Hong Kong cons

From Monday's SCMP, the most common con-tricks in Hong Kong. Don't worry - it's still a relatively safe place. You will notice that apart from the first one, which takes advantage of people's willingness to help, and the second one, they rely on the greed of the victim.

1. "Help! I need your phone/money" Culprit poses as a tourist in distress and asks to borrow money or a mobile phone from the victim, leaving them a false contact number.

2. "Evil spirit be gone" The victim is taken to see a holy man to expel an evil spirit, in a ritual involving the use of personal valuables or money. When the victims are returned their "valuables" in a bundle, they find only worthless items.

3. "Let's split the money" A "passer-by" agrees to split some money which they find lying on the ground at the same time as a victim. Another person then arrives and accuses the passer-by of stealing the cash. They apparently decide to settle the matter at a police station and appear to give the victim the dropped money in a bag for safekeeping. In return, the victim hands over valuables or other cash as collateral. The pair then disappear, and the victim is left with a bag invariably containing only paper.

4. "Those electronics are worth a fortune" The victim is asked on the street to watch over some electronic parts, in return for a fee of about $300, while the conman "returns to the office". A second swindler then turns up, and tells the victim that the goods are extremely valuable and suggests that if they can be bought for the right price, a huge profit could be had. The first conman then returns and agrees to sell the victim what turn out to useless electronic parts.

5. "It'll cure anything" Culprits approach a victim trying to sell some herbs, pills, or medicine by exaggerating their clinical effect. Alternatively, they lure the victim into buying the products as a joint venture, with the promise of huge profits.

They missed one out, though:

6. "The Shanghai Job" Elderly businessman persuades central government in Beijing that he is just the man they need to run a small but important piece of territory that has returned by the previous tenant at the end of a long lease. It turns out that this is not true and in fact he is a bumbling idiot with no previous political experience, but by the time this becomes clear he has already been given the job.

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Tax time

In Hong Kong, January is the month when you have to pay your tax bill. I am getting used to this, but at first it was quite a shock after having tax deducted automatically from my salary under the British PAYE system. Instead, it is common to receive a "13th month" of salary in December or January, which (for most people) covers the tax bill, but obviously not all of it for everyone. It's a strange system, and although some people regard it as a bonus, in effect the employer is holding back part of your salary and paying it to you at the end of the year. Legally you are entitled to receive the appropriate proportion of this if the employer terminates your employment, though you lose it if you resign. Plus, over the last few years, some companies have stopped paying the 13th month salary, but of course the tax bills still have to be paid.

The banks think they can help solve this problem for you. I've got used to receiving offers for 'tax loans', but this year the credit card companies seem keen to give people an incentive to paying tax bills using their card. Presumably they hope that some customers will take a few months to pay off the money, and end up paying interest at 24% per annum or whatever it is they charge.

Last year I was slightly surprised to discover that I could pay my bill through my bank's internet site and charge it to my credit card (so delaying payment and earning me a few measly bonus points). I wondered whether I had been a bit clever and discovered something that the bank had not really intended me to do, but this year they are advertising that this service is available, so obviously they wanted me to do it.

Another credit card company has written to me, suggesting that I can use their card to pay my tax bill. If I then spend a certain amount on the card in February and March they will give me 'cashback' (0.5%) in about a year's time. Too complicated, I fear.

I have also received a leaflet from HSBC credit cards advising me that they are running another scheme to try to encourage customers to spend more money. However, they seem to be rather confused about the meaning of the words 'at least' and 'maximum'. If you read the small print, you discover that you can get a maximum of 10 gifts, but they also say: "so you will get at least HK$200 in cash coupons". Not really - only if you make 10 purchases of HK$500 or more and phone their special 24-hour hotline (and enter a mass of detail) 10 times. The headline says "get up to HK$200 or more", which is wonderfully vague but closer to the truth. What they really mean is that you are unlikely to get more than HK$200.

Life has certainly changed for credit and charge card companies. Six or seven years ago it was unusual to get even the first year fee waived, but now there are offers of multiple years of automatic fee waivers, and many cards waive the fee if you spend a certain amount during the year. On top of that, many customers threaten to cancel the card if they have to pay an annual fee, and the banks usually agree to waive the charge when asked.

Nevertheless, I was surprised to receive a letter from one charge card that I use only rarely, telling me that as a valued customer my fee for the coming year had been waived. I only wanted the card because of the airport lounge access they offer, and I was quite willing to pay the annual fee, so that was an unexpected bonus (after my initial two years free). One of my cards is free because I spend over the minimum amount, another because we have a mortgage with the bank concerned, and another because the initial fee waiver lasts for five years! So, I am not currently paying for any of my cards.

