Having been on the show more than 1,100 days ago, Bernard Chan, chairman of Our Hong Kong Foundation, shares his insight with Straight Talk on how Hong Kong may move forward better and be competitive, given all the changes that happened over the past 3 years.

Check out the full transcript of TVB’s Straight Talk host Dr Eugene Chan’s interview with Bernard Chan:

Eugene: Good evening! I'm Eugene Chan and welcome to Straight Talk. Our guest tonight, Bernard Chan, is well known to us all in Hong Kong. Bernard has been recognized by the Hong Kong Special Administrative Region government with our highest honor, The Grand Bauhinia Medal, for his outstanding public service. He was Hong Kong deputy to the National People's Congress and former Executive Council convener. More recently, he took up chairmanship of Our Hong Kong Foundation. He sits on and chairs many business councils, both local and overseas, as well as several government committees. Of note, he is chairperson of the Hong Kong Council of Social Service, Steward of the Hong Kong Jockey Club, and also chairman of the M+ Museum. Welcome, Bernard!

Bernard: Hi, Eugene!

Eugene: I'm sure all our viewers may be a little puzzled by the title of our show. This is indeed a very special episode of what we call a milestone for us as you were our very first guest when I began hosting Straight Talk on April 27 in 2021, some 1,133 days ago. I thought we could take this opportunity to reflect together on some of what has taken place in Hong Kong since then. We had the National Security Law being implemented, then, three years ago COVID, then a new Legislative Council, a new administration with a new CE and more recently, we have had a revamped District Council, and passed our own national security legislation, Article 23. So, I've mentioned many things that have happened, I'm sure sort of ... pictures of what has happened will flash through your eyes. So, Hong Kong is kind of having a rebirth and continuing with this path from chaos to order and hopefully to prosperity.

Bernard: Right.

Eugene: I said hopefully, because it's not going to be easy. So, how have these changes impacted Hong Kong over these last three years?

Bernard: Well, first of all, thank you for having me back again. I can't believe it. You just reminded me it's been that long, two or three years, but like you said, a lot of things. Like most things, there are good things and bad things. I suppose I'll start with the good things. First, a good opportunity. I think after three years of COVID, finally, now we're back, right finally open but then back, because for your show, I did some homework. It just reminded me it's only last year, February last year that we completely lifted all the COVID restrictions. It's only last year in February that we were no longer required to wear a mask. In fact, I remember last time I was here, we both wore a mask.

Eugene: Yes, yes.

Bernard: Right. So, it's only a year and a little bit more ago that finally we are back to normality. So, a lot has happened, during that, you know, two years or so. I'll start with an opportunity. Amazingly, arts and culture and you introduced me to the M+ Museum and of course, I was very involved with the Palace Museum. The last time I was on your show was a chair for Palace Museum and now I'm with M+, and West Kowloon. This is definitely now one of the most important so-called the jewel for Hong Kong. This is actually now what helped to reconnect us back to the world, you know, after COVID. I was just in Venice, for the Venice Biennale opening two months ago. And, unbelievable, you know people all recognized when I passed out my M+ name card. Everyone recognized the name.

Eugene: Really?

Bernard: Either they've been here already or they heard about us. Now, of course, this is a very captive audience of art and museum people but still, this is one reason now people want to come back to Hong Kong. So clearly, there's something we've done right. Although you know, West Kowloon is not something that just happened overnight. It is 25 years in the making. So, it is open now at the right time. Last time when I was on your show, none of these had opened. So, M+ opened in November 2021, Palace Museum opened in July 2022. There will be many more to come. So, I think this is definitely the major highlight for Hong Kong now, a reason to bring people back, tourists.

Eugene: Now we also have many new challenges that we didn't foresee before. I'm sure we all agree now we have a bit of a crisis right now. Are we going to remain competitive? You know, vis-a-vis, for example, retail businesses, you know, because when the border opens, well I think what we completely underestimated was the attractions and offerings in Shenzhen.

Eugene: Right.

Bernard: That came as a surprise to us too. But obviously now requires us to completely rethink about the way forward for Hong Kong, so there are definitely new opportunities and new challenges ahead.

Eugene: Bernard, when I look at you, I must keep on thinking about the work you've done for us, especially at the government level, or the legislature, or the Executive Council over the last like two or three decades. So, with the National Security Law being implemented and the sort of electoral reform having patriots administering Hong Kong, is that helping Hong Kong's governance in your opinion?

