The Power of Data Podcast
Episode 54: Why A Global Approach Is Vital For The Future
Guest: Nicholas Kwan, Director of Research, Hong Kong Trade Development Council
Interviewer: Sam Tidswell-Norrish, International CMO, Dun & Bradstreet
Hi, welcome back to the Power of Data Podcast. Today I am delighted to be introducing you to our latest guest, Mr. Nicholas Kwan who is the Director of Research at the Hong Kong Trade Development Council, otherwise known as HKTDC. Welcome, Nicholas.
Hi, Sam. How are you?
All the better for speaking to you and it's a beautiful day here in London. You're based in Hong Kong?
Yeah, also quite nice weather here.
Excellent, bodes well. Let's start with a little bit about you. You've had a varied career in the area of research. I am a huge fan of government subsidiaries that promote trade around the world. And in doing my research about the Hong Kong Trade Development Council reminded me a lot of the UK Department for International Trade, the work that you do is pivotal not just to the Hong Kong economy, but actually global economies as a global trading hub. So can you start off by telling us a little bit about yourself and about HKTDC to our listeners.
To be honest, I started my career in something different, far from the kind of work you've just mentioned. I.ve been a researcher and a macroeconomist almost all my life. But I started off my research career in financial systems. Every time I changed job, one common thing is there would be a crisis coming very soon. I joined Merrill Lynch in 1987, just a month before the stock market crash. It takes me about a decade to learn my way through and I became the chief economist for Asia Pacific at Merrill. And then there came the Asian financial crisis in 1997. I stayed on for a while, but suddenly found that it would be more fun to switch side from the private sector to the public sector. So I joined the Monetary Authority of Hong Kong, switched from an investment banker to become a central banker, only to find that three months after I joined HKMA, a major crisis arrived Hong Kong with massive speculation on the Hong Kong dollar, which forced us to intervene in the market in a huge way. That's the second crisis of my career. Then few years later, I found it might be more interesting, more dynamic, to be back to the private sector. So, I joined Standard Chartered Bank as the regional chief economist, only to find that there is another bigger crisis waiting for me in 2007, 2008, the global financial crisis. So after some years, I found that I had enough in the financial sector, I have done investment bank, I have done central bank and commercial bank, if I was to stay in the research field, I need to find something interesting and new. So I joined HKTDCHKTDC. It is a trade promotion body of the government, but is largely run as a private enterprise, except for some of the key board members, including our chairman, who are directly appointed by the government. The whole council is operating on market terms, including my position as the director of research. I thought that I'll be doing something different, while still on macro-economic research, I left the financial sector and now looking at the real sector, and I believed that it will be less pressurized. But I was so wrong that some years later, I found myself running into some of the biggest crises ever, the trade crisis that evolved into a full-blown real sector crisis and lately, the public health crisis, which resulted in almost all economic activities being locked down, and paralyzed. So that’s a summary of my career. I hope I don't need to find another job to bring them another crisis. But to some extent, I think what I've seen is enough for my career.
As an economist and a researcher, you're going to have your hands pretty full with the situation we found ourselves in globally today, and at Dun and Bradstreet, our business is commercial data analytics, insights and predictive model. And the crises that you've been through, you've lived through, that rich learning environment are areas in which Dun and Bradstreet thrives, because we get to support our clients and help navigate their way through. And you're exactly right that the pandemic has been a trade crisis as well. And we have a number of different tools at Dun and Bradstreet, including our COVID Impact Index, and portal related solutions, to help companies understand more about the trading environment, rather than it just being considered a health pandemic. At Dun and Bradstreet, we're also passionate about working more collaboratively on a global scale. We are a global business and every day we become more global. We've just acquired 19 more markets in Europe, which we'll come to talk about a little bit later, particularly as it relates to the Belt and Road Initiative. And at the Trade Development Council, you have your own initiative to foster more collaboration in this area. Can you tell us a little bit about the Belt and Road Initiative and its aims for promoting further market integration, and I guess ultimately forging new ties amongst communities?
