The “hongs” or Trade Houses of Hong Kong

Hong Kong, the pearl of Asia has been the center of trade and finance in Asia since the early 20th century. In a forgetful history of abtaboo 150 years, Hong Kong has become the source of growth for many a(prenominal) nearby economies. In a certain sense, it can be even verbalize that it is a merchant city founded and managed by Traditional hongs or trade houses of Hong Kong were the pillar of the economy. Jardine Matheson and Hutchison were major hongs that led the economy and the Hong Kong & Shanghi Bank were the financier of these hongs and has today bragging(a) to become one of the largest bank in the world.These firms were the critical factors of the growth for Hong Kongs economy. Their role however has changed overtime. They are no longer the de facto leaders of Hong Kong as they were in the mid(prenominal) 1800s. Their role has diminished as Hong Kong grew to become more international, and the 1997 handover to the Peoples Republic of China has farther altered their positi on. Some hongs that adapted well to the changing times prospered eyepatch an early(a)(prenominal)s either The territory of Hong Kong is located at the mouth of the Pearl River, a little southwest of the Guangdong Province of the PRC.Hong Kong was ceded to the British after the Opium War in 1842. numerous believe that the British hongs were tramp lobbying the British government into fighting the Chinese Government and the settlement of the island. Kowloon was annexed in 1860, and the New territories were leased for 99 years in 1898. In 1984, the British and the PRC government agreed that Hong Kong as a whole would return to Chinese soverienty in 1997. However, a outline of one area two systems were also agreed upon where Hong Kong would retain its status as a free port, with its laws remaining unchanged for 50 years.Its main mphasis is to preserve Hong Kongs laws and economic freedom, and so to enhance the position of Hong Kong as a economic center. The Large British owned hon gs were originally trade and warfareehouse companies established by the British in the early years of Hong Kong colonialism, they have since grown in to major commerical conglomerates. They hold interest in cargo handling, manufacturing, real estate, and even retailing. They are the engine of the Hong Kong economy.Since Britain in like mannerk over the port city in 1842 to use as a gateway to the Chinese markets, the business of Hong Kong had been business, and the power was eld by the hongs. The first traditional hong was the Jardine Matheson. It was one time seen to be more influential than the colonial government barely nowadays it has become a minor player compared to Li Ka Shings Hutchision Whampoa. Li Ka Shing, the Chairman or Taipan of Hutchision Whampoa, became the first Chinese to own a traditional hong. Lis drive and business ability helped foster Hutchision into a global conglomerate.Hong Kong Bank grew from a subtle traders bank into one of the Jardine, Matheson & Co. was founded by 2 Scottish merchants, William Jardine and James Matheson in Guangdong in 1832. It was an opium trader that were the pioneers into the China trade. Eventually James Matheson takes defend from 1836. It played a key role in the founding of Hong Kong and became the first to purchase land from the colonial government in 1842. Jardine expanded into other trade products in other Asian countries like Japan and South East Asian countries and also enters the ship/cargo handling industry and the real estate business.After humankind War II, Jardine moved their head mangleice from Shanghi back to Hong Kong and it offically goes public in the Hong Kong Stock Exchange in 1961. The 1970s saw Jardine orming many ventures and aquisitions such as the junction venture with the Robert Fleming of UK to create the Jardine Fleming & Co. , a holding company the aquires many foreign and local firms and diversifies Jardines business. The mid- 1980s saw some mismanagments and misguided a quisition especially after the 1984 Sino-British announcement on the return of Hong Kong.Jardine wanted to diversify more abroad in fear of the Chinese takeover because their relations with the PRC was not good. It aquired the British construction whale Trafalgar House and ther various retail chains in Europe o that Jardine could emphasize more in Europe, exclusively these investments would turnout to be scotch in the future. The current taipan, or CEO is Alasdair Morrison. He has tried to undo many past mistakes and to rejuvenate the 160 year old hong. Morrison has sold off many losing companies and has a greater emphasis on lollyability.The management has been changed to more aggresive and experienced managers such as Ronald J. Floto who previously worked as Kmart Corp. and is known for his turn-around ability. But most(prenominal) centrally, Morrsion has been trying to improve ties with Beijing. He realises that the China market as an indespenable location and has tried repe atly to mend the differences made by the previous Today, the Jardine Matheson group is a multinational enterprise that operates in over 30 countries and employs some 160,000 people.It is divided into eight core companies Jardine Pacific(general trading), Jardine planetary Motors(Car dealership), Jardine Fleming, Jardine Lloyd Thompsion(Insurance), Jardine Strategic, Dairy Farm(supermarket and convenience stores), Hong Kong Land(Commerical property), and the Mandarin Oriental(luxury hotel chain) . Last years sales were US$11. 