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Arbitration Solves Disputes Faster, Cheaper(HKTDC Hong Kong Trade Services, Vol 01,2002)

Vol 1, 2002


Arbitration Solves Disputes Faster, Cheaper

IPR Protection Is Feasible

Franchises On A Fast Track

Testing & Inspection Services: Essential Confidence Builders

Proper Staff Training Creates Powerful Competitive Edge

Recruitment Experts Soothe Mainland Hiring Headaches

Behind-The-Camera Skill Counts


Arbitration Solves Disputes Faster, Cheaper

Arbitration, as shown here, is an efficient and cost-effective method to settle trade disputes. The Hong Kong Int'l Arbitration Centre's 307 cases in 2001 make it one of the world's busiest arbitration sites.

ACCORDING to Neil Kaplan, "The more trade there is, the more disputes will occur." He bluntly says this when asked about the impact on Hong Kong of Chinese mainland membership in the World Trade Organization.

As chairman of the Hong Kong Int'l Arbitration Centre (HKIAC), he keenly observes how businesses disagree and choose to resolve disputes.

Formed in 1985, the HKIAC handled 307 cases last year, placing it in the global "major leagues" of arbitration. By comparison, the famous ICC arbitration centre in Paris handled 550 cases in 2001 and the century-old London Court of Int'l Arbitration had 150.

Hong Kong is an increasingly attractive site for Chinese mainland companies to settle disputes. HKIAC secretary general Christopher To says seven cases last year involved only mainland companies. Many parties using the HKIAC have no links to Hong Kong.

"If you list the features required for an arbitration centre, Hong Kong has them all," says Kaplan. These include ready access to legal and other professionals, a modern arbitration law (last overhauled in 1997) and the arbitration centre itself.

Fully 1,500 of the Chartered Institute of Arbitrators' 10,000 members are located in Hong Kong, a figure Kaplan calls "remarkable".

One crucial advantage for arbitration is the New York Convention, making arbitral judgements easily enforced in more than 120 jurisdictions. The convention was written for cross-border enforcement between sovereign states, leading to a post-1997 problem for Hong Kong and the Chinese mainland. Special arrangements with the mainland came into force two years ago, and the problem was solved.

Companies use arbitration because it is quicker and more cost-effective than more traditional dispute-resolution methods. To cites a recent case involving HK$500,000 for which the arbitration-settlement costs reached only HK$11,000. If the disputed amount is below HK$10m, the parties usually try working with a sole arbitrator, rather than the three typical in larger cases.

The HKIAC has a special small-claims procedure designed for simple maritime claims, but applicable in non-marine cases too. This suits arbitrations that can be settled without complex oral testimony at a fixed fee of HK$15,000.

Disputing parties often choose their own arbitrators. When they cannot, the HKIAC has power to appoint an arbitrator and does so for a fee of HK$4,000. This happened 50 times last year. The only remaining costs are for rental of the centre's facilities.

Even in the smaller documents-only cases, physical arbitrators remain essential in the process. There is no suggestion yet that technology can replace individual judgement. Arbitration does, however, play a role in the technology businesses.

This year alone, the HKIAC has expanded in two new directions. In January, it teamed with the Hong Kong Society of Accountants in announcing the launch of electronic-transaction arbitration rules. These create a framework for online merchants in Hong Kong to use in resolving consumer disputes.

"Given that arbitration awards are internationally enforceable through the New York Convention, arbitration is an effective medium for resolution of cross-border disputes," says HKIAC vice-chairman Teresa Cheng.

"While the electronic-transaction arbitration rules were developed to address the special requirements of resolving disputes in electronic transactions, they also suit use in a wide range of disputes in private and public sectors", adds another HKIAC vice-chairman, Edward Rubin.