Yeah, it's very simple actually. Many people have different interpretation of the Belt and Road Initiative. But for us, as you said, we are an agency to help to globalize in different forms, particularly in trade and economics. This Belt and Road Initiative it's basically a globalization effort initiated by the Chinese. So I normally call it as a globalization with Chinese characteristics. And a problem with this globalization with Chinese characteristics is that it comes at a time where the world is not all along going for globalization. In fact, since the past global financial crisis, we've seen a huge wave of de-globalization, that goes from finance, to economics, to trade, and to technology and everywhere. It is quite unique that China being an upcoming major economy is going against this trend, and pushing for globalization. What I see Hong Kong's role is because the BRI is done from a Chinese way, it has to synchronize with the rest of the world, otherwise you can't globalize, and any program that cross border, needs to be owned and shared by stakeholders on different sides of the border. So Hong Kong's case here is that we are the most internationalized city of China, and to some extent, we could claim as one of the most internationalized city in the world, and we have globalization, particularly the economic side, in our DNA. We have a lot of connections, we have a lot of business practices, which are well integrated with the world. So here, our role is how to make this project of globalization with Chinese characteristics, also in line with international characteristics, so that this kind of globalization really works for everybody's benefit. That is how I see the things going on. Of course, in terms of the actual practices, there's a lot of work to do. And because we are the trade promotion body, we focus on how to get the related parties together, make it more internationalized, and how to get this practice to synchronize with the international practices.
Thank you. And I love the way you've positioned that, you've given me some wonderful sound bites there, around the globalization with Chinese characteristics. And for those listening who don't necessarily know a lot about the Belt and Road Initiative, the Belt and Road Initiative, the way I see it is a wildly ambitious program designed to connect Asia with Africa and Europe through a number of different both land and sea networks. And it was designed by President Xi Jinping of China, probably I think, in the early 2010s, maybe 2012 2013. And it was based on the concept of the Silk Road from many thousands of years ago. It's ambitious for a number of reasons, firstly, because of the amount of investment has been poured into it. I think there's something like 3000 projects ongoing, with around $2 trillion of infrastructure investment being put to work. But most importantly, as you say, Nicholas, it's going against the deglobalization that we're seeing today. And I think the pandemic has only increased deglobalization, supply chains are broken down, people are thinking more domestically, looking for different supply chain opportunities. And knowing that Hong Kong is a wildly cosmopolitan city and region, it can be that integration hub, and help connect China's characteristics with international characteristics, it's a really, really exciting opportunity and I know, James, our general manager in Hong Kong, and Andrew, our general manager for Greater China, are both wildly excited about the ways we can support you in doing that as Dun and Bradstreet. So there's huge opportunity for us together, I'm sure. But if we look at the appeal of launching such an initiative in Hong Kong, what do you see the advantages Hong Kong can bring to the Belt and Road Initiative? And how can it benefit both Hong Kong and other countries that want to work with Hong Kong?
The bottom line is that we see the future of Hong Kong is to get the world closer to each other. We are a very small, open economy. All we live along is to interact with different parts of the world. To some extent, we are a service centre, many people see Hong Kong serves as a gateway to China. And we also serve for China going out to the rest of the world. Actually, we are serving as a gateway for the East to meet be with the West. So there's more than China to talk about. But this particular Belt and Road program, since it is initiated by China, we see ourselves has a specific position and role to play because we know China much better than any other cities outside. And we have the most international connections among all the Chinese cities. And because of the one-country-two-systems regime, we managed to have something really unique, where the rest of the mainland doesn't have. The other area is finance. Many people know Hong Kong in terms of our stock market and IPO. But we are unique in several other ways. We are the single largest hub for offshore RMB business, we are the third largest center for US dollar exchange market also. We have been doing Forex and other financial cross border business for a long time. And we rank among the top five in terms of inflow as well as outflow of foreign direct investment, on a cumulative basis around the world. It's not to say that we have a lot of money to invest, or a huge opportunity for people to invest in. But the simple fact is that a lot of countries and investors use Hong Kong as a conduit to invest cross border. So in the old days, a lot of American, European, Japanese money use Hong Kong as a place to invest into the mainland and Asia, increasingly, Asia and China is using Hong Kong as a hub to invest overseas, and to the West. So all these are very critical. If a globalization program like the Belt and Road were to succeed, we would see a huge amount of trade flows, investment flows, as well as other service and technology flows through, across the region. And we are serving in this particular area with our unique platforms, as well as our expertise.
