been a big headache for the Taiwanese government. It gives Beijing
the leverage of jeopardizing Taiwan’s economic development through economic
sanctions every time cross-Strait relations get tense (Lin 83-86).
government’s statement, “these links are not only considered a prelude to future direct links between
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Overall, Taiwan’s economy is increasingly integrated into China’s economic
growth. Although there are worries that closer ties and growing cross-Strait
economic interactions — especially Taiwan’s experimental direct links with Mainland
— will cause Hong Kong to lose its importance as an agent between the two, Hong
Kong will maintain its importance as a cross-Strait trade conduit as long as the
political stalemate persists. And given Beijing’s tough position on “One China”
policy and Taipei’s denial of being part of China, the political deadlock is not likely
to be solved in the near future (Lin 87-90).
Taiwan and the Chinese Mainland, but are also expected to help facilitate cross-strait dialogue.”
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Chapter 5: Cultural context
Hong Kong’s cultural context is a tapestry woven with Western political and
business management, ethnic traditions and religions. Its colonial past expedited the
territory’s modernization and Westernization. However, despite the modem and
seemingly Western look, the ethnic Hong Kong Chinese are strongly identified with
traditional Chinese culture (qtd. in Martin 47). Fundamentals of Chinese culture
such as Buddhism, Taoism and Confucianism are well preserved in the territory,
governing the ethnic Hong Kong Chinese’s daily life and shaping their attitudes
(Martin 48). Therefore, to communicate effectively in Hong Kong, one must
understand the underlying cultural concepts upon which the Chinese base their
behaviors.
The Concept of Self
Understanding Chinese culture may begin with the notion of self, as self
conception affects how one relates to others and thus how one communicates with
others. Self in Chinese culture is “other-oriented” (Gao 8-12). In contrast to the
Western concept of “individual” as “an independent entity with free will, emotions
and personality, the Chinese equivalent of individualism implies selfishness and is
often used in a negative sense” (qtd. in Gao, 8). Based on Confucianism, self in
Chinese culture is dependent on the nature of one’s relations to the surroundings.
Relations are derived from kinship to one’s relations to country and society, and are
infused with traditional Chinese values such as “filial piety (i.e., obedience to parents
and financial support of parents), loyalty, dignity and integrity” (Gao 9). For
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example, a Chinese might perceive himself as a son, brother, husband and father
rather than as a separate individual (qtd. in Gao, 9). Confucianism advocates that
one should be responsible for one’s relations to others and perform one’s duties
accordingly. Being aware of one’s relations and maintaining harmonious relations
with others are a Chinese’s life goal (Gao 8-9). That’s why the Chinese saying goes:
Maintaining good social relations is more challenging than taking care of
professional duties zuo ren bl zuo shi nan).
The notion of self leads to another important concept in Chinese and other
collectivistic cultures - the in-group vs. out-group distinction. The notion of “in
group” is very important because it often serves as the primary unit of socialization.
The goals and needs of the in-group usually come first. To a Chinese, anyone who is
associated with or somehow related to him falls into one of the two categories:
insider or outsider. A person considered an insider often enjoys privileges and
special treatments beyond an outsider’s comprehension. Furthermore, a Chinese is
less likely to initiate a conversation or involve in a social relationship with an
outsider (Gao 48-51). “Chinese need to recognize not only where they are in relation
to others but also, more important, whether their relationships with others are
situated in an in-group or out-group context.” (Gao, 49) The insider effect leads to a
communication context in which outsiders are excluded. The Chinese are often
highly involved in conversations with insiders (people they know) while indifferent
to outsiders (strangers). Therefore, the nature of a relationship determines what is
communicated and how it is communicated (Gao 48-51).
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Two other related concepts are reciprocity and face-directed communication.
Reciprocity means one must repay a favor given by someone. Gifts and favors are
considered “social investment” in Chinese culture (qtd. in Martin 49). Normally,
when a Chinese acts, he expects something in return. Likewise, when a Chinese
receives a favor, he immediately feels compelled to pay it back in one form or
another so that he’ll be “debt-free” in terms of balancing personal relations (Gao 31-
33). “Face” refers to an individual’s self-perceived positive image in a relational and
social network context. In Chinese culture, feelings of pride, delight and those of
shame, embarrassment, and humiliation are associated with “gaining” or “losing”
face. “Face” is a major mechanism governing social relations, communications and
behaviors (Gao 53-56).
Clearly maintaining relationships is an integral part of communication for the
Chinese. The functions of communication are intended to preserve amicable
relations with family and the surrounding environment rather than asserting oneself
and achieving individual goals. Confrontation and arguments are avoided at all costs
(Gao 6-7).
Ethnic Hons Kong Chinese s Chinese/Western Value Orientation and Market
j
Segmentation
Because more than 90 percent of its population is ethnic Chinese, Hong Kong
is very much a Chinese society. Recent Western influence and millennia-long
Chinese traditions shaped Hong Kong’s unique cosmopolitan atmosphere.
7 This section is based on and adapted from “Individual Modernity and Western Orientation” in
“Advertising in Hong Kong” by Ernest F. Martin, Jr. Advertising in Asia.
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Immigration from China8 beginning in the early 1980s and the emigration in the
1990s due to imminent political change also contributed Hong Kong’s ethnic makeup
and Hong Kong people’s self-identification. According to a series of research studies
on Chinese market segmentation in Hong Kong, five groups are identified. The
“Middle-Middle” group is largest, with 51.4 percent; “Modem-Western” group is
next with 20.9 percent; “Traditional-Chinese” is third largest with 13.9 percent;
“Modem-Chinese” has 7.9 percent; and “Traditional-Middle” is the smallest with 5.9
percent (qtd. in Ernest F. Martin, Jr., 47).9
The five groups are distinct in demographic characteristics. The Modem-
Western group is the youngest, with Modem-Chinese, Middle-Middle, Traditional-
Middle increasingly older. The education achievement is highest among Modem-
Western, Middle-Middle and Modem-Chinese groups, and lowest among
Traditional-Chinese and Traditional-Middle groups.
8 The number of legal immigrants from China, which remained steady at about 27,000 a year from
1983, rose to about 50,000 in 1997.
9 Although there is no available research, one must bear in mind that with the 1997 handover and
China’s acculturation in Hong Kong, the group which identified itself as “Modem-Western” is likely
to diminish while the “Modem-Chinese” group is likely to grow.