In February, the HKIAC and the China Int'l Economic and Trade Arbitration Commission unveiled the Asian Domain Name Dispute Resolution Centre (ADNDRC). This is designated by the Internet Corp for Assigned Names and Numbers (ICANN) as one of four dispute-resolution services in the world approved to help resolve cases where "abusive registration" of Internet domain names is alleged. ADNDRC will have offices in Hong Kong and Beijing.

Arbitration is not the only way to settle disputes. Sometimes courts must be used, Kaplan concedes. If the parties require a judgement to apply as a legal precedent, traditional litigation is necessary. The same applies when judgement must extend to third parties, as when protection of intellectual property is necessary.

Mediation is a less-adversarial approach often used in family disputes and finding favour with businesses. Hong Kong Mediation Council former chairman Colin Wall says Hong Kong has 240 mediators. Half handle family cases while the others focus on construction, commercial and community disagreements.

Ultimately, disputants must believe they are pursuing arbitration in an appropriate place. Hong Kong is regarded as "a good and safe place to arbitrate", Kaplan declares.


Useful Contact(s):

Hong Kong Int'l Arbitration Centre
Tel: (852) 2525-2381
Fax: (852) 2524-2171
E-mail: adr@hkiac.org
Web: www.hkiac.org



HKIAC Venue Is Anti-Acrimony

LOCATED in Hong Kong's Central business district, the Hong Kong Int'l Arbitration Centre has a rather notable venue with large and small hearing and break-out rooms, a library and various secretarial features.

Arbitration in major cities often takes place at luxury hotels. Although comfortable, hotels are more expensive and less effective than a purpose-built venue.

The HKIAC, in addition to its arbitration work for which fees apply, offers such free services as:

  • furnishing general information and assistance for international or domestic dispute resolution;
  • answering enquiries on any proposed conciliation, mediation or arbitration in Hong Kong;
  • providing information on law and procedure for international arbitrations in Hong Kong;
  • advising on arbitrators' fees; and
  • making relevant enquiries or arrangements with arbitration centres elsewhere.

The HKIAC's office hours are 9 am to 5:30 pm on business days.

Consider Resolution Options

MOST business people occasionally face disagreements involving clients, suppliers or staff. No one-size-fits-all solution can possibly apply. The Hong Kong Int'l Arbitration Centre (HKIAC) suggests some options:

  • Negotiation. Most disputes can be settled through straightforward negotiations. If both sides take reasonable and open-minded approaches, this is the quickest and cheapest option.
  • Mediation. If negotiations break down, the next step may be appointing a mediator. This person will be skilled in dispute resolution and can help to bridge the gap, but lacks enforcement power. The Hong Kong Mediation Council operates as a division of HKIAC and can advise on this process, including recommendations of accredited mediators.
  • Arbitration. If a non-binding negotiation process fails, there is still one step available before entering law courts - arbitration. This is often agreed as the preferred dispute-resolution method in contracts even before disagreements occur, but can be selected at any time. Arbitration costs vary hugely depending on a case's size and complexity, as well as the rates charged by individual arbitrators. The HKIAC does set down a few simple guidelines. An initial deposit must be paid depending on the amount in dispute. This ranges from HK$10,000 for amounts below HK$100,000 to HK$50,000 for amounts above HK$1m.
  • Litigation. Finally, some disagreements can only be settled in court.

IPR Protection Is Feasible

By Adelaide Yu

The author, a specialist on intellectual property rights, is an associate with the Deacons law firm in Hong Kong.

Even the most unusual logos, images and other intellectual property can be protected on the Chinese mainland, but IPR owners must understand the rules and enforcement mechanisms.

INTERNATIONAL and domestic pressures prompt constant changes to Chinese mainland laws about intellectual property. Despite steady complaints of inefficiencies in the system, all kinds of intellectual property rights (IPR) are now enforceable through reasonable efforts.

The mainland does provide an infrastructure enabling administrative and judicial enforcement of intellectual-property rights. Administrative enforcement offers quick solutions to straightforward infringement problems. The judicial system handles complex cases and those involving large claims.

