Asian business and finance - Essay Example

Throughout history, Macau was dwarfed under the shadow of her more colonially favoured neighbor, Hong Kong. Lying on the southern part of China, it stands on the Western part of the Pearl River in Guangdong Province1. In terms of land size it is almost insignificant even compared to Singapore as it is only 23.5 square kilometers with a population totaling around 450,000 inhabitants. Historically, Macau was the first European settlement in China and even during that time it was a sparsely inhabited place compared to Hong Kong. In 1557, the Portuguese set up a settlement on the peninsula and the settlers had to pay a lease to live in Macau to the Ming Dynasty. Later on, in 1887, the Portuguese made Macau a full colony and because of its long standing relationship under the Portuguese administration it developed different features compared to her other Chinese counterparts, however, these features on its own did not diminish the importance of Macau but actually allowed it to economically thrive from its backwater history. After Hong Kong was returned in 1997 Macau followed suit in December 1999, both the countries received negative economic reviews of its return to China but in the year 2000, to protect foreign interests of trade in Macau and Hong Kong, China assigned both Hong Kong and Macau under the Special Administrative Region using the novel policy of 'One Government, Two Systems'2 rule. The aim of the two systems rule was to free Hong Kong and Macau from the legal constraints of the People's Republic of China (PRC) and it allowed them free rein in handling its economy in a more diverse manner compared to the mainland, recent developments in Macau in the past few years reflect this. Macau has always been a destination for the 'darker' side of entertainment with its strong affiliations of triads and it had a reputation of being a dangerous place to travel to3 .Within its parameters, gambling is legal and for the past 45 years it was under the monopoly of one of China's successful entrepreneurs, Stanley Ho. In 2002, the Chinese government made a big move by opening up Macau as a gambling destination, under the Cotai Strip4 plans. This move attracted even more investors especially from America and Australia, as this was a big opportunity to expand the gambling and entertainment industry in Asia5. By last year, 2006, there are 23 established casinos alongside other illegal gambling dens in Macau and the number of casinos is expected to rise. Along the development of the gambling entertainment industry mimicking Las Vegas are also the opening up of theme parks. In comparison, Hong Kong in terms of size is larger than Macau and in terms of historic significance has benefited quite well under the administration of the British government who levied a low flat income tax rate over Hong Kong before the handover in 1997. Although Hong Kong is slightly struggling politically under the leadership of the People's Republic of China (PRC), nonetheless its economic background is still going strong6. Considering that there is a small population in Macau and in Hong Kong an influx of expatriates and migrants from the Chinese mainland there is a steady, albeit more of a 'second choice' among Hong Kongers to move to Macau in search of work. Recently, Hong Kong's economic boom has been moving steadily although its tourism industry hasn't yet been able to fully recover from the Asian crisis and despite increasing numbers of tourists in 1999 to the year 20007, there is an actual decline in the tourism and hospitality industry. This is attributed to the spread of the SARS virus in Hong Kong and its open reputation for bad service. In fact, with the PRC's diversification of economy Hong Kong is no longer seen as the main financial base for the country and with this in mind if Macau's tourism industry will continue to grow it will finally overcome being under the shadow of Hong Kong's prominence. As I have mentioned above, Macau's increased attention by the Chinese government has resulted in China trying to diversify the economy. The PRC's extensive means as to allow Macau to be the 'gambling' and entertainment hub of Asia will result in the creation of many and new jobs for the Chinese population, however Hong Kong's slump in the tourism industry will greatly reflect on the SAR (Special Administrative Region) as it is one of the major income earners for Hong Kong. The SAR however has taken steps to revive the Hong Kong tourism and hospitality industry including the Disneyland project8 that completed in September 2005, and last year, 2006, there were a series of tourist attractions and countless advertisements to give Hong Kong another go as a tourist destination. Although this move has yet to be seen in terms of Macau's development as an 'adult entertainment' hub but it could be projected that with different aims on the two SARs could well benefit China's transition towards mobilization of the modern economic global market. But Macau is selling itself short to say the least, it has not exploited its cultural traits, evident from the several Portuguese monuments that line the peninsula, it hasn't fully understood