2 billion and a operating profit of US$190 million was made. The profits fell 34% from last year, and share prices have locomote almost 60% since it moved its primary listing from Hong Kong to Singapore.The main problem with Jardine is that it needs to use its large cash resources to boost market shares in be profitable businesses and make aquistions in core business while assests in Asia are still cheap from the Asian crisis. It also needs to refocus on As ia, because it is where its main expertise and connections are, but the controlling family, the Keswicks with nly a 4. 9% share are reluctant to invest heavily back to Asia and especially China.The Keswicks have held control through cross ownership to build a financial defense against hostile takeovers. Li Ka Shing has tried but failed to take over Jardines in 1988 but many still believe that Li has not given up but is rather waiting for an opportunity. Although the current taipan, Morrison is trying to shape up Jardine again, many are doubtful as long as the Keswicks still retain the controlling shares. Jardine Matheson has had a astonishing past, but many fear that the golden days of the past John D. Hutchison Company was founded in 1828.Being one of the first major traditional hongs in Hong Kong, it had made vast investments in port facilities and other infrastructure projects in the colony. In the 1960s, in an effort to revitalize the hong, John Douglas Clague, the last British CEO of Hutchision made huge investments in not solo in Hong Kong but It reoragnized itself to the Hutchision International and up til the early 1970s, many believed that Hutchision would indeed make a comeback as a dominant firm in the colony.However, losses started to occur from 1973, and being overstretched and hort in liquidity it lost the favors from its investors and creditors(most importantly the Hong Kong Shanghi Bank). Eventually the Hong Kong Bank would step in to take up 33% of Hutchision International and within 2 years merge with a subsidary, the Whampoa Dock Company and create the Hutchision Whampoa. Hong Kong Bank was looking for a suitable investor to take over the pre-opium war hong and eventually they chose a rising real estate tycoon, Li Ka Shing.There are many reasons that Hong Kong Bank chose Li Ka Shing, but two reasons stand out the most, His reputation as a honest nd able businessman and his contacts with the government in Today, Hutchison Whampoa has grown i nto one of Hong Kongs largest blue chip companies with over 70,000 employees worldwide. The grouping operates five core businesses Property Development and Investment, Ports and related services, Retailing and manufacturing, Telecomminications and Media, and Hutchison Whampoa Property develops residential and commerical properties for sale and lease.Its portfolio includes some of Hong Kongs largest private housing projects and several landmark developments in the Mainland. The groups expertise in port investment and management stems form its pioneering operations in Hong Kong. Its port operations arm, Hutchison International Port Holdings, is now exporting its victor experience and expertise to ports in different Watsons operates three of Asias most innovative retail chainsParkN Shop supermarkets, Watsons personal care stores, and Fortress, selling domestic galvanizing appliances.The manufacturing division produces and distributes a wide range of food and beverages throughput Ho ng Kong, the mainland and other Hutchison Telecom operates a wide range of intregrated elecommunications services worldwide and is one of the worlds major providers of expeditious communications The Group has major shareholding in Cheung Kong Infrastructure, which holds interests in infrastructure and related businesses, and power plant projects such as the Hong Kong Electric. It is the sole supplier of electricity to Hong Kong Island. ill-humored Oil, is one of Canadas largest privately owned oil and gas For the fiscal year ending in December 31 1998, The Hutchison Whampoa Group had a net profit after tax of HK$8. 7 billion. It was lower than HK$12. 