While highlighting available laws and enforcement options, this article briefly introduces a sophisticated legal system, but should not be regarded as legal advice.

The Law

The primary intellectual-property laws on the Chinese mainland govern the protection of registered trademarks, patents, designs, copyrights and unregistered trademarks.


The trademark law, amended most recently in October 2001, and relevant implementation regulations govern the procedures for trademark applications and protecting registered marks.

Trademark rights are acquired on a first-to-file basis. Both trademarks and service marks can be registered. Infringements include:

  • unauthorized use of a trademark identical or similar to one registered for the same or similar goods or services;
  • selling goods or providing services knowing a trademark is applied without authority of the registered proprietor;
  • unauthorized making or selling representations of a trademark;
  • altering a registered trademark and offering products bearing the altered mark without a legitimate proprietor's approval; and
  • otherwise prejudicing exclusive rights to use a registered trademark.

Patents and Designs

The patent law, as amended in August 2000, was implemented in mid 2001. Three types of patents are available: invention, utility-model and design varieties.

Once granted, invention and utility-model patents are infringed by anyone without the patent owner's consent making, using, offering, selling or otherwise conducting business with products directly obtained through the patented process. Patent-rights owners can prevent the unauthorized import of such products.

Similarly, design patents are infringed by anyone without consent making or selling products featuring the patented design.


Protection of copyrighted works is governed by implementing regulations and a law last amended in October 2001. Such works can be literary, oral, musical, dramatic, folk-art, dance or acrobatic. Other possibilities include photographs, motion pictures, engineering or product designs, maps, schematics, models and computer software.

Registration is usually unnecessary to acquire copyright. However, separate rules do apply to computer-software registration.

Infringements may involve copying and publishing copyrighted work without an owner's consent, falsely claiming authorship and unauthorized adapting, translating, annotating or editing.

Anti-Unfair Competition Law

In 1993, China introduced the Anti-Unfair Competition Law with provisions to protect unregistered trademarks. These prohibit the unauthorized use of names, packaging or decorations peculiar (or similar) to well-known items, if the use causes confusion and misleads buyers.

Well-known goods are defined as those with strong market reputations or familiar to the relevant public. The market is the one where disputing parties compete and the relevant public is actual or potential consumers.

Whether products are well known is judged by the Administration for Industry and Commerce (AIC) and by the People's Court, each at county level (xian) or above. Sales volume and region, time on the market, market share, promotion efforts and consumer awareness are all considered.


When rights are infringed, an IPR owner can launch legal proceedings in the People's Courts.

The court system has four levels: Basic People's Court, Intermediate People's Court, High People's Court and Supreme People's Court. Except for specialty venues like maritime or military tribunals, all courts are designated as the People's Courts.

Basic People's Court operates in counties and county-level cities while Intermediate People's Court is in prefectures or prefecture-level cities and High People's Court is at provincial level. The Supreme People's Court is the country's highest tribunal.

Experience shows the People's Courts are poorly equipped to expeditiously handle infringement actions from foreign complainants. Recently, the mainland launched strong efforts to establish specialist IPR tribunals in various provincial capitals and special economic regions. The hope is that People's Courts will become increasingly accessible to foreign complainants.

Courts are empowered to "investigate" the facts through trial, decide if rights are infringed and award damages. The latest amendments also allow the granting of injunctions.

Yet most foreign IPR owners favour administrative enforcement. The AIC enforces registered trademarks and unregistered rights under the Anti-Unfair Competition Law. The Intellectual Property Office (IPO) enforces patents or designs and the National Copyright Administration (NCA), through local offices, is responsible to enforce copyright.

Administrative authorities have broad quasi-judicial powers. On IPR, the most powerful authority is the AIC, which can question representatives of a violating company; order them to stop infringing; compensate for damages; confiscate or destroy offending goods and the equipment used to apply infringing trademarks; impose fines; and inspect contracts, accounts or other relevant documents.