Bernard: In fact, I think you asked that question more or less three years ago, my answer is the same. Definitely, I think with the new electoral arrangement with the new administration, clearly I think we now can be far more focused. I think in the past, things got too politicized at every level. But now, we are far more focused on addressing more livelihood issues, the economic crisis we are dealing with right now. So, I think in a sense, it's good. But it's not ... but that itself cannot solve all the problems. I think political issues are just one matter of it. There's too many, many issues that are far more deep-rooted and a lot of time self-interest. Right. I'll give you one case in point is... the recent decision to abort the waste management... the waste charging arrangement. So, I was very involved in that. And in fact, it was the committee that I chaired 10 years ago. I was the chair for the Council for Sustainable Development. It was our council recommendation to the government at the time.

Eugene: So, are you disappointed?

Bernard: Yes and no. I completely understand the rationale behind the decision to abort because clearly timing is off because today the economy is not in good shape. So, this will actually pose an extra financial burden to you know, F&B operators and so. So, I fully understand the rationale behind but I am disappointed because we've been in this for a long time. It's not even 10 years, I was involved 10 years ago, but then it was even before then we started this entire discussion. In fact, you know, funny enough where we are today at TVB, you ... TVB clearly understands because right across the street from you is where the landfill is.

Eugene: Yes. And we're going to run out of landfill to deal with all the trash that we produce every day. So, we have to come back to this issue sooner or later.

Bernard: Exactly so it didn't go away. The issue is still there. Yes, we have an incinerator being in construction right now. But even that, even when that incinerator is built and ready to open, it only addressed roughly about a third of the waste we produce every day. So, we still have to figure out a way to induce people to change behavior, the whole waste charging mechanism. It's not about collecting tax, collecting money, it’s all about inducing behavioral change. So, for us to waste less.

Chan: Right, let me ask you now since you mentioned the economic difficulties or challenges we're going to have. How would you suggest our economic priorities and policies so sort of chose to reshape to fit this new scenario? What shall we do?

Bernard: Well, by the way, this is not new to Hong Kong. And for my understanding, Hong Kong has gone through different economic cycles in the past, each time … it's painful, but each time we manage to reposition ourselves. So, I have confidence in Hong Kong to be able to find a way out right. But it requires us to sort of rethink about whether we cannot continue to hang on to what we have done best in the past because that may have been our winning formula in the past, but clearly in certain industries it is no longer the case. We no longer remain competitive. So, we have to move on.

Eugene: Right. We had Anne Kerr last week here and she said that changes are imminent everywhere. And I think the whole … globally it’s sort of having all this crisis. Do you think Hong Kong would be able to come back up stronger? Because in the past we had our niche, which we're going to talk about, but nowadays with all the geopolitics, they're really directing at us, especially as an international financial center. So, how can we come out of this direct attack?

Bernard: Yeah. First of all, I remain very confident about Hong Kong's future, largely because it's not just about Hong Kong, it is about our entire country, China, right? We have 1.3 billion or 1.4 billion people with 400 million rising middle class. You can only imagine with that sort of hinterland, you cannot go wrong. Now, obviously, we are now in that downturn of the cycle. So, it's not going to be an easy transition, but then with that market in place, what requires us now to think of is how are we going to serve that market? At the end of the day, Hong Kong's future is always about adding value to China at different stages, right? You know, 20 years ago will be a different topic. But today, clearly, we have a rising middle class of 400 million, some of those services that that demand or the 400 million will require onshore, some will be required offshore. So, how can Hong Kong as a city, as a service center, continue to provide these different options, the optionality for both Hong Kong and the hinterland of 400 million or even 1 billion people? So, that is the role of Hong Kong, but it's not just on the mainland alone. I think what the one mistake we make, I was the one who always was pushing it but I can understand why all the attention on the mainland because it's such a big market, so why bother looking anywhere else? Hong Kong's future, besides focusing on the mainland, is its connectivity to the rest of the world, particularly in the region, ASEAN, and of course, the Middle East and elsewhere as well. I don't think we have spent enough resources and attention to the past in these other markets. So, that is although something that ... Now we have no choice because when that one market that you're counting on is having a little bit of downturn, it's actually in a way, we have no choice but to push ourselves to think beyond just Hong Kong and the mainland and think about what else more we can do.

Eugene: Okay, let's take a break now, but viewers stay tuned. We will be right back.

Eugene: Thank you for staying with us on Straight Talk. Bernard Chan is with us, and we have been talking about significant changes in Hong Kong that have been taking place over the last 3 years. So, Bernard, in the first half you had made a very good account of your view of what we can do and what we shall do. And I remembered Stephen Roche, the former chief of Morgan Stanley in Asia, said in February, Hong Kong is over. I am sure you don’t agree.

Bernard: I don’t agree at all. However, he actually raised principally three issues about Hong Kong. Firstly, we are too reliant on the Chinese mainland, which I somewhat agree with, as I said in the first half. I said because mainland was doing so well in the last 10-20 years, so all our focus is on the mainland. But I think we should have also spent enough resources in ASEAN, Middle East, and Europe, and so on. So, he is not that far off. Second point is: he raised was the geopolitical tension. Now, we all agree, yes. But what can we do? There's nothing we can do. The third thing, he said, which I would never agree with, is that “one country, two systems” is finished. Now, he clearly doesn’t understand why even the central government would want the two systems to work. This is the whole essence of Hong Kong.