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Chapter 6: Media in Hong Kong
Overview o f the Hons Kons Press
Three different groups of Hong Kong newspapers can be distinguished in
terms of readership and their political stances: (i) the apolitical, mass circulation
newspapers featuring sensational reporting, including the Apple Daily, Oriental
Daily News, Shing Pao, Tin Tin Daily New and Hong Kong Daily News', (ii) the elite
Ming Pao, South China Morning Post (SCMP), Sing Tao Jih Pao, Hong Kong
Economic Times and Hong Kong Economic Journal', and (iii) the party press Ta Kung
Po, W en Wei Pao and Commercial Daily supported by the Beijing government (Lee
and Chu, 63). According to the 1998 annual report by the Hong Kong Journalists
Association (HKJA), the Apple Daily and Oriental Daily News together account for
70% of the total newspaper readership in Hong Kong. The SCMP is an English
newspaper. Both the Hong Kong Economic Journal and SCMP were traditionally
labeled as pro-Hong Kong government and have had great impact on government
policy and elite’s opinion forming.
After the handover, there have been concerns about whether the media would
continue to enjoy freedom of expression after the handover to China in 1997. It’s a
general conception that fundamental right to freedom of speech will be corroded
rapidly in the Special Administrative Region (SAR) as of this report in early 2002.
According to the annual reports of the HKJA, which monitors and analyzes the
media’s practices, the press in Hong Kong continues to enjoy relatively high freedom
of expression, although there are negative signs suggesting the increasing influence
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of the People’s Republic of China (PRC)’s central government on media coverage of
politically sensitive issues, such as independence of Taiwan, Tibet and the spiritual
movement Falun Gong.
Although the press ostensibly enjoys autonomy, the central government’s
admonishment and the prevalent practice of self-censorship should not be
overlooked and underestimated. On various occasions, Chinese officials
unmistakably voice their dissatisfaction with Hong Kong media’s coverage in
conflict with PRC’s national interests and called on the media to exercise “social
responsibility.” In April 2000, Wang Fengchao, deputy director of China’s liaison
office in Hong Kong (formerly the Xinhua News Agency Hong Kong branch) told a
seminar organized by the pro-Beijing Hong Kong Federation of Journalists that:
The media should not treat speeches and views which advocate Taiwan’s
independence as normal news items, nor should they report them like normal
cases of reporting the voices of different parties. Hong Kong’s media have
the responsibility to uphold the integrity and sovereignty of the country. This
has nothing to do with press freedom. (HKJA annual report, 2001).
The remark was a harsh response to the Hong Kong-based Cable TV’s
interview with Taiwan’s newly elected vice president, Annette Lu, who openly
advocated the island’s independent sovereignty in the interview. In the face of
another controversial issue, Falun Gong, several senior Hong Kong government
officials have attempted to influence the angle of the media’s coverage on the
organization. For example, National People’s Congress Standing Committee
delegate Tsang Hin-Chi urged the media to assess how the group had ruined Hong
Kong’s prosperity and stability (HKJA annual report, 2001).
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In addition to public admonishment or requests, the Chinese authorities seek
to control the local media through punishment and rewards. An example of
punishment is denying unfriendly newspapers access to Chinese news sources. The
Apply Daily, though itself an apolitical newspaper, is repeatedly attacked and
marginalized by the Chinese government due to its owner, Jimmy Lai’s antipathy
toward the Chinese government and his support for the Beijing students’ democratic
movement in 1989. When covering the 2001 “Go West” campaign, in which the
PRC government encourages investment in its impoverished Western provinces, the
Apple Daily's reporters were refused permission to travel with the official entourage
on the trip to western China and were relegated to following the official bus in a
hired car (HKJA annual report, 2001).
Another way of castigating unfriendly media is withholding advertisement of
Chinese-controlled enterprises. An article in the July 2000 Asian Wall Street Journal
reported that Andrew Lo, personal assistant of the SAR Chief Executive Tung Chee-
hwa, had encouraged several property developers to boycott Apple Daily's
advertising pages (HKJA annual report, 2001).
While punishment is used to silence dissident opinions in the press, reward is
used to encourage the Hong Kong media to toe the party line. The key reward for
docile media is its proprietor’s appointment to Chinese political organs such as the
Basic Law Drafting committee or Preparatory Committee for the Hong Kong Special
Administrative Region (PCHKSAR). For instance, Lim Por-yen of ATV, Sir Run
Run Shaw of TVB and Peter Woo Kwong-ching of Wharf Cable were all appointed
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25
as Advisors on Hong Kong Affairs and members of the PCHKSAR (Lee & Chu, 65-
68).
Besides punishments and rewards by the Chinese authorities, a potentially
more serious threat comes from the media itself: self-censorship. According to the
1998 annual report of the HKJA, “the Hong Kong edition of Marie Claire reversed
its plan to print a feature story on Tibet originally printed in the main French edition
for fear of jeopardizing Mainland sales.”
The Hong Kong press has always paid close attention to Mainland’s social,
political and economic changes. The Mainland affairs section is a major component
of every newspaper in Hong Kong. Since the 1980s, newspapers in Hong Kong have
hired journalists with a Chinese background since reporting of the Mainland requires
the right kind of networks. The most well-known figure is probably Feng Xiliang,
founding editor of the China Daily, the Beijing government’s English mouthpiece.
Feng was hired as a “consultant” by the proprietor of the SCMP in April 1997 (Lee
and Chu, 69-70).
The impact of the Chinese journalists is mixed. On the one hand, their
journalistic expertise and knowledge about China’s politics and society help the
Hong Kong press better report on and analyze China. On the other hand, their
background also brings a biased Chinese perspective to reporting, especially in
commenting on controversial topics. For instance, when covering the first popular
presidential election in Taiwan in 1996, many Hong Kong newspapers down played
China’s military exercises near Taiwan. Instead, they adopted Mainland Chinese
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perspective and condemned Taiwan’s alleged attempt of declaring independence
(Lee and Chu, 69-70).
Fallins Popularity and Diminishim Credibility of the Press
In addition to the Chinese influence, the Hong Kong press is facing another
challenge: falling popularity and diminishing credibility caused by market-driven
sensational reporting. According to a survey conducted by the University of Hong
Kong in March 2001, Hong Kong citizens generally agree that Hong Kong has the
highest degree of press freedom among Asian media, but lacks social responsibility
and credibility in news reporting. The results of the survey revealed that credibility
in Hong Kong’s news media was 6.08 on a scale of ten (Muzi News).