The AIC also grants and administers business licences and so has offices in nearly every town or county. It is a powerful and respected administrative authority.

The IPO, with less extensive powers under the Patent Law, can only order infringers to stop offending. Some IPO offices will pursue raids and seize patent-infringing goods, but security bonds are usually required to cover items seized and possible damages to any alleged infringers later exhonerated.

Both the IPO and NCA must try to mediate and often convene meetings for that purpose. When mediated settlements prove impossible, they can make awards.

Orders of the AIC, IPO and NCA are all enforceable through the People's Court.

Useful Contact(s):

The Law Society of Hong Kong
Tel: (852) 2846-0500
Fax: (852) 2845-0387
E-mail: sg@hklawsoc.org.hk
Web: www.hklawsoc.org.hk

Intellectual Property Department
Government of Hong Kong
Special Administrative Region

Tel: (852) 2961-6901, 2803-5860 (hotline)
Fax: (852) 2838-6276
E-mail: enquiry@ipd.gov.hk
Web: www.info.gov.hk/ipd/


Franchises On A Fast Track

Chinese mainland customers enter a 7-Eleven retail-store franchise. Franchise operators gain from international name-recognition and corporate advertising, but also must stay attuned to local culture, customs and business practices.

CHOOSING to operate a franchise is one well-established means for a smaller company to go into business with all the appearances and the feel of a large corporation.

There are various pros and cons. A franchise operator can expand business quickly and gain from the franchisee's experience, bulk buying power and corporate advertising, all beyond reach for typical small businesses. The disadvantages are regular franchise fees and plenty of rules on how business is conducted.

"Franchising developed slowly, but steadily, in Hong Kong," says Hong Kong General Chamber of Commerce senior manager for business policy Charlotte Chow.

Now the Chinese mainland looms as an area of massive potential growth. "We believe that mainland entry to the World Trade Organization does present opportunities for franchise operators," Chow says.

"Chain stores and franchise businesses are major growth areas in the mainland's retail and catering sectors, especially involving personal enhancement, education and training, health products, speciality shops and others."

Although the mainland has no specific legislation on franchising, the authorities in Beijing are developing new regulations to govern activities by foreign franchisers.

Baker & McKenzie law firm partner Daniel Chan told a recent seminar about some of the uncertainties in how foreign franchisers are treated in Chinese law. Various business types are handled differently. For example, until WTO-compliant regulations kick in, restaurant franchises may be quite easily licensed while retail shops are not.

Even if franchise deals are struck between a foreign company and a Chinese entity, franchise fees are subject to a 5% withholding of business tax. There may also be taxes of up to 33% on deemed profits from the fees paid under cross-border franchise agreements.

According to a survey by organisers of the Franchise China Conference & Exhibition, the most popular businesses among potential mainland franchisees are fast-food venues and restaurants, retail shops and real-estate services.

"Three core forces drive the demand for franchising on the Chinese mainland: chain stores use franchising for expansion; business-to-consumer e-commerce needs franchises to handle physical distribution; and mainland WTO entry means foreign companies must be allowed into local markets through franchising," says Dr Chen Ye-sho, a specialist in franchising and international business from Louisiana State University in the US.

With more than 500 outlets, KFC is the leader among international franchisers on the mainland. From November 2000 to September 2001, KFC opened more than 100 new restaurants there. Although sometimes challenging, the mainland is its most profitable market.

McDonald's has 280 outlets, the second highest total. Holiday Inn, too, has established a successful franchise presence. Others, notably in the retail sector, encountered slower success.

Franchise activity is accelerating. Dairy Farm, active in the southern mainland, will expand its convenience store network to for 350 stores in the next few years, up from the existing 72 stores in Shenzhen and Guangzhou.

