23 March 2016
Into the Zone
Opportunities opening up in the Pearl River Delta
Dr Haywood Cheung is Chairman of Hong Kong listed Target Insurance Ltd and has over 30 years' experience in precious metals trading, securities and futures brokerage and Forex dealing in Hong Kong. Dr Cheung's first degree was in Geology with a minor in Economics from Concordia University, Montreal. More recently he has graduated from the College of Business at CityU with an EMBA and DBA. Dr Cheung has served as President of The Chinese Gold & Silver Exchange Society, President of the New Territories General Chamber of Commerce, and Vice President of Guangdong General Chamber of Commerce. Dr Cheung has recently made a donation to CityU EMBA College Development Fund. Here he talks about developments in the Pearl River Delta Free Trade Zones, opportunities for Hong Kong, and his own start in professional life.
Dr Haywood Cheung's office looks out over Hong Kong's answer to New York's Central Park: Kowloon Park. We are close to the top of one of the shiny new towers, looking down over the sprawling banyan trees 20 floors below. In his office, shields and certificates in the bookcase stand testament to his professional background in gold and silver trading. And on arrival after being caught briefly in the Kowloon traffic, Dr Cheung is affability itself.
"I was on the through train with three other learning partners," he says, referring not to his recent journey back to the office, but to the accelerated development which allows College of Business students to study the EMBA and the DBA in four years.
"It's very important for guys like me. If I had to give a second thought to starting up the DBA I would have quit!"
Why return to academia?
"The EMBA gave me a new life, it gave me renewed drive after so many years in business. And it laid the foundation for the DBA, and my thesis on the internationalization of the RMB." Dr Cheung is happy to discuss big topics such as the new Free Trade Zones in the Pearl River Delta:
"Hong Kong's recent economic relationship with Guangdong is more than thirty years old," he says. "The China economic boom of the 1980s was driven by the many Hong Kong entrepreneurs who moved their factories to Shenzhen. This helped further the economic reform of China. That phase is now finished because land and labour costs are so high, and manufacturing has moved north."
But now the Pearl River Delta presents a second wave of opportunities, this time in high-end technology services, finance, logistics, and education. The key is in the Free Trade Zones, the New Areas of Nansha in Guangzhou, Hengqin in Zhuhai, and Qianhai in Shenzhen.
Commuting is doable
"This is a big project. These zones cover over one hundred square kilometres. And Qianhai is inside the one hour economic circle from Hong Kong. Commuting is doable. It is going to give lots of opportunities to our small and medium enterprises (SME) as well as to our young professionals." Having served as Vice President of Guangdong General Chamber of Commerce, Dr Cheung is well placed to outline the opportunities ahead.
The niche is in providing front line financial services related to off-shore finance.
"Shenzhen will start offering more specialized financial services but for the time being Hong Kong is still five years ahead."
"Hong Kong is a trusted brand worldwide. We have a transparent monitoring system, an effective mechanism for listing overseas enterprises, and an equity and commodity trading system which makes international fund transfers available to mainland China. That adds up to a great base to participate in the new Free Trade Zones."
The uses of Geology
Dr Cheung started out in tertiary education more than thirty years ago. This was a Bachelor Degree in Science with a major in Geology and a minor in Economics from Concordia University, Montreal. Why geology?
"When I got off the plane I was surprised that there was nobody from Asia. I couldn't even pronounce Montreal. The French language was everywhere. Montreal was a 90% French speaking city in Quebec Province."
"I was looking for something 'easy'. Geology was an unusual subject. All the Chinese were doing popular subjects like computer science, or accounting. I took geology because I am an active kind of person. There were lots of field trips, up to ten days at a time."
"In the third year I remember going out into the cold northern forests, to a sulphur mine. I was smoking at the time – although I did give up for that day! We were shipped out by car at six in the morning. Provision was basic. The mentor gave us one apple, one sandwich, and one coke. I said Thank you for the breakfast. He said That's for your lunch and tea break as well. See you tonight at 7.00. Temperatures were down to -10 degrees Celsius. Easy option it was not."
And, surprisingly, geology has influenced his subsequent career.
"Back in Hong Kong one of my learning partners from Concordia said: Haywood, there are government contracts dealing with site formations. This was the time of the terrible landslide disasters of the early 1980s and the government was beginning to take land slip preventions and slope maintenance very seriously. So I opened up a construction company dealing with site formation, and we became a licensed company. For some years, we took up close to 30% of government land slip prevention contracts."
Concordia wasn't the end of his academic studies either. More recently Haywood has been studying with the College of Business.
No such thing as too busy
Dr Cheung leads an extremely busy professional life but at CityU still managed to keep up to speed with study.
"In my book there is no such thing as I am too busy. Time can always be managed, even if it means working on a Saturday night or a Sunday morning."
After thirty years in the financial markets Dr Cheung found the return to academia valuable. And he is not through with academic study yet:
"Academic work is a complement to my professional activity. The internationalization of the RMB – the subject of my research thesis – is an ongoing process, and that area lacks theoretical support. We need publications, promotion, channels, business models, further studies – and I would like to make a contribution."
QE: a worldwide business model
As an ex-President of The Chinese Gold & Silver Exchange Society, Dr Cheung is often asked about the prospects for the gold market.
"Gold was the first commodity to respond to the Quantitative Easing of the US. But now QE is a business model for the world. Japan, Europe, even China. It has become almost institutionalized and therefore there is no longer a sharp reaction when yet another country announces a round of QE."
"After almost 12 years of boom, the price of gold is now stable. Right now investment has moved to equities, so gold will slow down. Volumes are still there but it will take a year for the return of a bull market."
Hong Kong – still special
Dr Cheung comes back to the future of Hong Kong. "The China boom over the past ten years or so has to an extent marginalized Hong Kong, but we are ourselves in danger of increasing that marginalization. We were once one of the beloved, but now mainland China is becoming more self sufficient. The current focus is on Shanghai and Singapore."
And he has a specific message for our university students and graduates. There are chances now to get involved, specifically in the new Guangdong Free Trade Zones:
"Learn from your academic study, get into China, and then apply yourself to China. The window is still open: Hong Kong is still five years ahead in financial services."
There are opportunities ahead for Hong Kong.
"The Asian Infrastructure Investment Bank is coming, and that will mean China building closer linkages within Asia, and that's another chance."
And his parting thought:
"The one thing we can't afford to do is stay put in Hong Kong and wait."
By Eric Collins