Tabloidization of the press is prompted by cutthroat competition among the
newspapers and economic concerns. In a war of claiming the title of the top-selling
newspaper in 1998, the two leading newspapers - Oriental Daily News and Apple
Daily - employed aggressive marketing practices and excessive reporting to vie for
readers and marginalize other papers no matter how small they are. The enduring
competition between the two dominating newspapers left smaller papers to battle for
whatever is left in the market. The economic slowdown in the late nineties also hit
the Hong Kong press hard. In 1998, several papers and magazines were forced to
close down due to financial difficulties including the Express Daily, the pro-Beijing
New Evening Post, the revered China-watching magazine, The Nineties, and others.
Lee Yee, former editor in chief of The Nineties, attributed the closure of the
magazine in 1998 to the decline in interest in serious magazines. He also accused
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the Hong Kong media of being corroded by a culture of sensationalism and “shit
digging,” which “eliminated the space of serious publications devoted to political
discussion.”
Public backlash on excesses in reporting and concerns about media ethics led
to the creation of the Hong Kong Press Council in July 2000. The council, which
monitors alleged invasions of privacy by the press, is composed of 15 public
representatives, 11 newspapers, including four pro-Beijing publications, and two
media organizations - the News Executives Association and the Federation of Hong
Kong Journalists.
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Chapter 7: Public Relations in Hong Kong
Hong Kong’s public relations industry started in the 1960s when foreign
Public Relations firms started setting up offices in the territory. In the 1970s, Hong
Kong’s economic growth attracted more foreign investments and called for more
public relations services. The industry boomed in the 1980s when China opened up
and triggered soaring economic growth in the territory (Chen, 193-195).
For more than two decades, the profession was dominated by Western
multinational public relations firms. Several factors contribute to these firms’
presence in Hong Kong. The public relations market began with demands for
professional services from overseas firms in the territory. As of June 1, 2000, a total
of 3,001 overseas companies had regional operations in Hong Kong. Widely
accepted Western business practice and excellent local infrastructure are also
considered favorable factors. The territory’s service-oriented economy provides
adequate infrastructure for public relations. There is a wide selection of graphic
services, film/video production houses and translation and market research services.
Over the years, multinational public relations firms also attracted and trained
numerous local talents for the profession. Growth of the industry and greater
demands for public relations talents prompted the Hong Kong Baptist University
(then Hong Kong Baptist College) and Hong Kong Shue Yan College to begin
offering public relations courses in the 1980s. As a result, small local firms began to
emerge in the 1980s and made the market more diversified and sophisticated.
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Table 2
Advertising And Related Services in Hong Kong
Advertising and related services
Number of establishments (March 2000) 4,074
Number of persons engaged (March 2000)
Business receipts and other income (1998, US$ million)
18,184
2,149
iValue-added (1998, US$ million) 517
: Exports of advertising and market research services (1998, US$ million) 598
i Contribution to total services exports (% ) 1.7
Note: Advertising and related services include: advertising companies and agencies; public relation
services; market research companies; and other advertising services.
Sources: Census and Statistics Department, Hong Kong
Foreign Firms
The market makeup of Hong Kong’s public relations industry manifests the
territory’s incredibly cosmopolitan character. Of the 89 public relations firms listed
in the PR Week Asia’s All Asia PR Guide Hong Kong (2001), more than half are
foreign-owned.
Most multinational public relations firms have established a presence in the
territory. The capacities and sizes of these representative offices vary from less than
10 employees to a staff of more than 60. The biggest office of multinational firms in
the territory at the time being is Ketchum which employs 65 people, with Weber
Shandwick following behind with a staff of 60.
In addition to multinational players, there are also a number of independent
Hong Kong-based communication consulting firms started by senior Western
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practitioners who have been in Hong Kong for decades and have substantial
knowledge of the society. Among them, the oldest firm is Corporate
Communications Ltd.which was established by broadcaster, columnist, and public
relations consultant Ted Thomas in 1973.
Foreign firms tend to have a slight majority of Chinese employees, with the
rest being international practitioners of various backgrounds and nationalities. For
example, in Laykin Communications, an independent public relations firm establish
Joel Laykin in 1983, most employees are Chinese, but not necessarily local Hong
Kong Chinese. They include America-born Chinese, Canada-born Chinese and
Taiwanese. Besides, the firm’s staff include an African American who was bom in
Nigeria, a Slovenian, a Brit and an American. “We have a various array of cultures.
Hong Kong is a melting pot,” said Laykin.
Local Firms
After local firms joined the competition in the 1980s, the sector of local
public relations firms has been growing. There are a few large local firms, the
largest being Acumen Public Relations which has a staff of 45. But most of the local
firms are small in capacity, employing less than 20 people. There are also a
considerable number of tiny, unlisted shops composed of only one or two partners.
In general, local firms specialize in one area such as initial public offering or events
rather than offering full public relations services.
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The number of small local public relations firms is expected to increase since
the economic recession which has forced the rent and salary levels to go down. The
cost of starting up a business has become more affordable than ever.
Competition and Market Share
In terms of competition and market share, there seems to be a clear line
between multinational firms and local agencies because of different price levels. In
general, local firms charge a lot less than multinational firms.
Table 3:
Comparison of Service Fees Between Local And Foreign Firms
Billing rates of Impact Asia (local)
Managing Director US$ 154 - 256
Account Manager US$128 - 154 (approximate rate)
Account Executive US$103 - 128 (approximate rate)
PR Assistant US$77-1 0 3
Admin Assistant US$51 -7 7
Billing rates of APCO/GCI (multinational)
Managing Director US$400/hour
Director US$300
Associate Director US$250
Senior Consultant US$200
Consultant US$150
Project Assistant US$65
According to APCO/GCI senior consultant Stephan Engel, multinational
companies tend to hire multinational public relations firms while local companies
find local public relations charges more affordable and acceptable. “We don’t
compete (with them). We can’t, they are too cheap,” said Engel. APCO/GCI’s
clients are all foreign firms. According to Engel, it is facing the difficulty of not
having enough clients.