its potential as Cheng (1999)9 has aptly put, its cultural 'janus', its fusion heritage that is nearly half a millennium old. It could have used these monuments to build Macau up not only as an 'adult entertainment' hub but a cultural heritage hub that needs China's protection and maintenance. Another problem is the fact that it has built up a reputation over the years as a seedy tourist attraction10 when in fact it has one of the most beautiful churches ever existed in its day, the So Paolo's remains from the fire of 1835 haven't yet been reconstructed for historical and tourist purposes. However, the last two years Macau has been trying to revive this cultural heritage somewhat and it has been receiving good reviews but is it possible to greatly affect Hong Kong's tourism industry. The problem with Macau is its very small area, although this could be further developed into mimicking a sort of 'high-end' area like Monaco but the problem of its triad infested involvement is too evident11given that even Chief Executive of Macau, Edmund Ho admitted that he had triad contacts and that in keeping the politics of Macau safe was to allow a correct balance between the two, the underworld and national politics. In contrast, the Hong Kong tourist and hospitality industry's recent turnover last year had Forbes.com announce its Ocean Park as one of its most popular amusement parks in the world12 and instead of cowering even further we can actually expect to see that Hong Kong will try to move out of its tourism slump soon. Hong Kong seems to be actually benefiting from the open competition of tourism from the mainland (especially Shanghai) and Macau. In fact, this year alone the Hong Kong Tourism Board is trying to enhance their image for stricter measures concerning their previous reputation for bad service13. What is apparent is that Macau won't completely lose out when it comes to Hong Kong being in the limelight, on the contrary if the SAR was able to combine both Hong Kong and Macau as one destination both of these areas could benefit financially. What needs to be done is to create an easier access between Macau and Hong Kong and instead of emphasizing on its complete alienation between Hong Kong and Macau an integration of values could be inserted, under a theme of unity with unique diversity. Macau is a place where people could escape from the fast pace of Hong Kong and in comparison time is perceived as being slower and more relaxed, a combination of both these ideals could be SAR's ticket to accessing better tourism. This is because Macau's recent contracts has been with one of the more lucrative gambling magnates such as the LVSC (Las Vegas Sands Corporation) of the Venetian complex fame in Las Vegas14 and the Macau Sands Casino is reported to attract 20,000 visitors in a day. The reason why I stress the importance of combining both Hong Kong and Macau as one destination is the important fact that while Hong Kong is extremely dependent on its tourism industry Macau is also heavily dependent on its gambling entertainment industry. The gambling industry accounts for 70 per cent of Macau's local government revenue, when a combination occurs considering that both are very close geographically to one another Hong Kong and Macau could help one another financially when there is an economic crisis. Macau has a rising industry that requires en masse employment and because of its small population needs an influx of workers as only three quarters15 of its 450,000 inhabitants are 'economically active' while Hong Kong itself is well populated especially from the increasing migration of peoples from the mainland, eventually most of these peoples from the mainland who are usually frustrated by the legal difficulties of the mainland would prefer to find employment in Macau when Hong Kong becomes overpopulated than returning. In summation, the PRC's move in allowing Hong Kong and Macau to be administered specially is providing benefits for China's economic future and the legal differences that govern both Hong Kong and Macau will reflect greatly in their ability to maintain itself as the 'hotspots' of tourism in Asia. References Ash, R., Ferdinand, P., Hook, B., & Porter, R. (Eds.). (2000). Hong Kong in Transition: The Handover Years. Basingstoke: Macmillan. Cheng, C. M. (1999). A Cultural Janus A Cultural Janus. Hong Kong: Hong Kong University Press. Herschensohn, B. (2002, July). Hong Kong: Five Years after Handover. World and I, 17, 38. Retrieved May 1, 2007, from Questia database: http://www.questia.com Hoare, N. (2006, October). Building on the Past, Gambling on the Future. Geographical, 78, 72+. Retrieved May 1, 2007, from Questia database: http://www.questia.com/ Hong Kong Tourism News (n.d) Retrieved 1st May, 2007 from < http://www.hong-kong-travel.org/NewsContent.aspNewsId=19 Hong Kong Government News in Business and Finance section (2nd April,2007) Retrieved on 1stMay,2007 from Lintner, B. (2002). Blood Brothers: Crime, Business and Politics in Asia. Crows Nest, N.S.W.: Allen & Unwin. Macau: Soon to Be Asia's Las Vegas. (2004, July 30). Manila Bulletin, p. NA. Retrieved May 1, 2007, from Questia database: http://www.questia.com Read More