Eugene: Right. Bernard, I must ask you this question because a lot of our interviewees, when they are here, many have told me that when they are overseas, I am sure you have come across the same thing, Bernard, is it safe in Hong Kong? I mean can you still express your … express freely? I am sure that sort of sentiment is sort of floating around in the rest of the world. So, are you confident that Hong Kong can still maintain itself as an international, financial, and shipping center?

Bernard: Of course.

Eugene: Despite all those rumors?

Bernard: Yes. Well, that is the problem. We have to address that. And thanks to your program and many other international English speaking programs, we need to do this more because after the 2-3 years of COVID and Hong Kong was somewhat in a hibernation during that time.

Eugene: True. So, we just need to bring people back, right?

Bernard: As soon as they come back, everyone I spoke to, that is the reason they came, they say “wow, Hong Kong is what Hong Kong used to be”, right? But unfortunately, not many are coming yet. So, that is the first thing we need to do. It is to bring them back.

Eugene: Right. Bernard, I must ask you one question because you were with the last administration. In hindsight, should we have opened up our border earlier?

Bernard: Well, I am pretty sure the administration had a lot of things to consider. First of all, we have to admit, we are a few months behind everyone else.

Eugene: Right.

Bernard: So, it is what it is, because obviously, Hong Kong has been addressing both the international needs as well as the mainland needs. So, we were caught in this situation. So, it wasn’t an easy decision at the time. But let’s not go back to say it could have been done differently. I think what is more important is how we are going to position ourselves going forward.

Eugene: Right.

Bernard: So, I think that is even, probably, more important.

Eugene: When you say that, I am sure we want our investors to come back. And we must understand our strengths. I have actually listed down, just for recap of everyone’s memory. So, we have financial and professional expertise, we are a very efficient market, Anne Kerr said Hong Kong is where businesses get done. And we have got simple and low taxation, free port, open economy, rule of law - Are these enough to ensure the resilience and competitiveness of our economy, do you think?

Bernard: Kind of yes and no. I mean in certain industries, we are facing some challenges. You talked about the port, there are many other very big ports out there too, competing with us. So, at the end of the day, it is the cost issue and the logistic arrangement. Can we forever remain competitive? That is the big question for every industry to face. But ultimately, it still comes back to the one market that we are principally serving, and it is in the mainland.

Eugene: Right.

Bernard: And their needs are changing too. For example, given the whole geopolitical tension today, many companies on the mainland talk about de-risking, right? When they are de-risking from the mainland, many are looking forward, maybe moving their operations to … some of their operations, not all the operations, some of their operations to the ASEAN market and elsewhere? And of course, Hong Kong has always been used as the kind of like their way out. So, can Hong Kong serve those purposes? At different times, during the different needs of the mainland, we Hong Kong need to position ourselves.

Eugene: Right.

Bernard: To know how to figure out how to serve them. Certain industries will remain very competitive. Financial services, yes. I believe that financial services still have … offshore we continue to serve the offshore needs for Chinese companies, for mainland companies, very well. But those needs will continue to change. You know, how can we continuously try to sort of re-engineering ourselves? That's the keyword. So, the most important thing is that our professions in Hong Kong, especially our young people for the future, need to understand their needs. They need to understand the needs of the mainland market, as well as the rest of the world because that is why Hong Kong calls itself a connector.

Eugene: Right. Bernard, you know we have been talking about trawling for talents. And we had Chris Sun here three weeks ago, we had many talent schemes to attract talents. But on the other hand, we don't have enough people right now in Hong Kong.

Bernard: Yeah.

Eugene: So, if you talk about service level, I mean how can you … I was talking with a restaurant owner, she said to me, “How can I ask for more from our limited number of staff?” So, you mentioned young people, and some have emigrated, hopefully more are coming back. What can we do to encourage them to stay in Hong Kong?

Bernard: Well, this is a crisis for us. But then again though, it wasn't because of this crisis, I think politically it will be quite challenging for Hong Kong to open up our labor importation scheme because this has been … not an issue we are talking about today, it has always been an issue. But in the past, there had been a lot of resistance coming from the labor sector. But now I think by now, everyone would agree that we need to import more labor, talented labor to come to Hong Kong. So, this crisis actually gives us a new mandate, allowing us to bring in talents.

Eugene: So, hopefully with time, we can see the effects of it.