In Hong Kong, the earliest franchises sold fast food. KFC and McDonald's arrived in the 1970s. Since then, the market has grown incredibly diverse, with franchises active in clothing retail, speciality retail, training, photo processing, car-wash services, beauty salons, courier companies and more.

"Even in the past few months, we have noticed a surge in franchising interest," says Chow. "This is partly due to lower rents. The level of investment for one unit franchise has gone down slightly. Some franchisers have adjusted their packages to make them more attractive to potential franchisees."

Some managers no longer employed with larger companies may consider using redundancy pay to launch franchise businesses. The difficult economic climate places many such managers in the market.

Chow estimates that Hong Kong has almost 130 franchise entities, up from 55 in 1993 and 111 in 1998.

Useful Contact(s):

Hong Kong Franchise Assn
Tel: (852) 2529-9229
Fax: (852) 2527-9843
E-mail: hkfa@franchise.org.hk
Web: www.franchise.org.hk



Winning Advice On Franchises

OPERATING a franchise business can bring benefits, or be fraught with difficulties. Hong Kong General Chamber of Commerce senior manager for business policy Charlotte Chow offers the following advice.

  • In a franchise business, you don't need to start from scratch, but can enjoy quick access to the market under an already well-known brand. The disadvantages are regular franchise fees and plenty of rules on how business is conducted.
  • Anyone who considers franchising must be very cautious because, as in all business activities, there are risks. Everything does not necessarily end with profit.
  • One key issue is suitability in terms of personality. When franchising, you work for yourself, not for anyone else. It is like your own business. Being in suitable financial position and enjoying strong family support are also important.
  • The franchiser's assistance and support for training are vital. Product image and enhancement, competition and customer taste should also be taken into consideration.
  • Beware when signing the franchise agreement. Carefully scrutinize the description of business scope, district or area coverage and termination terms.
  • For franchisers, one common problem is franchisees under-reporting profits, aiming to pay fewer royalties. To battle this, franchisers may demand auditing procedures more rigorous than many small companies typically apply.

Five Steps For Franchise Starters

THERE are many ways to begin a franchise business, be it large or small, local or regional. Some require substantial corporate backing. Individuals can launch others. Yet a few common threads exist. Here are the first steps.

  • Do your homework. Contact a local franchising association. Check the ABCs of Franchising online at franchise.org.hk. Learn what franchising means and evaluate its appeal. A search on amazon.com provides a long list of relevant books.
  • Find a franchise. After deciding you want to run a franchise, you must find one. Watch for trade fairs where franchisers promote themselves. Singapore and Shanghai have such events.
  • Perform due diligence. Make sure the franchiser is a solid company able to fulfil its part of the deal and assist your new business.
  • Decide what kind of franchise you want. Do you prefer controlling an entire region or a single outlet? What can you afford? The International Franchise Assn says the average initial investment for almost 80% of franchises, excluding real estate, is less than US$250,000. The range is from as little as US$20,000 all the way to US$1m. Average royalty fees are 3-6% of gross monthly sales.
  • Negotiate the franchise contract. This crucial document governs many aspects of how you do business and the costs. Take good legal advice and understand all obligations.

Testing & Inspection Services: Essential Confidence Builders

Companies that submit products to comprehensive testing can distinguish themselves on quality, present a positive image and gain the trust of customers.

SUCCESSFUL trade in manufactured products often requires testing and inspection to heighten confidence among potential customers. Companies and organizations offering such services say their work creates a useful weapon for SMEs seeking competitive advantages.

"Consumer rights dominate overseas markets so product quality does play an important role for SME exports. Assurances on quality not only allow SMEs to fulfil buyers' specific requirements, but also are effective marketing tools to impress customers and strengthen brand images," says SGS Hong Kong Ltd's director of retail and supply support, Helmut Chik.

SGS Hong Kong is part of a large international organization for verification, testing and certification.

