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1. HK `must look to Yangtze'

2. Developers and analysts propose radical solutions

3. $600m revamp for Ocean Terminal

1. HK `must look to Yangtze'
Jonathan Tam, The Standard 26 September 2002

Exporter Li & Fung and contractor Shui On Construction & Materials said yesterday that China offered great business opportunities after joining the World Trade Organisation, but they differed over which region had the greatest potential.

Li & Fung chairman Victor Fung expected the Pearl River Delta economy to grow rapidly because of its strategic infrastructure network, while Shui On chairman Vincent Lo said the future laid in the northern Yangtze Basin with its large population.

``Hong Kong will be a driving force in the Pearl River Delta region, but the region as a whole will develop very rapidly,'' Fung told the Forbes Global CEO Conference yesterday.

The SAR government is encouraging greater economic integration with the Pearl River Delta to aid Hong Kong's economy, which has just rebounded to a growth of 0.5 per cent from three quarters of recession.

Fung said that according to the Central Government's current five-year plan, four major highways would be built to connect the region to Beijing and Shanghai in the north and Chengdu and Kunming in the southwest, giving the region high growth potential.

``The economic radius of Hong Kong is going to increase dramatically, [as a result of] the interconnection,'' he said. ``So from a logistics and distribution standpoint, we are talking about major developments.''

But Lo said Hong Kong should look further into the Yangtze Basin as the Pearl River Delta offered little room for further development. ``The Pearl River Delta is quite saturated now although there is still room to grow,'' he said. ``I believe the Yangtze Basin will definitely be of tremendous attraction to Hong Kong.''

Lo pointed out the potential market size of that region - which ranged from Shanghai to Tibet and accounted for around 41 per cent of China's population and 46 per cent of its gross domestic product. About 75 cities within that part of the country had populations of between one million to five million.

``We can continue to be based in Hong Kong and use the SAR's strengths and assets to develop it,'' he said, adding that the territory's companies could team up with smaller overseas enterprises that wanted to crack into that market as well.

Lo said Shanghai offered plenty of business opportunities for construction companies such as Shui On as people were getting wealthier.

Meanwhile, Fung expected Hong Kong's exports to record ``double-digit'' growth this year as US consumer demand continued to hold up. However, it was too early to predict orders for Christmas even though he expected that to be ``pretty good''.

2. Developers and analysts propose radical solutions
SOPHIA WONG and RAYMOND MA, SCMP 26 September 2002

Analysts and developers have come up with a range of extreme suggestions - including spending public funds on luxury flats - as the government looks for ways to boost housing prices.

However, price-slashing continued yesterday. Wharf (Holdings) released the first batch of units at its Bellagio project in Sham Tseng at 10 per cent below the cost of comparable flats on the secondary market.

Wharf assistant director Ricky Wong Kwong-yiu said: "It seems that the government is no longer rejecting the need to push up the market."

He suggested the government use its investment funds to buy quality properties.

It could also reduce stamp duty or provide more tax breaks to buyers, he said. ABN Amro analyst Anton Kwang suggested shortening the pre-sale period - the earliest point before completion at which developers are allowed to sell unfinished projects - to nine months from the current 20 months to cut the supply of flats.

He also suggested a two-year land sale freeze.

Midland Realty executive director Victor Cheung said it would be better to freeze sales of Home Ownership Scheme flats and public housing for two years, in addition to suspending land sales.

JP Morgan regional property equity research analyst Douglas Sung said: "I think the government clearly understands [the problem] . . . but the question is whether there are any quick fixes . . . Personally I don't think there are any."

3. $600m revamp for Ocean Terminal
KENNETH HO, SCMP 26 September 2002

Ocean Terminal in Tsim Sha Tsui is getting a major overhaul, with Wharf (Holdings) earmarking HK$600 million for the revamp and construction of a Ferris wheel on the harbourfront next door.

Completed in 1966, Ocean Terminal is the oldest commercial property in Wharf's Tsim Sha Tsui portfolio.

The shopping centre will re-emerge as a Lifestyle Concept X (LCX) megastore and present an image aimed at younger customers with the shops better designed to foster an open feeling.

Executive director of Wharf subsidiary LCX Joe Wong said the centre would provide 300,000 square feet of net floor area following the two-phase facelift. The first phase, of 80,000 sq ft, on Level 3 of Ocean Terminal would open next month, he said. LCX had committed HK$60 million for interior renovation in this phase.

Work on the second phase, of 220,000 sq ft, would begin in the next few months and was scheduled for opening in the second half of next year.

Mr Wong said LCX had employed a retail format combining Japanese and American experiences in operating shopping malls and department stores to create a barrier-free environment.

"With the open concept, we provide a comfortable environment for people to hang around and relax at our store longer," he said.

LCX is dividing the first phase of the revamped centre into five zones: fashion and accessories, American-style casual wear, beauty products, food and beverages, and hip fashion brands.

Mr Wong said the second phase would include children's wear, more apparel and accessories, a game centre and a nine-screen cinema.

Wharf received Town Planning Board approval last year to convert about 58,000 sq ft on the ground floor into a multi-screen cinema with 1,430 seats.

Mr Wong said the LCX target customers were those from the low teens to late 30s, with the merchandise mainly mid-range products.

"The large mid-range consumers' market will be the first to recover when the economy turns around," he said.

Research showed there were about three million people living in subsidised and public housing estates who had not been hit by the problem of negative-equity ownership, he said.

"This group will be among the first to return to consumption and their propensity to spend is great."

Analysts viewed the revamp as part of Wharf's ambitious plan to turn Ocean Terminal into an entertainment, shopping and tourist attraction.

Mr Wong expected the 75-metre Ferris wheel to become a landmark and draw local visitors and tourists to the LCX store.

The Ferris wheel is tentatively planned for completion in 2004.

LCX is also taking the retail concept into China with plans to open similar stores in Beijing and Chongqing.

Mr Wong said the consumption power of mainlanders was strong and China's large population presented a great potential for business growth.

Next month would see the opening of its Beijing store, 300,000 sq ft of net area at the capital city's Times Square, a Wharf development.

The Beijing store had adopted a similar concept but slightly adjusted according to specific market conditions in the city, he said.

"The store has not included beauty products because there is very strong competition in the cosmetics business in the area," he said.

The planned LCX store in Chongqing is expected to open in September next year. With 500,000 sq ft of net area, the store will be located at another Wharf Times Square project, now under construction.

Mr Wong said the detailed mix at the Chongqing store had not yet been finalised but expected the interior renovation cost would exceed HK$100 million.

The Beijing store cost HK$60 million.

He said LCX was studying opportunities in other cities, including Shanghai.

In identifying suitable properties and locations, he said Wharf's own projects in the mainland would be one choice but LCX was also looking at others.