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However, this is not always the case. The economic downturn has made the
line between the market segments of multinational and local firms blurred. In spite
of the government’s optimistic forecast,1 0 managing directors of multinational public
relations firms in general agree that the market has become more competitive and
price sensitive since the 1997 Asian financial crisis.1 1
Manning, Selvage & Lee (MS&L) handles 50 percent foreign firms and 50
percent local, i.e., Asian companies. “I have adopted this policy because it helps to
balance our revenue,” said Andrew Laxton, managing director of MS&L’s Hong
Kong office and director of its Asia Pacific operation. “In times of economic
hardships, the big multinationals always tend to slash advertising, marketing and PR
budgets. If we put all our eggs in one basket, we would be forced to make layoffs.”
In Laxton’s opinion, forging strong relationships with equally important local clients
helps to balance out the liquidity of the company.
Tony Turner, managing director of Professional Public Relations Asia, also
expressed concerns about small firms undercutting big players in difficult times. “It
is difficult to operate because you’ve got a lot of small players,” said Turner. “Given
the economic climate, they tend to undercut the bigger players.” Turner pointed out
10 According to Invest Hong Kong, advertising markets in the region, including Hong Kong, have
recovered from the 1997 regional turmoil in 1999 and into 2000. Ad spending in Hong Kong has
exceeded the pre-crisis level. Although there are no ready data on the public relations market, under
the assumption that during economic hardships, companies will slash ad spending and resort to
relatively less expensive and more effective public relations, a healthy advertising market indicates a
strong public relations market.
1 1 The 1997 Asian financial crisis, which originated in Thailand, hit Hong Kong hard. Gross
Domestic Product (GDP) registered a negative year-on-year growth rate o f-2.8% in the first quarter
of 1998, the worst performance in 40 years. Unemployment went up from 2.2% just before the crisis
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that it is a challenge for multinational firms to be represented and remain
economically viable. Turner’s firm, also has 50% foreign clients and 50% local
clients.
To survive, foreign firms and local agencies have adopted different strategies.
Some multinational firms merge with other foreign firms to combine their resources.
For example, GCI, which opened up in Hong Kong in a very difficult time, merged
with APCO Asia at the beginning of 2002. Other foreign firms chose to merge with
local firms to add a Chinese component and bring in local business. For instance,
Professional Public Relations Asia (PPRA), which is owned by the Australian
Cordiant Communications Group, merged with Mary Cheng & Associates in October
2001. According to PPRA’s managing director Tony Turner, Mary Cheng has been
in the profession for 20 years and has her own contacts and clients.
Local firms, on the other hand, are seeking to “go north” to enter the China
market. When asked whether iPR Limited, a 3-year old financial relations firm, is
aggressively pursuing Mainland Chinese clients, senior consultant Ellen Zee said
affirmatively, “of course, that’s the direction. That’s why we’re setting up offices in
Shanghai and Beijing.” In addition to servicing Mainland Chinese clients who
operate in the Mainland but are listed in Hong Kong, iPR is also assisting Hong
Kong-based companies in China market entry.
Given China’s entry into the World Trade Organization and Hong Kong’s
economic recession, “going north” is a hot topic among local public relations
broke out to 6.3% at one point, the worst since September 1975, when unemployment statistics first
became available.
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practitioners. Hong Kong Public Relations Professionals’ Association, which is
mainly composed of local public relations practitioners, has organized discussion
forums and lectures on tapping the China market. The organization also coordinated
trips to Shanghai to foster experience exchange and cooperation between Mainland
Chinese and local Hong Kong practitioners.
The Myth of Hons Kons as a Gateway to China
China’s accession to the World Trade Organization on Dec. 11, 2001, gave
new hopes to Hong Kong to relive its dream of being the “gateway to China.” Since
China opened up in the early 1980s, Hong Kong has been China’s most important
trade partner and the conduit of commercial goods and information between China
and the rest of the world. The SAR government forecasts that Mainland China will
provide the bulk of growth in the industry (advertising and related services) in Hong
Kong over the next five years. Hong Kong is “poised to ride the crest of the wave in
terms of partnerships, new business and much-needed expertise and language skills,”
according to Invest Hong Kong, a government department which spearheads the
drive to attract foreign direct investment to the city.
No matter how hopeful Hong Kong is about its dream of being a service
center1 2 and servicing the greater China market, the era of Hong Kong being a
gateway to China is over, according to many senior international public relations
consultants operating in the territory. It was a gateway to China in the 1980s when
1 2 As analyzed in the “Economy” session, the comer stone of Hong Kong’s economy is its service
sector which accounted for 85 percent of the territory’s Gross Domestic Product in 1998. To attract
foreign investments, the SAR government is also aggressively promoting the city as “Asia’s world
city” and a provider of professional business services in the Greater China area.
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China was opening up because there were no other ways, said Stephan Engel, senior
consultant of APCO/GCI. But with more and more multinationals moving their
China operation headquarters to Beijing and Shanghai, Hong Kong is marginalized
and left primarily with the local market.
Engel gave an example of Proctor & Gamble (P&G) to illustrate Hong
Kong’s role change. “In the old days, in order to get a project in Beijing for P&Q
you had to basically sign on the local guys in Hong Kong,” Engel said. “The head of
P&G would be based in Hong Kong.” Public relations firms doing work in China
for multinational corporations in the 1980s in general set up their contracts in Hong
Kong and implemented the projects in China. “This is over because the head of
P&G China is now in Beijing. There is no role for Hong Kong,” said Engel.
Managing director of Professional Public Relations Asia Tony Turner also
affirmed Engel’s point of view. “The relevance of being headquartered here or
controlling programs from here is becoming less of a requirement,” said Turner.
Like many people, Turner believes that in a decade or so Hong Kong will be taken
over by Shanghai which is growing at a mind-boggling speed.
Not only do public relations firms in Hong Kong rarely get business from
China, but cross-border joint campaigns seldom happen as well. Contrary to the
notion that multinational public relations firms will coordinate regional public
relations campaign in Hong Kong and implement communications programs locally,
offices of the same public relations firm on both sides of the border usually have
different accounts. They pitch or report to different decision makers in different
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36
geographical regions and often times, have different budgets. From a marketing
point of view, China and Hong Kong are also seen as different entities and that
means different budgets, according to Engel.