Thank you, Nicholas, that was extremely useful and you've given me a lot of ideas that I have to take off the podcast because there are opportunities for us. But let's talk for a moment about some of the events that are going on, that we can get involved in and our listeners can get involved in who find this an area of opportunity. In 2017, May, I think it was during the first Belt and Road Forum for international cooperation in Beijing, President Xi formally announced that big data would be an incorporated component in the Belt and Road Initiative, and it will play a very pivotal role in how the Belt and Road Initiative evolved. And the core focus was on traditional infrastructure deployments, and they wanted to establish a Digital Silk Road equivalent. Can you just talk to us a little bit about the developments within the Digital Silk Road, and how data and analytics have played a role in it?
Happy to do it. Digital economies is a trend anyway, everything's going digital, particularly under the pandemic. But well before that, actually, two years ago, we have commissioned a study on how Hong Kong can play a role in this Digital Silk Road program. The reason we see we have a role is basically that we are one of the more developed digital economies in the region. We were ranked the top two in Asia and top eight around the world in terms of our digital competitiveness by the IMD study. And we have some of the top digital infrastructures in terms of cross continental submarine cable connections, satellite connections, mobile penetration rate, broadband penetration rate. So all this gives us the basic infrastructure to embark on more active participation in this Digital Silk Road program. The way I see it is that what the Belt and Road’s first focus on is infrastructure projects, and particularly in terms of the digital infrastructure, it is very important not just for China, but also for many of the recipients of the Belt and Road investment, mostly developing countries. Digital and technology is something which really can help countries, developing countries, to leapfrog, as well as to cut short their development path. We know a lot of infrastructure take a long time to build, and they require huge investment. But some of those actually can easily cut through many other generations of investment, like mobile technology which can save us huge investment in fixed line infrastructure. In finance, E banking, mobile banking, helps countries to have much higher banking penetration into the rural and suburban areas. This is particularly evident in China which have quite an experience in using technology and digital means to promote its own development. Now we are in a position to bring that to the other countries and make them fit into different systems. So these are areas which have been identified in our study where Hong Kong will be and hopefully we can play a much more active role, and we are working with the mainland as well as the overseas counterparties to see how to get these different projects put together. We are not strong in infrastructure building, but Hong Kong is very famous of our service sector, professional services. And we adhere to a lot of international standards, which is different from what the mainland counterparties are like. So what they need for us is the kind of services to help them connect with the other side, mostly the developing countries, but also including some of the more developed areas.
Thank you. And I know recently, just this week, and last week, the HKTDC participated at the CIIE event in China, which was one of the largest national events in China that President Xi actually opened. And you have your own event coming up called the Belt and Road Summit, which I want to talk to you about just for a moment, and it's a big event, you know, we're gonna have over 5,000 people there. Dun and Bradstreet are a sponsor and a participant at the event. And these kinds of events are really important for us. I'll tell you why, and then I'd like you to tell us why it's so important to you. And for those listening, Dun and Bradstreet, with our commercial data solutions, lives to fuel business. We want people to do more business, we want our clients to thrive, we want our clients to compete, and we want our clients to be protected. And one of our solutions the D-U-N-S® Registered Seal, which is often abbreviated to DRS, is a solution that helps people do that. It helps companies actively market their credibility digitally. And we work with big sourcing platforms all the way down to some of the most ambitious and exciting new sourcing platforms, helping companies do business online. The Belt and Road summit is bringing all of those constituents together, you're gonna have over 5,000 government officials and business leaders, you've got, I think, over 100 Mainland China and overseas delegations, you've got hundreds of exhibitors, hundreds of investment projects on show. Tell us a little bit about what the objectives of the Belt and Road Summit are and how people can get involved, because this is all about doing more business. And I think it's critical to do more business at a time like this.
