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“….The real difficulty lies in deciding how best to do it….”

  Jonathan Fu, Trustee

 

 

In 2002 when first starting out in fund management, I asked the senior partner who oversaw my training why we categorised Hong Kong as an emerging market when the wider industry deemed it as developed, adding that Hong Kong’s economic output per capita was higher than some developed market peers. The partner simply told me that Hong Kong had the most Rolls-Royces per head of population globally and that was the end of the discussion. His point was that Hong Kong’s wealth was comparatively concentrated, as indicated by the high number of luxury cars (owned by a small number of people), so it lacked a large middle class that is typical of a developed economy. This was an important distinction for a firm looking to invest in consumer trends around the world, and where I ended up leading efforts in capitalising on China’s emerging middle class.

 

Hong Kong’s wealth gap has widened since then, following a pattern experienced by many so-called developed, western economies. This global phenomenon has been caused by a confluence of factors, common explanations include: outsourcing of production to low-cost countries; new technologies displacing manual labour; growing monopolistic power of big business; and policies pursued by central banks to inflate asset prices. Then there are the local issues unique to Hong Kong like housing policy where there is no easy solution. That the poverty rate is at a record high when stock and property markets have done well underscores the social issues faced by our city.

 

There will always be differing opinions on the fairness of our system but the fact is that it has allowed some big winners to emerge, many who like my great grandfather came from modest means. As beneficiaries of the system, it is easy to justify morally why we should follow our progenitor’s footsteps and give back to society. The real difficulty lies in deciding how best to do it.

 

Our foundation’s recent excursion into sponsoring social enterprise, by way of Social Impact Partners, will soon make its first investment in an extensive outdoor running programme for disenfranchised youth, which will be funded by running races and comes with pro-bono legal and accounting support. Philanthropists and social investors are always in search of projects that are both impactful and that can pay for themselves, and this will hopefully turn out to be one of them. But the core of what we do remains in funding programmes designed to provide direct benefits to the least fortunate.

 

These are usually basic counselling, educational or medical services delivered by qualified professionals to clients who have typically been struggling for a long time and are in dire need of assistance. In high tax jurisdictions like Australia or Europe, government agencies might be expected to fulfil this role. In Hong Kong, the government’s take is much lower, so affording organisations like ours the opportunity to help reinforce the social safety net. Most recently, we have focused resources at our base in Kwai Chung where our executive team sit and where we have control over the physical spaces.

 

From the Kwai Chung centre, a variety of services catering to the working poor are provided by our NGO partners. By being close to the frontline, the idea is that our team will be in a position to better understand the impact delivered by the respective programmes and perhaps realise synergies between them. We will also be well placed to help solve challenges that arise. A recent visit revealed that the centre’s location (in an industrial zone) can be a hindrance for some user groups, so we may have to put our heads together and figure out a way to improve logistics. The next few years will be a learning process for how best to utilise the centre and our other resources to assist as many as possible, without compromising on quality.

 

  Jonathan Fu, Trustee

 

 

In 2002 when first starting out in fund management, I asked the senior partner who oversaw my training why we categorised Hong Kong as an emerging market when the wider industry deemed it as developed, adding that Hong Kong’s economic output per capita was higher than some developed market peers. The partner simply told me that Hong Kong had the most Rolls-Royces per head of population globally and that was the end of the discussion. His point was that Hong Kong’s wealth was comparatively concentrated, as indicated by the high number of luxury cars (owned by a small number of people), so it lacked a large middle class that is typical of a developed economy. This was an important distinction for a firm looking to invest in consumer trends around the world, and where I ended up leading efforts in capitalising on China’s emerging middle class.

 

Hong Kong’s wealth gap has widened since then, following a pattern experienced by many so-called developed, western economies. This global phenomenon has been caused by a confluence of factors, common explanations include: outsourcing of production to low-cost countries; new technologies displacing manual labour; growing monopolistic power of big business; and policies pursued by central banks to inflate asset prices. Then there are the local issues unique to Hong Kong like housing policy where there is no easy solution. That the poverty rate is at a record high when stock and property markets have done well underscores the social issues faced by our city.

 

There will always be differing opinions on the fairness of our system but the fact is that it has allowed some big winners to emerge, many who like my great grandfather came from modest means. As beneficiaries of the system, it is easy to justify morally why we should follow our progenitor’s footsteps and give back to society. The real difficulty lies in deciding how best to do it.

 

Our foundation’s recent excursion into sponsoring social enterprise, by way of Social Impact Partners, will soon make its first investment in an extensive outdoor running programme for disenfranchised youth, which will be funded by running races and comes with pro-bono legal and accounting support. Philanthropists and social investors are always in search of projects that are both impactful and that can pay for themselves, and this will hopefully turn out to be one of them. But the core of what we do remains in funding programmes designed to provide direct benefits to the least fortunate.

 

These are usually basic counselling, educational or medical services delivered by qualified professionals to clients who have typically been struggling for a long time and are in dire need of assistance. In high tax jurisdictions like Australia or Europe, government agencies might be expected to fulfil this role. In Hong Kong, the government’s take is much lower, so affording organisations like ours the opportunity to help reinforce the social safety net. Most recently, we have focused resources at our base in Kwai Chung where our executive team sit and where we have control over the physical spaces.

 

From the Kwai Chung centre, a variety of services catering to the working poor are provided by our NGO partners. By being close to the frontline, the idea is that our team will be in a position to better understand the impact delivered by the respective programmes and perhaps realise synergies between them. We will also be well placed to help solve challenges that arise. A recent visit revealed that the centre’s location (in an industrial zone) can be a hindrance for some user groups, so we may have to put our heads together and figure out a way to improve logistics. The next few years will be a learning process for how best to utilise the centre and our other resources to assist as many as possible, without compromising on quality.