Asked what PR firms should do if they want to tap into the Mainland market,
Engel said “go to China and open a shop there. Make sure you hire good people.”
Although the consensus is that Hong Kong’s role as a service center for
Mainland China will gradually be eclipsed by Shanghai, practitioners are not entirely
pessimistic about Hong Kong’s future and the public relations industry.
“Until those areas (law, banking) have been improved in China, there is still a
role for Hong Kong,” said Turner.
Further more, Hong Kong will no doubt remain to be an ideal location for
regional headquarters. “If you want to set up a regional headquarter, of course you
have to go to Hong Kong,” said Engel. “Hong Kong guarantees you a legal system
you can rely on and a corruption-free government.” 1 3
In conclusion, there is still a role for Hong Kong in terms of hosting regional
headquarters and providing professional services which are still restricted in China,
such as legal and financial services. But as far as public relations is concerned, Hong
Kong firms deal with primarily the very competitive domestic market. Many
seasoned Western practitioners recognize that Hong Kong is an important market,
but they also point out that there shouldn’t be any illusion about Hong Kong being
1 3 Although no government is perfectly “corruption-free,” the SAR government does place a high
emphasis on fighting corruption. A prominent example is the establishment of the Independent
Commission Against Corruption (ICAC) in 1974. ICAC’s mission is to eliminate corruption through
law enforcement, education and prevention.
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the “gateway to China.” The role of Hong Kong in relation to China’s public
relations industry lies in transferring the professional knowledge to the Mainland
rather than service China from Hong Kong.
Challenges Facins Western Public Relations Firms
In spite of all the favorable factors which attributed to the public relations
industry’s development and attracted multinational public relations firms to the
territory, there are some challenges facing Western public relations firms in Hong
Kong. The greatest challenge is probably the lack of understanding of what public
relations is and what public relations firms do, in particular among local companies.
“I don’t think many companies fully use public relations correctly,” said Professional
Public Relations Asia’s Tony Turner. Turner, whose firm’s clients are 50% local,
speculated that the lack of understanding of public relations’ values is probably due
to the fact that many local companies are private companies or family business. “It
is difficult to penetrate and represent them in a broader professional way,” said
Turner.
“This is a fundamental stumbling block as the end result is that public
relations is treated as a commodity and priced accordingly,” said Gavin Anderson’s
Laurence Cook. “There is no ready acceptance of the value of strategic advisory and
its contribution to the top line and the bottom line.”
In contrast to Turner and Cook’s statements about local companies’ lack of
understanding of public relations, Ellen Zee, senior consultant of the local iPR
Limited which specializes in financial relations, holds a different view. In her
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opinion, multinational firms simply don’t understand the local mindset and therefore,
don’t know how to deal with local companies. Zee plainly pointed out that
multinational firms are in a difficult situation now because they are too selective
about their clients and inflexible about service fees.1 4 At a time of economic
downturn, there aren’t many big deals out there. The small accounts left in the
market are not so tempting for multinational firms. That’s why many multinational
firms are closing their financial relations division in Hong Kong, according to Zee.
But for iPR, it will take on all the clients it can get regardless of size. In fact,
Zee thinks that it is mostly the small companies that need assistance in how to
present themselves to their investors. Large companies usually have their own PR
counsel team and know how to tell their stories.
Another problem with multinational firms, according to Zee, is their high,
uncompromising service charges. IPR limited usually offers its clients a package
deal. “We charge on deliverables instead of on hourly rates,” said Zee who
obviously thinks local firms offer a much more reasonable price for what they deliver.
The debate of public relations’ values aside, APCO/GCI’s Engel raised
another point of potential challenge - the diverse market segments in the territory.
“We’re operating in an unusual environment,” said Engel, pointing out that Hong
Kong is a multi-lingual (Cantonese, Mandarin and English) region with different
audiences, including Westerners, local Hong Kong Chinese and Chinese immigrants
1 4 There are two reasons for disputes over service fees. For one thing, many local firms are very
price-sensitive because they are reluctant to pay high fees for something that doesn’t seem to
guarantee concrete results. The other reason is that bargaining is an integral part of doing business in
the Chinese culture but is in conflict with Western business practice.
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39
from China. “If you do a PR campaign in Germany or California, it will be much
easier. The audience is much more cohesive,” said Engel.
In addition to the different understanding of public relations’ significance and
the unique environment in Hong Kong, many managing directors of multinational
firms are concerned about difficulty of finding local talents with appropriate English
skills and the ability of critical thinking. Many of them have the same opinion that
the local education system doesn’t produce people who are creative and proactive.
They invariably found that their employees are good at memorizing as a result of an
education system which puts too much emphasis on exams but not at creative
thinking.
There is also a difficulty in attracting people with proper English skills and
creativity to the profession because the understanding and knowledge of what public
relations is somewhat distorted among the local Hong Kong Chinese, according to
Professional Public Relations Asia’s Tony Turner. The word “public relations” ( ^ | f )
in Chinese is identical to the Chinese euphemism for prostitutes. Turner said he
made a job offer to a local Chinese female years ago. The lady refused to take the
offer after consulting her family. “They think we are a provider of entertainment,
putting on events to foster and engender good will,” Turner said. “And that good
will is seen as selling services and prostitution does come to mind.”
While some local Hong Kong Chinese still associate public relations with
prostitution, the industry’s rapid growth in the 1990s and increasing presence of
public relations firms and local practitioners have helped clear the confusion.
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40
Even if foreign public relations firms do hire good local talents, they face
another issue in the industry: one day their local employees will walk off and start
their own businesses. Over the years, Turner found from time to time that people he
had trained had gone off to start their own businesses in competition with him. “It
can also be somewhat devastating, particularly if they take clients with them,” said
Turner. “There is an entrepreneurial spirit here that perhaps doesn’t prevail in a lot
of other places.”
Challenges for Western Practitioners in Hons Kone and How They Can Fit In
Although Hong Kong is incredibly international and the local public relations
market is relatively more mature than those in other Asian countries, challenges for
Western practitioners do exist. For Denise Maguire, managing director of Hill &
Knowlton (H&K), Hong Kong, the greatest challenge of practicing public relations
as a Westerner is language fluency. “The Chinese media often carry stories that the
English media don’t have and can be more investigative and sensationalist,” said
Maguire. “So you have to have good teamwork with Chinese colleagues.”