2 billion from 1997. The Asian crisis which rought on pressures on the entire Asian region. It experienced a period of infrequent asset and price deflation coupled with severe recessionary conditions. These conditions had the big(p)est impact on the Property/Development and Retail/manufacturing operations of the group in 1998.Li Ka S hings other main weapon in Asian business is his strong ties to the Chinese Government. He has been favored since being the first Chinese to take over a western hong in the late 1970s. He also played a large role in the transition period for the 97 handover of Hong Kong. Currently he has a trong influence in the policies that effect Hong Kong both through his contacts with Beijing and the Chief executive, Tung Headquartered in London, HSBC holdings is one of the worlds largest banking and financial services organizations.The HSBC Groups international cyberspace comprises more than 5,000 lines The HSBC Group is named after its founding member, The Hong Kong and Shanghi Banking Coporation limited. Hong Kong Bank, as it is known for short, was established in 1865 to finance the growing trade between China and Europe. The inspiration behind the founding of the bank was Thomas Sutherland, a Scot who was then working as the Hong Kong Superintendent of the Peninsular and Oriental Steam Navigation Company.He realised that at that place was considerable demand for local banking facilities in Hong Kong and the China coast and he helped to establish the bank in March 1865. Then, as now, the banks headquarters were at 1 Queens Road in Hong Kong and a branch was opened in April 1865 in Shanghai. Throughout the late nineteenth century and the early twentieth century, the bank established a network of agencies and branches based mainly in China and South East Asia but also with epresentation in the Indian sub-continent, Japan, Europe and North America.In many of its branches the bank was the pioneer of modern banking practice. From the outset, trade finance was a strong feature of the banks business with bullion, exchange and merchant banking also playing an important part. Additionally, the bank also issued notes in many locations throughout the Far During the Second World War the bank was forced to close many of its branches and the head office was temporarily moved to London. However, after the war the bank played a key role in the reconstruction of the Hong Kong economy and set about further iversifying the geographical spread of the bank.The post-war political and economic changes in the world forced HongkongBank to analyse its strategy for go on growth in the 1950s. The bank diversified both its business and its geographical spread through sciences and alliances. However, the bank remained committed to its historical markets and played an important part in the reconstruction of Hong Kong where its branch network continued to expand. In 1965 the bank purchased a controlling interest in Hang Seng Bank, which had been established in Hong Kong in 1933.By the 970s the policy of expansion by acquisition of subsidiaries with their own identities and specialisations was firmly in During the 1980s the bank concentrated on moving into those markets where it was not yet fully represented. Hongkong Bank of Canada was established in 1981 and HongkongBan k of Australia expressage in 1986. In 1987 Marine Midland Bank, based in New York State, became a wholly owned member of the Group and its principal subsidiary in the United States. HSBC Holdings plc, the parent company of the HSBC Group, was established in 1991 with its shares quoted on both the London and Hong Kong stockAlready almost two years have passed since the handover Hong Kong to the PRC. It is hard to judge the impact of the handover to the Hong Kong economy, due to the Asian Financial Crisis in 1997. What is definite however is that Hong Kong has suffered a difficult 1998 and is still in the process of recovering. The good news is that the fallen prices of 1997 got rid of a lot of the bubbles that was being accumulated in the territory. Large landowners like Li may have had some losses but 1999 saw the economic prices and activities picking up again. Many say that the worst is over and that recover is in process.Already land prices have recovered a lot of its losses dur ing the 1997-8 The problem in the territory is more a political one. Many incidents have brought attention to the problem of implementing the one country, two system policy, which is fundamental in the Hong Kong Basic Law and which will guarntee the independent governing of Hong Kong. The main attraction that has made Hong Kong what it is today is its efficiency and lassie faire approach of the government. If the mainland interferes too much in Hong Kong, it status will decline as the international free port city that has made it so prosperous.