Bernard: Well, absolutely. And then, of course, the key question though is … I mean we are not the only place looking for talents, everywhere in the world are looking for talents. So, the key is: are we competitive enough? Are our offerings competitive enough to draw talents?

Eugene: Right. See now, just at the beginning of the show, you mentioned that you being the chairman of the M+ Museum, when you were overseas people were very happy to see that. This is something that we have, like a jewel for Hong Kong. With all this geopolitical tension, looks like the government or even the businesses are very hard to connect.

Bernard: Yes.

Bernard: What else can we do apart from the jewel that you have?

Eugene: In fact, you are absolutely correct. I think now, government to government types of dialogue has been challenging. Business to business also can be politicized as well, depending on the nature of the business. Even academics, it is also challenging, right? The one thing so far I see remaining a very open engagement and dialogue is in the arts and culture space, and music. Partly I think no one would argue that the people to people connection is wrong. Politics is politics, you know, you can disagree. But in terms of people to people connection, it is still going strong. So, the entire West Kowloon Cultural District, we signed 21 MOUs with international cultural organizations back in March. So, those are still very healthy and still very willing from both ends.

Eugene: Right. I must barge in here because when you talk about the West Kowloon, we know that it is a very important one. But it faces an equal share of problems. So, will that be sorted?

Bernard: It will be solved, it will be resolved, don't worry about it.

Eugene: Really?

Bernard: I am pretty confident with it.

Eugene: Okay. And let's move on to something else. We have been encouraging integration between Hong Kong and the mainland. But now I am sure we read in the news, we have a lot of people going up to cross over the boundary and spending a lot of money there, but not the local businesses. So, is this trend going to continue? And what can we do? Should we let it continue to happen? Or should we do something about it?

Bernard: To be honest with you, Eugene, I didn't see that coming either. It just … that's the thing, right? I think these days, things moving so quickly and so fast, and I am like you and … Shenzhen, for me growing up, was just a small village. And next thing before you know it, yes they produced a lot of cheap products. We loved to go to Shenzhen to buy cheap products, right, back to 20-30 years ago? Today Shenzhen remains cheap, but the difference is, but they are better.

Eugene: Right.

Bernard: Cheap and better, and good services. I think this definitely came as a shock to us because we always command a premium in Hong Kong, which is fine. But now the question is, well, what is … why are people paying the premium for? So, we have to ask ourselves what deserves that premium? Is that the product itself or the servicing?

Eugene: Right.

Bernard: Or what else? So, one of the big problems obviously, for us, is the cost. So, if you really come down to it, it is the real estate. The real estate is a big cost, and the labor cost. So, I talked to someone from the catering trade, and the person told me labor cost is about 40 percent, rental cost of about 30 percent, and the food cost is 30 percent.

Eugene: Right.

Bernard: And you can lower the rental cost, but food cost you really can’t do much. But the labor cost is the big issue. So, until we address these issues, I don't think our competitiveness is going to remain to be very challenging.

Eugene: Right. Bernard, I am going to ask you the second last question. We haven’t got a lot of time, but I am sure the viewers would want your answer. You mentioned earlier that we didn't expect to see that Hong Kong people would want to have this new spending pattern. At the same time, you see the visitors from the mainland, the numbers are far less and they are looking for a different experience. Look at the Ocean Park they used to come to or even the Sky City that we were having built right at the airport. So, it goes to the point is how do we reposition ourselves? I think I need your answer on that.

Bernard: Well, to be honest, I think those types of trade that you are talking about, they commence that premium and the advantage because there was a tax incentive there, because we are cheaper. They came here because they have tax allowances or tax advantages. Once that was gone, all of a sudden we became not very competitive.

Eugene: Right.

Bernard: So, we have to ask ourselves, continuously what are the needs they have? And what are the competitive advantages we have? Now aviation definitely is a clear advantage. We have far more international flights out of Hong Kong than say Shenzhen or other places in GBA. So, we have to look at every industry. It is like where can we commence that premium that nowhere else, let’s say in GBA, have, and Hong Kong can. And we just have to expand that, in that trade.

Eugene: Right.

Bernard: When we go down to the F&B level, unfortunately, clearly we are no longer competitive at all.

Eugene: Right. Bernard, I am going to ask you the last question, simple answer: how do you see Hong Kong in the next 1,000 days ahead?

Bernard: You know what. I always believe that there is always a new hope from a new crisis because it forces us to change, because we don’t have the luxury to wait around.

Eugene: Right. Thank you, Bernard, for your valuable insights. It has been quite a journey over these 1,133 days, but Hong Kong's ability to innovate and reposition itself to seize new opportunities will ensure a bright and prosperous future for our city.

As Xia Baolong said, “We need to use new thinking, new methods, new routes, to say new things, and dare to do new things that have never been before to make constant breakthroughs.” Have a good evening and see you next week!