For public relations firms which serve as regional headquarters in Hong Kong,
cross cultural learning is a much more critical issue. “The Asia Pacific region
represents many different markets where you encounter not only different religions
and political beliefs but also different business practices and attitudes towards
business,” said MS& L’s Laxton.
On the other hand, Herman at the Hoffman Agency insisted that language
barriers and cultural issues have not been setbacks to her public relations practice in
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41
Hong Kong because those difficulties can be overcome by teamwork with Chinese
colleagues and her own life experience in the territory. The real challenge for her
lies in communication with local employees where cultural factors come into play.
Status and power are held in respect in Asian cultures and there is a ready acceptance
of the hierarchal structure of society. Conformity to superiors is a recognized aspect
of cultural traditions and that may not be related to private belief. The unwritten
rules and customs of hierarchy are exactly what Herman believes have prevented
employees from sharing everything with her. To remove the communication hurdle
with her local staff, Herman has made it a rule of thumb that, because she can’t
understand or read everything, they must find a way to give her a signal. For
example, if she sends an e-mail to her staff and they are not responding, she knows
they either disagree or don’t understand and she will talk to them.
For Herman, another challenge is that local employees are not very proactive
in solving problems. To motivate her employees, “instead of telling somebody how
to do something, I tell them what I want the end result to be,” Herman said. “And I
let them proactively approach the problem and do it their way.”
To fit in the local market as a Western practitioner, senior Western
professionals invariably agree on the importance of building extensive knowledge of
local culture, being respectful, patient and flexible. When asked what Western
practitioners should know if they want to practice in Hong Kong, H&K’s Maguire
pointed out they should familiarize themselves with how the local government
system works, who are the influential in areas such as public policy, healthcare,
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42
Consumer Council, etc., and get attuned to local culture and attitudes. “Westerners
can never ‘become Chinese’ but must take time to try to understand the local
mindset,” said Maguire.
Hoffman’s Herman suggested that Westerners have to be able to open up their
minds, flexible and be a team player. “If you tried something, it works at home but
not here, don’t be frustrated,” she said.
A senior public relations practitioner Beth1 5 at Fleishman-Hillard Hong Kong
offered yet another point of view. Westerners can never really understand the local
culture, what they should grasp fast is how media practices are different from home
here, Beth said. For instance, although they are rare in the U.S., “News conferences
and media briefings are alive and well in Hong Kong. There is a news conference
for every product launch,” according to Beth. Many Western practitioners have
never put together a news conference before in Hong Kong style. So Beth believes
they have to learn the local media practices and how to get through the media fast.
The 1997 handover’ s impacts on Hone K ons’ s PR practice1 6
When asked about if the 1997 handover has in any way impacted public
relations in Hong Kong, H&K’s Maguire said, “It is still about tailoring programs to
client needs.” But Herman and Engel both said they did notice the greater climate
change in the government and the media. “Hong Kong is more culturally tied to
China,” said Herman. She says Beijing is slowly starting to influence the local
1 5 For reasons of privacy, this practitioner declined to be identified.
1 6 The content o f this part is the English rendering based on A Handbook to China’s Public Relations
by Stephen Fung, published by Acumen Public Relations, 2001. P38-44.
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43
media in a “negative way1 7 .” Engel also pointed out that there was a major shift in
the importance of English and Chinese in Hong Kong which resulted in a change in
English and Chinese media’s influences.
Chinese newspapers were largely ignored by PR practitioners before the
handlover, especially those who worked for multinational companies. Many PR
practitioners prepared only English news releases for both English and Chinese
newspapers, forcing Chinese reporters to translate the news releases on their own.
China’s acculturation in Hong Kong’s 13-year transition leading to the 1997
handover bolstered the importance of Chinese and the Chinese media. Four years
after the handover, Mandarin, the official language on the Mainland, has become
more and more significant. But English is still widely used in the government and
business. The most obvious change is that the SAR government does not release
exclusive news to English newspapers.
Practicing PR in Hong Kong now requires a different language skill set.
More and more PR practitioners recognize the importance of Mandarin. In fact, “a
good PR professional in the new age must be proficient in Mandarin, Cantonese and
English,” according to Stephen Fung, president of Acumen Public Relations, in his
book “A Handbook of PR in China.”
Another change that affects the PR practice in Hong Kong is that reporters
have to devote greater attention to the words used to describe the political status of
1 7 As analyzed in the media session, the Beijing government has sought to influence the Hong Kong
press through punishment and rewards. There is also a widespread practice of self-censorship among
the newspapers, i.e., avoid provoking the Beijing government by dropping reports on sensitive issues
or taking a Beijing point of view.
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44
Hong Kong and Taiwan. Before the handover, China and Hong Kong were two
separate entities of equal international status. Now, it is inappropriate for journalists
to imply Hong Kong is a separate entity.
Titles and names used to refer to Taiwan is an especially sensitive subject to
China. China considers Taiwan to be a province which it lost when Chiang Kai-
shek’s government retreated to the island. So to avoid offending any of the two sides,
Hong Kong media in general call Taiwan a “region.” Because China doesn’t
recognize Taiwan as a country, reporters usually put the title in quotation marks
when a Taiwanese government official is mentioned. On the other hand, Taiwan
claims to be an independent country, not a province of China. Fung suggested PR
practitioners use different terminology in news releases when they have Taiwanese
clients.
The following case studies illuminate the principles outlined here.
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45
Chapter 8: Case Study
1. Marketing VTech to Hong Kong and Overseas Investment Community1 8
The VTech Holdings Limited investor relations program was planned and carried
out by Forrest International Limited (FIL), a Hong Kong-based public and investor
relations company, from September 1996 through December 1997.
VTech Holdings Limited is one of Hong Kong’s most successful homegrown,
consumer electronics companies, which manufactures Electronic Leading Aids
(ELAs), telecommunications (900 MHZ cordless phones), and (at the time) computer
components. However, the company was not well known to the investment
community. Few analysts follow manufacturing and electronics due to the fact that
Hong Kong’s economy is strongly tied to property and banking sectors. Furthermore,
VTech’s markets are overseas. The Group sells very few ELAs and no cordless
phones in Hong Kong, only inexpensive computers. The situation was compounded
by the Group’s unsuccessful venture in selling computers overseas. Although it
quickly reduced losses and turned around its computer division, investors didn’t
understand the strategy. When FIL was approached by VTech’s chairman for
assistance, its share price lingered between HK$10-12 (US$1.2901.55) at a time
when the Hong Kong stock market was booming and the Hang Seng Index, Hong
Kong’s equivalent to Dow Jones, was projected to soar to 12,200 at the end of 1996.