This can't last for ever, and once the economy picks up I expect that the banks will quietly withdraw these concessions and we will have to start paying for our credit cards again. Not just yet, though.

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Hong Kong Public Housing

According to the government there are 11,000 older privately-owned apartment blocks in Hong Kong that don't have an owners' corporation or management company to look after the building. This means that the individual apartment owners have to agree on any expenditure, and if they can't agree then nothing will be done. Unsurprisingly, many of these building are in poor condition. The Housing, Planning and Lands Bureau has produced a consultation paper on the subject. According to The Standard:

In a Legislative Council session yesterday, lawmakers said the consultation paper lacked concrete content. "It was the most hollow public consultation paper I have even seen in the past 10 years. The paper has depicted the problems but not provided solutions,'' said democrat lawmaker James To.

Many of the owners seem to think that it is the government's responsibility to maintain the common areas and so are unwilling to pay for the work themselves. The government in turn shows no sign of being willing to explain to people that it is the responsibility of the owners to maintain their property, or do anything else about it.

One complication is that many of these buildings are likely to be pulled down at some stage, possibly by the government's Urban Renewal Authority. Owners of these properties know that if this happens they will be compensated very well (regardless of the condition of the property), and the irony is that the more dilapidated the area the more likely it is that the government will want to re-develop. So for some of the owners, the reluctance to pay for repairs may actually be a cynical ploy. Not much consolation to those who have to live there, though.

When I lived in the UK, I owned a leasehold flat (as we call apartments). The owners of the freehold and the head lease had both disappeared, leaving the flat owners somewhat in limbo. A group of us managed to set up a company, buy the freehold and head lease and issue new longer leases for the apartments for those who wanted them. It was hard work and took a couple of years, but fortunately the majority of owners supported the initiative and we were able to ignore the small minority who didn't want to do it. Around the same time, there were some horror stories of similar blocks where the owner of the head lease (or freehold) had decided on a massive renovation program and sent bills to the leaseholders for £20,000 or more. If the leaseholders didn't pay they could lose their property, and there were suggestions that the contracts for the work were being given to associated companies without a public tender.

In Hong Kong, newer and larger developments have an owners' corportation that decides on the work to be done and appoints a management company. This is better than what happens for older blocks in the UK (which may well be owned by a third party), and not radically different to what happens with newer blocks.

The problem comes with older blocks where such arrangements were not made when they were developed, with the complication that there is no freeholder and no head lease. All Hong Kong property (apart from St John's Cathedral) is leasehold, and the freeholder is the government. So the term of the lease is fixed, and there is no possibility of acquiring the freehold (as I was able to do in the UK). Worse, if you want to re-develop the property you have to pay a substantial premium to the government.

As usual in Hong Kong, the problem is that the government interferes too much and yet seems reluctant to take responsibility for the difficulties this creates.

If the government didn't interfere, it's reasonable to assume that the price of these properties should fall to a level where someone would buy them in order to re-develop the site. However, prices are maintained at an artificially high level because of the prospect of the Urban Renewal Authority stepping in (and paying owners enough to buy a similar seven year-old unit in the same area). In addition, the developer would also have to negotiate with the government and then pay a Land Premium before re-building.

On the other hand, the overblown public housing system seems to make people believe that the government has an obligation to sort out the problem (which they don't in this case). So people stay put, expecting either that the government will carry out renovations or that the Urban Renewal Authority will buy their property.

What a mess! Unfortunately the government doesn't seem to have any idea how to sort it out.

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A fool and his money

Hong Kong has a few supermarkets that are aimed squarely at the expat community - Citysuper (in Times Square, Harbour City and IFC 2), Great (in Pacific Place), and Olivers (in the Princes building).

The majority of the customers are gweilos (Brits, Australians, Americans, Canadians, Europeans) and Japanese, and the shops tend to have different ranges for the two groups - my comments are mainly about "gweilo food". I have very mixed feelings about them - on the one hand it's great to be able to buy things that are otherwise unavailable, but on the other hand the prices are very scary.

I don't visit these shops very often, mainly because, when I do, I end up walking around picking things up, and then putting them down when I see the price. Then I tell myself that I am being stupid and I should just pay the money and not worry about it.