It's good that you mentioned about the Belt and Road Forum for international cooperation in Beijing, which was launched in May 2017 by President Xi. We have our first Belt and Road Summit done actually a year ahead of that, and we are now into the fifth year of this summit, both are huge and mega, but honestly of two different calibrate. The one in Beijing definitely is more g to g, government to government, they have a huge number of state heads, and ministers attending. Ours is very different in the sense that since Hong Kong is just a small city. But we'd like to have a more business oriented, and more global type of conference. So all along, we have been building this summit with two focus, one is business, and second is international. Belt and Road is a globalization program, we need to make it as global as possible. Last year, we have about 5,000 attendance. But this year is very unlikely to have that, because, first, pandemic will not allow us to have so many people traveling in and out. And even for people here, we have restrictions on, to the number of people we can get together. So we will have it done mostly in an online format. We expect much less attendance in the sense of direct participants, but probably a much wider coverage in terms of geographical and business sectors. This is one distinct development we have, and if things go on well, we would like to have a kind of hybrid setup going forward. The thing about this year's summit is that we try to do most things online, which actually give us an edge of reaching out to many people who may not be able to travel, not just because of the pandemic, you know Belt and Road cover a lot of developing countries and traveling from those places to Hong Kong could be very expensive, and also very time consuming. But this time with the online setup, we are expecting a much higher penetration and wider participation and hopefully we will actually spread the message much wider. In the last several years, we're talking mostly on very generic terms of what is Belt and Road, what kind of broad industries, and key projects that companies may be able to partner together. This time, we are much more dedicated to business matching for companies, stakeholders to meet with each other and talk about details of projects. And there are quite a number of projects, which have already been started years ago, and they would like to follow up through our conference where different parties, different stakeholders can get together. The last things we're expecting this year to be somewhat different from previously is the pandemic. We see the pandemic as a crisis but on the other hand is also an opportunity. Without the pandemic people probably aren’t aware that we live in the same world, so close to each other, that a virus will travel across borders so easily. So we have some common ground to work together more closely, not just on public health area, but also in other areas, environmental and all those things. So there will be new focus on public health, biotech, health tech. And I believe there will be a lot of programs, or projects, other than the global infrastructure projects. And hopefully we can connect them together and make things work much faster.
I couldn't agree more. I think the wider reach due to being digital is definitely an asset. I think the ability for you guys to do business matching and help partner different people together is essential, as that broker in the middle. And yeah, you're right, it's not just about physical infrastructure anymore, we can talk about other areas of cross border opportunity, and seeing the collaboration that's happened around the world, the World Economic Forum has been a great example of that. They brought together different constituents from all different corners in different sectors to work together on health related areas of cross border collaboration, it's really powerful. And I'm actually going to challenge my team in Hong Kong and I'm doing this publicly, so hopefully, no one gets too annoyed of me. But you talked about helping reach a wider audience through the digital platform. And you talked about helping match businesses, projects. Those are two things that Dun and Bradstreet does uniquely well, our sales and marketing tools help accelerate businesses through propensity analysis, reaching bigger audiences, and matching. So I'm going to challenge our team in the Hong Kong business to support HKTDC, ahead of the 30th of November event, to do that stuff even better. I'll take that as an action and we'll come back to you after the podcast.
It's well appreciated.
Well, let's see, we'll see the results. But I'm certain that the team have got this capability right at their fingertips and we'll help you guys grow your platform and make it even more impactful. The event is on the 30th of November, and runs till the 1st of December, if people who are listening to this, which goes live on the 27th, want to get involved, what do they do? Can they register online?
Yeah, definitely everything can be done online, you don't need to fly, you can pay online if you have to, listen and watch online. There's so many events going in parallel together. In the old days, you will probably miss some of those. But with everything being recorded, you will have a much fuller program to enjoy, and entertain.
Excellent. I'm excited to hear how it goes and like I said, I'll be in touch afterwards to make sure the team rise to the challenge. So let's talk about some success stories through the Belt and Road. I always love success stories when you have such high volumes of people and businesses collaborating. Tell us a little bit about the wins we've seen through the Belt and Road.