1 8 The case study’s entrant, Joyce Jui, is a winner of International Association o f Business
Communicators’ (IABC) 1998 Gold Quill Award in the category of investor and customer relations of
industrial, manufacturing, retail sales. The case study is obtained from LABC’s resource center and
adapted based on the original entry.
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46
After consulting with VTech’s management about the company’s desired
position and the key messages it wished to convey to stakeholders, FIL put together a
comprehensive investor relations program for VTech. It was implemented from
September of 1996 to December 1997.
The objectives were to increase the target audiences’ awareness of VTech as a
“highly successful homegrown international organization” and one of Hong Kong’s
best known brands. Moreover, it was to position VTech’s chairman as a skilled and
visionary leader in the manufacturing and electronics industry; and to encourage
investors to buy and hold VTech shares.
The audiences were identified as the investment community and the financial
media. The investment community consists of Hong Kong and international analysts,
fund managers, institutional investors and bankers. The financial media target
audiences included Chinese and English language reporters in print, broadcast and
online media outlets which report on business subjects.
The investor relations program is roughly divided into three parts: publicity
material production, media/analysts relations and special events.
FIL created a calendar of publicity material production and media and analysts
communication activities which was in line with VTech’s corporate and financial
calendar. The firm also made recommendations on how to compile a database of
financial reporters and contacts in the investment community. In addition, FIL
worked closely with VTech in the preparation and production of all publicity
materials including biographies, backgrounders, speeches for public speaking
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47
engagements, press releases, video scripts, corporate video visuals, letters for
mailings, analyst questionnaires, an annual report, fact books, fact sheets, and slide
presentations.
In terms of media and analyst relations, FIL worked with VTech to establish
regular routine briefings for reporters and analysts at the announcement of the
Group’s interim and annual results. Publicity materials were distributed and
attendees’ business cards were collected at the door to update the investor relations
database. FIL also arranged local media interviews, provided journalists with the
company’s background and addressed current issues related to VTech.
To position VTech’s chairman as a visionary industry leader and reach out to
more audience, FIL looked for and arranged public speaking activities for him. FIL
also recommended that VTech do a presentation at the Credit Lyonnais Investor
Forum Asia, one of the largest and best-known forums in Asia. Since attending the
initial Credit Lyonnais forum, VTech has been invited to forums sponsored by
SocGen Crosby (held in Hong Kong) and Jardine Fleming (held in New York).
In addition to all the media and analyst outreach efforts, FIL invited VTech to a
year-in-review meeting to assess the effectiveness of the investor relations programs
and fine tune activities to meet VTech’s business objectives.
VTech’s investor relations program successfully reached out to media, analysts
and investors. The Group’s headlines were listed by Reuters Newswire; the
chairman was interviewed in a special BBC radio program hosted by Peter Eustace, a
well-known BBC world-service anchor; the Group was approached by the Asian
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48
Wall Street Journal for a feature; VTech also gained exposure on the “Money, Money,
Money” program on CNBC, a popular all-business regional cable TV program.
VTech’s chairman has been invited to be a guest speaker at many seminars and
fomms on industry trends, strategies for global business, management issues and the
future of Hong Kong, hi addition to VTech’s successful positioning, the company
survived the Asian financial crisis, soon recovered the value it lost in October 1997
when the crisis broke out and continued on its upward trend to a record-breaking
high of HK$22.85 on December 31,1997.
Comments
VTech’s investor relations program was competently planned and implemented
by FIL. It had all the major components of a professional investor relations program
as those carried out in the U.S. However, one of the participants in the program, FIL
consultant Joyce Jui, did raise concerns of the challenges the FIL team encountered
in her entry to the 1998 International Association of Business Communicators’ Gold
Quill Award.
Although Hong Kong is Asia’s financial capital, investor relations is not as
commonly practiced as in countries like the U.S. Corporations are reluctant to spend
money on communications programs whose outcome is hard to evaluate and can’t be
tied to sales numbers. Furthermore, very few in-house personnel have a good
understanding of investor relations. According to Jui, VTech’s team was very price-
sensitive and chose outside vendors solely on the basis of low cost. “The limited
creativity of suppliers and sometimes lack of professionalism caused major
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49
headaches, multiple drafts of publications, confrontations on why something needed
to be done/had to look a certain way, various ‘face-offs’ which nevertheless required
diplomacy and tact, exhausting hawk-eye supervision of copy, design and layout for
annual reports, brochures and other publications,” Jui wrote in her Gold Quill Award
entry about limitations and challenges in implementing the program. The challenges
correspond to the comments of MS&L’s Laxton on Hong Kong’s public relations that
there’s a lack of understanding of public relations’ value, especially among local
Asian companies. Therefore, public relations practitioners’ role is not only to advice,
but more importantly, to educate their clients.
2. Valuing Customer Relationships: Hang Seng’s Winning Strategy1 9
Founded in 1933, Hang Seng Bank is the second largest homegrown bank in
Hong Kong and operates 156 local branches and automated banking centers. With a
highly respected and well-known brand name, Hang Seng is considered a community
bank and provides services to more than one-third of Hong Kong’s population.
Hong Kong’s interest rates were deregulated by the Hong Kong Monetary
Authority in July 2001. Since July 3, 2001, interest rates on all types of deposits,
including savings accounts are determined by competitive market forces. In
response to intense competition and rising operating costs, banks had been reviewing
their charging policy for account services, minimum balance requirements and
tiering of interest rates. Hang Seng Bank, too, was planning to impose a new service
fee of HK$40 (US$5.13) per month on savings accounts with an average balance
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50
below HK$5,000 (US$641). However, given the fact that the territory is in slow
recovery from 1997’s Asian financial crisis and under persistent deflationary
pressure, announcement of any new charges and service fees would be a challenge.
Customers might react by switching to other banks.