The first time I went in to citysuper I remember seeing some yoghurts and thinking that the price looked quite reasonable, until I discovered that they charged that price (HK$14 or thereabouts) for each single pot, not for the pack of four!! This is for an ordinary yoghurt that is available in supermarkets in France for a fraction of that price.

I don't mind paying a modest premium for imported products, but I do object to paying a high price for run-of-the-mill products. Assuming that it is the cost of shipping that makes these products expensive, but that is a fixed cost regardless of whether it is a cheap or an expensive product, so why not import the good stuff? If you go to Harvey Nichols food hall you pay high prices, but the quality is also very high. Here it sometimes seems that we are paying Harvey Nichols prices for Tesco products!

For example, the cheese counter has some fairly ordinary cheeses at extraordinary prices. I wouldn't mind paying for really good cheese, but this is mainly mass-produced stuff! I did find some decent Cheddar in Great, but typically they didn't label it with the name of the producer - it just said "cloth bound Cheddar". On the other hand, I bought some Stilton a while back, but it had only been matured for about a week and I didn't enjoy it at all.

The selection of meat in most 'ordinary' supermarkets in Hong Kong is not very impressive (though my local Wellcome does sell fresh New Zealand lamb). Unfortunately the prices in the expat supermarkets are quite high, and a lot of the meat has previously been frozen.

Fruit and vegetables in the expat supermarkets are also expensive, but again the quality is variable. I sometimes look in total disbelief at the prices they are charging for very ordinary produce!

Sometimes they get it right - Great sell a range of fresh sausages from Waitrose (an upmarket supermarket in the UK) for just under HK$50 per pack. I'm guessing that they sell for £3 or thereabouts in the UK, which is HK$40 at today's exchange rate (and so I think they'll increasing the prices if the rate stays the same for much longer).

Going off at a tangent, I noticed a poster advertising Beaujolais Nouveau when I was in Great this week. This really is a triumph of marketing, and whoever it was who thought of promoting the stuff all over the world deserves to be very rich. Beaujolais Nouveau is very immature wine that is fermented rapidly, and so does not develop the characteristic depth of flavour and tannins that are normally found in red wines. In a good year it is clean and fruity, but in a bad year it tastes of almost nothing!

Around 1985, some of the wine producers started promoting it by organizing a race to get the first bottles to London. It was a huge success, and for a few weeks in late November and early December it became the perfect excuse for going to a wine bar. A few years later I worked for a company that had drinking as a very strong part of the culture, and we didn't need much of an excuse anyway, but we had a few Beaujolais Nouveau nights!

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Fighting the pirates

Interesting story in the SCMP this morning, about the approach taken by film distributors on the mainland to pirate DVDs. Infernal Affairs III was released last week, and pirate DVDs were available a few days later. So rather than whingeing about it in the SCMP they did something positive:

Just three days after cinemas began screening Infernal Affairs III, they have flooded Beijing shops with DVDs of the police thriller - hoping to beat pirates at their own game.

"It is our strategy to fight against the piracy by flooding the market with authentic and legal products at an extremely low price," said Ouyang Xinpeng, media manager for the Guangzhou-based distributor Zoke Culture Company. Big-screen hits including Infernal Affairs II, Warriors of Heaven and Earth and Running on Karma have been fast-tracked to film vendors by Zoke Culture in the past six months.

"Our products now occupy about 70 per cent of the market, as opposed to 60 per cent for the fakes in the past," Mr Ouyang said. "We lost profits from them all, but we believe that all this effort is worthwhile to squeeze fake producers out of the market."

A very sensible response, I thought. The only thing that surprised me was that they are pricing them quite so cheaply. I'd have thought that they could have charged a little more for the genuine article, but perhaps this way guarantees that they beat the pirates.

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Cold Front

This is the time of year when opinions about the weather vary somewhat depending on whether you are a local or a foreigner. For many of us (as Shaky noted) this is good weather, pleasant during the day but perhaps a bit cool at night. However, locals are dressing up in scarves and winter coats because it's so cold. People actually tell me I must be very strong to go out wearing a shirt but no jacket!

Later in the year we can look forward to the cold weather warnings from the Observatory:

• Members of the public are advised to put on warm clothes and beware of low body temperature due to the cold weather.
• If you must go out, avoid prolonged exposure to wintry winds.
• If you know of elderly or persons with chronic medical conditions staying alone, call or visit them occasionally to check if they need any assistance.
• Make sure heaters are safe before use, and place them away from any combustibles.

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