The Belt and Road have a lot of controversies being reported in the press. It depends on how you see it anyway. But of course, there are quite a lot of success stories. In our portal, the TDC portal, actually, we have more than 100 stories, videos, being recorded that people can look at. Our focus is not so much on the mega huge projects. Most people think about Belt and Road as projects that involve billions of investment, which take 5, 10 years, or even 20 years to complete. So not until it is fully completed, you can’t say if it is successful. To that extent, it's very difficult to find a full success story. Our focus is particularly on small enterprises, and local enterprises, because people's perception is that Belt and Road is for the big guys, for the government, not for the small business, not for the local people. We particularly find stories which go against that and tell people how it can affect you and how you can catch the opportunity in such a huge program. There's one interesting story I can share with everybody here, is two young bankers here in Hong Kong, they themselves are very eager to look for different opportunities, and they thought about the Belt and Road. They traveled to one of the mega billion project locations to look for opportunities. And they found something interesting. With all the construction going on, there is a need for some very basic construction material, which is readily available locally. The local people are aware of that and they are very eager to use those materials and supply to the project. The problem is that local people didn’t have capital to do their business. What they need is just maybe a truck to move those materials to the site, which is not too far away. So these two bankers come up with the idea of micro financing to enable the local villagers to buy the equipment they need. That benefits the local people and also brings them the new technology of micro financing, which honestly is not very high tech, but is not existing in those places, where people don't even have a bank account. So these two guys set up something, and through their funding sources in Hong Kong, they managed to build that up into a multi country business. These are success stories I see which are very important for us, because it tells you how small business, startups, and local people, can benefit from the Belt and Road. And I would expect that any major mega project would have hundreds of these smaller projects coming along with that, and if we can manage it well, it will spread the benefits to a much wider community, and have much bigger impact to the society. This story and many other small micro business, we have them written and recorded in our website, if people are interested, people are welcome to look at our hktdc.com web portal for details.
I would really recommend anyone does go to the HKTDC website, there's so much in there, it's a great resource for people who want to know a little bit more about the Belt and Road Initiative. And want to know more about the events that you guys host, I mean, they couldn't quite literally be more events, you've got dozens of events each month, and then the ability to also source products and services through the HKTDC website. I think you've got, I can't remember how many of those, but something like over 100 and 20-hundred and 30,000 quality suppliers from around the world on the HKTDC website, and on the marketplace. So that's a huge area of opportunity for people that want to do business in Hong Kong, but also do business with organizations in Greater China as well. So as we come to the end of the podcast, I'd like to find out if you personally have had any specific pieces of wisdom, or lessons, that you've taken with you through your career. And I ask that because at the start of the podcast, you talked about all of the crises that you've worked through and, you know, that intensity of learning through crisis, I always feel you learn more through failure, or you learn through more crises, than you do often through good times. And I'm sure you've learned a lot. What piece of advice would you give our listeners today?
Yes, you're right, I feel lucky that I have gone through so many different crises. And if I have to look back the last 40 years of my career, every time there's a crisis, there's something specific you can learn from. So my simple advice, or conclusion, is that we are in a global world. We are facing global challenges, from economics, to trade, to finance, to public health, and many other aspects. What we are missing is global response, our response to this crisis is still largely local. So to that extent, we are not over globalized, we are under globalized. For those people who believe that we should deglobalize, you're going in the wrong direction. We should globalize more, and think global, work globally. And I hope that with the work in TDC, which was to connect the world closer to each other. On one aspect, the trade aspect, I hope there are many more people, experts, talents, as well as institutions who work together in this direction, with us, to make the world closer to each other, and better for each other.
Nicholas, I could not agree with you more. I think the opportunity for businesses and economies around the world, and individuals, consumers, to benefit from the synergies and the expertise of others across borders is enormous, and it's untapped. So I look forward to ensuring that Dun and Bradstreet helps power that connectivity and helps power that trusted environment through transparency and the insights derived from data. And most importantly of all, I look forward to doing that in partnership with HKTDC. Good luck with the event on the 30th of November. I wish I could be there in person but I know the team are looking forward to playing a big role and I look forward to seeing you soon.
Fantastic. Thank you so much.