After careful consideration, Hang Seng Bank management decided to exempt the
Bank’s existing two million-plus savings accounts (i.e. those set up before April 12,
2001) from the new service fee of HK$40 per month if the account balance falls
below HK$5,000. The Bank further leveraged on this opportunity to strengthen the
its image as a community bank and convey the core message of “valuing customer
relationships.” In another gesture to demonstrate the Bank’s commitment to social
responsibilities, the new fees are not imposed on new customers who are senior
citizens or recipients of government’s social welfare subsidies. Minors under 18 are
also exempted. Tertiary students with a Bank-In-One Account are exempted until
their graduation.
In the course of making pricing decisions based on the “valuing customer
relationships” strategy, Hang Seng Bank’s senior management was open and took
into account advice from in-house public relations personnel. They also worked
closely with their public relations department to determine the strategies and position
in communication with the media, staff and customers. To prevent leakage of
information, a special task force comprising members of the Corporate
Communications Department and the Retail Banking Division was formed to handle
1 9 The Hang Seng Bank case study is adapted from an article written by Ihe Bank’s senior corporate
affairs manager Cecilia Ko in the July, 2001, issue o f Two Way, a publication o f Hong Kong Public
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51
the announcement project. It agreed on core messages in internal and external
communications to ensure consistency of the messages.
In anticipation of negative public reaction, the task force closely monitored the
market situation and devised crisis communication plans. The task force members
also made sure that the announcement was disseminated to all relevant parties,
including influential public policy commentators, pressure groups, the media and
customers in a timely manner.
In terms of internal communication, employees were informed of the new pricing
policy via a morning broadcast, circulars and staff briefings prior to the press
announcement on April 12. Q&As were developed for customer service staff. A
Deposit Service Guide was delivered to all branches and was available on the Bank’s
Web site hangseng.com.
As a result of the professionally coordinated communication effort, the
announcement was prominently reported by local print and electronic media, with
praises of Hang Seng Bank showing a “human face” in adjusting its pricing policies.
Agencies including Reuters, Dow Jones and Bloomberg sent out wire stories
highlighting the exemption policy. Most news reports ran photos of Hang Seng
Bank’s chairman Vincent Cheng in front of the backdrop saying “We Value
Customer Relationships.” Major newspapers also ran stories of positive feedback
from customers and non-customers, therefore helped the Bank reiterate its core
message and strengthen customer rapport.
Relations Professionals’ Associaiton Ltd.
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52
Comment:
Although many Western practitioners indicated in their interviews that public
relations is not as mature as it’s practiced in the West, Hang Seng Bank’s customer
relations program and announcement strategies demonstrate that Hong Kong’s
managerial firms do have a good understanding of customer relations and in-house
practitioners’ advice is taken into consideration.
3. The Hong Kong and China Gas Company’s Crisis Communication in the Shek
Kip Mei Incident2 0
Two people died in an accident in Shek Kip Mei, Hong Kong, in the early
morning of Jan. 17,1999, when they used a water heater which was fueled by bottled
gas and not connected to the gas pipe system. The Hong Kong and China Gas
Company, the main gas service provider, concluded that the accident was caused by a
lack of ventilation. Although the Gas Company did not have any liability in this
accident, officials took prompt, proactive measures to assure the public of gas safety
and avoid any damage to the company’s image.
The Gas Company’s management held an emergency meeting as soon as they
learned of the accident. It decided all the households using water heaters fueled by
bottled gas should be notified of safety precautions and that their heaters should be
inspected. Nearly 16,000 households used such water heaters at the time. Company
representatives managed to call all the water heater users in the customer database
within two days. Within two weeks, the company mobilized 250 employees to visit
2 0 The case study was adapted from an article written by Grace Lam, head of corporate
communications o f the Hong Kong and China Gas Company, in the October, 2000, issue o f Two Way,
a newsletter published by the Hong Kong Public Relations Professionals’ Association.
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53
water heater users. To accommodate customers’ work schedule, inspectors visited
some families at night as late as 10 p.m. examining water heaters, giving
recommendations on switching to other models or renovating the location to ensure
safe use. In the first week, the company’s employees visited 62 neighborhoods and
inspected 8,800 households. Nearly 2,000 households agreed to switched to more
advanced, safer water heaters and additional 1,750 households agreed to dismantle
part of the windows at the balconies.
In terms of communicating with the media, a spokesperson was sent to the
site of the accident to answer media inquiries on the day of the accident. The
company also issued a news release in the afternoon, explaining the official position
on the accident and how it was handled. In the following week, the communication
department issued four news releases on safety inspection’s progress and results and
handled over a hundred media inquires. The Gas Company’s prompt response to the
media and dissemination of accurate information reduced the chance of rumors and
negative public reaction.
Posters and fliers on how to accurately use water heaters were distributed.
Fliers accompanied gas bills. When inspectors went to visit customers, they posted
safety stickers on the units to warn of potential dangers. Furthermore, the Gas
Company advertised in Chinese and English newspapers caution customers.
Officials also notified authorities and pressure groups about how the incident
was handled. Employees were informed in detail and thanked for their efforts and
support for the company.
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54
The Gas Company’s prompt response and proactive measures won respect
and trust from the customers and the public as well as the 2000 APEX Award2 1
(Annual Awards for Publication Excellence Competition) in Crisis Communications.
Comment:
The Hong Kong and China Gas Company’s handling of the Shek Kip Mei
incident was a very mature, first-rate crisis communication effort. The company
could have played down the gravity of the situation and simply explained the cause
of the incident. But instead it used the crisis situation as an opportunity to educate
the public about water heater safety and to enhance its image with the media,
customers, the government and pressure groups. The crisis effort had all the
elements of a model crisis communication plan, including prompt response and
accurate information dissemination to all relevant parties. What was more
impressive was the company’s rapid mobilization of a large number of employees.
2 1 APEX is sponsored by the editors of Writing That Works, the newsletter for communicators who
write, edit and manage business publications. Writing That Works is published by Communications
Concepts, Inc., providing problem-solving information to professional communicators since 1984.
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55
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Asset Metadata

Creator Yim, Yeung Iris (author)

Core Title An overview of public relations in Hong Kong and its political, economic and cultural context

Contributor Digitized by ProQuest (provenance)

School Graduate School

Degree Master of Arts

Degree Program Strategic Public Relations

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag Hydrology,journalism,mass communications,OAI-PMH Harvest

Language English

Advisor Floto, Jennifer (committee chair), Fromson, Murray (committee member), Swerling, Jerry (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c16-302270

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Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA