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The Hutchison Whampoa Strike and Hong Kong's Tycoons

Yesterday The Sunday Morning Post reported on yet another controversy between the unionist leaders of the dockworkers' strike and Mr. Canning Fok Kin-ning, the managing director of the Hutchison Whampoa group, to which the dock terminals hit by the strike belong.

Mr. Canning Fok launched a media attack against unionist lawmaker Lee Cheuk-yan, one of the promoters of the strike. On 20 April, the 24th day since the beginning of the strike, Hong Kong International Terminals Ltd. (HIT), which is owned by the Hutchison group, spent estimated HK$1 million to place ads on numerous Hong Kong newspapers and denounce Mr Lee. The only media outlet that was not included in the ads campaign was Apple Daily, the most popular paper in the city. One possible reason why Apple Daily was not considered suitable for being used as a platform by the Hutchison group is that the paper belongs to Jimmy Lai, an outspoken critic of the Communist Party and an advocate of freedom of speech.

"Is someone unwilling to make a deal?" asked the ads, referring to Lee Cheuk-Yan. "Is there someone who wants to achieve his own purpose and is ignoring the interests of the workers?" The union's demands for a wage increase of around 20% were called "unachievable" and it was suggested that unionist Lee Cheuk-yan supports the strike only to advance his personal profile.

On his way to Beijing, Mr. Canning Fok launched another personal attack on Mr Lee, suggesting that the latter "resorts to every means - he doesn't want an outcome at all, hoping that as the strike drags on, he can negotiate with Mr Li [Li Ka-shing, owner of Hutchison group] so as to boost his own publicity." He further stated that Lee "has been using the style of the Cultural Revolution".

As Apple Daily reported, Mr. Canning Fok's words were heavily criticized by strikers for belittling the workers. One of them stated that Fok's defamation won't affect the workers' determination, and that "no matter if we succeed or fail, we'll have no regrets". 

According to HIT dockworkers earn HK$20,000 per month (around 2000 Euros), and a wage increase would cause "irreparable damage to Hong Kong". Moreover, Mr Canning Fok said that the workers "were willing to work long hours". However, unions claim that workers could earn this sum only if they worked many 24-hour shifts, and that real wages have been decreasing since 1995 (SMP, p. 3; Apple Daily).

In a pro-free-market and pro-big-business city like Hong Kong, all the dark sides of a "laissez-faire" regime become apparent. It is hard to imagine that Mr. Canning Fok has a clear idea of the working conditions and the necessities of the workers. 

Born in Hong Kong in 1951, Canning Fok has been called (I wonder by whom, and I wonder if ironically) the "Emperor of Employees" (打工皇帝) for being one of Hong Kong's top five taxpayers in recent years. 

In 2011 Mr Fok's annual salary stood at HK$170 million (US$21.9 million), which means HK$904 (US$116) per minute for 12 working hours per day, and HK$650,000 (US$83,750) per day for 261 working days a year (note). This is, of course, a major setback for him, because in 1999 he earned HK$200 million (US$25.77 million). So probably he must now tighten his belt and live more frugally.

Unlike my father, who was a fervent socialist, I have never considered myself to be left-wing, until I realized that today's world has shifted so much to the right, that an economist like Paul Krugman is dubbed a "socialist", I would be seen as left-wing, and my father perhaps would be called a Communist.

Hong Kong is a great reminder of the detrimental effects of an economy in which the rich dictate the agenda. As a recent survey showed, "Hong Kong's poorest 20 per cent take up just 6 per cent of society's income share while the rich take up 43 per cent, a poll has found as the city's notoriously wide income gap continues to worsen" (note).

I used to believe that the experience of the post-war boom had taught us a clear lesson: workers are consumers, consumers need money to spend, so salaries should be adjusted to productivity and allow people to spend. I believed that we had understood both the social and moral value of labour as a criterion to judge social stability and harmony. But apparently, these values have been slipping away, and powerful lobbies made up of politicians (Margaret Thatcher was a good example of that), big business and main-stream economists (such as a Milton Friedman) have pushed forward an agenda that has fundamentally changed the balance of power between employer and employee at the expense of the latter. It hasn't done that by force; but by creating a myth that we see mirrored in the recent dockworkers' strike in Hong Kong, and that is also reflected in public opinion (in a recent post, I criticized what SCMP's columnist Alex Lo saw as the entrepreneurial spirit of Hong Kong).

The idea is that entrepreneurs are, according to a neo-Darwinist assumption, the 'best people', the ones that generate wealth and jobs. Therefore, they are working for the good of the society and the nation. When they demand sacrifices from the workers, they do it because they must stay competitive against foreign competition. Wage decreases are thus acceptable, though painful.

Unfortunately for them, this point of view is completely detached from the reality. They do create wealth, but mostly for themselves; they do work for the good of the nation, provided that the nation is not the sum of the individuals, but the sum of the companies, most especially the big ones; they do remain competitive, on the basis of finding the cheapest labour and putting pressure on trade unions (where they exist).

I am not blaming all entrepreneurs, of course. But there is a large number of them, most especially big corporation, as well as influential lobbies of economists and politicians, who keep on defending the interests of the few.

It is too easy to demand sacrifices from the workers when you earn millions in a month. And it is just an excuse to say that what you earn is what you deserve, so if you earn little you are just a replaceable nobody, while if you earn a lot you are a smart guy. There are systemic problems, all around the world, which have to be addressed. 

The situation in Hong Kong is particularly complex because of the political symbiosis between the central government in Beijing and the local government in Hong Kong. Traditionally, the Communist leadership has been acting in a paternalistic way towards Hong Kong. By Chinese standards, derived from the Confucian precepts, this means that the father has authority over his children, and that he alone knows best what is good for his children, without feeling the need to ask them. 

This stance had become clear already during the Sino-British negotiations of 1982-84, when Deng Xiaoping, despite knowing very little about Hong Kong, "insisted that he knew the Hong Kong people better than they did themselves and that he acted in their best interests" (Tsang 2011, p.223).

Beijing needed a link between the citizens of Hong Kong and the Communist government; and it found this link in the powerful business tycoons. They did not push for political reforms or democratization, but saw business as their first priority, and in order to protect their business in and with mainland China, they offered themselves as a stabilizing political and social element that was useful to implement the "One country, two systems" formula.

Many of these tycoons made their fortunes through something that is traditionally more suitable for an aristocracy than for business people: land. Due to its small size and population density, in Hong Kong land means power.

[W]ith the exception of a couple of the long-established and successful British hongs like Swire and Hong Kong Land (part of the Jardine group), as well as a few large local landowners like the Hotung family and the Hysan group, most of Hong Kong’s top business conglomerates of the 1990s were built on the basis of bold investments in real estate development in this period. 
Li Ka-shing’s Cheung Kong empire is the best known example. The same applies to other conglomerates. Among the best known are the New World group, Henderson Land, the Hang Lung group and the Sun Hung Kai group. The substantial profits made by the pioneering entrepreneurs of these companies were turned into fortunes in the stock market boom of the early 1970s. The capital thus accumulated was, in turn, reinvested in a wide range of businesses and catapulted some of these astute entrepreneurs to rival long-established British hongs within a decade. 
Their spectacular rise was symbolised by the takeover of Hutchison Whampoa (originally founded in 1828 as John D. Hutchison) by Li Ka-shing in 1978 (Tsang 2011, p. 173).

A small number of property developers thus enjoys a disproportionate share of political and economic power. Many of them have expanded into other areas such as restaurant chains, mobile phone operators and supermarkets. Because they own land, they can get the best locations, and because property prices increase year by year, competition is relatively easy to wipe out. 

As a matter of fact, Hong Kong has only two supermarket chains, one of which is owned by Li Ka-shing. That is why you won't see Carrefour or Wal-mart here (note). While dockworkers strike for better wages and thousands of people live in cage homes, the illusionary formula that "what is good for the tycoons is good for Hong Kong" still doesn't let go of this city. 


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