"To ensure product quality, SMEs should perform testing and inspection throughout the supply chain. Testing and evaluation allow companies to prevent costly mistakes at various stages. Coupled with the benefits of testing, inspection helps SMEs to reduce buyers' risk by detecting substandard quality before shipment," Chik says.

The Hong Kong Productivity Council (HKPC) advises SMEs on using such services. Different testing and inspection services apply to different products or industries, making generalizations difficult. With toys, for instance, diverse quality and safety standards apply in different export jurisdictions.

Companies must pass testing and inspection stages to secure proof (or certificates) that they conform to prescribed standards and so can enter specific overseas markets. Among the most common quality standards are UL (Underwriter's Laboratory), CE mark and ISO 9000.

Testing and inspection services are equally important for differentiation, positioning, wider market coverage and strong competitiveness.

"Companies with quality-standard awards can differentiate themselves as high quality, gain better images, create brand awareness and achieve better positions against competitors," says an HKPC representative.

For example, once SMEs pass tough and complex EU-imposed quality/safety requirements through testing and inspection, they secure much wider market penetration than rivals unable to conform.

Useful Contact(s):

The Hong Kong Assn of Certification Laboratories Ltd
Tel: (852) 2542-8620
Fax: (852) 2541-8154
E-mail: acl@cma.org.hk
Web: www.hkacl.org

Hong Kong Quality Assurance Agency
Tel: (852) 2202-9111
Fax: (852) 2202-9222
E-mail: hkqaa@hkqaa.org
Web: www.hkqaa.org

Hong Kong Quality Management Assn
Tel: (852) 2581-2210
Fax: (852) 2581-2212
E-mail: info@hkqma.org.hk
Web: www.hkqma.org.hk



Taking A Test: Step By Step

OFTEN a step-by-step approach works best in product testing. Inspectorate (Far East) Ltd provides the following guidelines on how its inspection process for various consumer products works:

Visual inspection can focus on:

  • Performance, function
  • Appearance, design
  • Assembly, accessories
  • Workmanship, finish
  • Labelling, packing and marking.

For visual inspections, clients must submit:

  • Reference samples
  • Purchase orders
  • Specifications and/or other relevant instructions.

The documents required are:

  • Copy of proforma invoice/purchase order
  • Copy of letter of credit
  • Complete specifications or agreed quality standards showing acceptable tolerances
  • Colour reference, cutting/swatch-card where appropriate
  • Full name, address and telephone numbers of manufacturer
  • Copies of related correspondence that may affect specifications.

Once documents are submitted, the next steps are to determine sample size and AQL level and to select the sample. Standard methods of deciding sample size involve mathematical theories of probability. Samples come from the start, middle and end of production runs from a minimum number of cartons equal to the square root of the total number shipped.

Defects are classified as follows:

  • Critical defects that fall short of safety standards and may result in unsafe usage
  • Major defects that are functional or cosmetic, reducing product value
  • Minor defects that may affect ability to sell, but not use.

Testing Standards Assured

SINCE the 1960s, various testing and inspection companies have established a strong presence in Hong Kong. Many expanded into the southern Chinese mainland and Southeast Asia.

Two organizations help to manage the activities of Hong Kong-based product-testing laboratories: the Hong Kong Laboratory Accreditation Scheme (HOKLAS) and the Hong Kong Assn of Certification Laboratories Ltd (HKACLL). Together, they have almost 150 members.

HOKLAS began in 1985 as a voluntary initiative spearheaded by the Hong Kong government's Industry Department. Now the Hong Kong Accreditation Scheme operates it.

Its main objectives are ensuring high standards of management in Hong Kong laboratories, helping to identify and recognize the "most competent" laboratories and promoting the notion that test data from accredited laboratories is preferable.

Although covering many sectors, HOKLAS stresses construction materials, electrical and electronic products, environmental testing, food, textiles, garments, toys and children's products.

Hong Kong Accreditation Services (HKAS) evolved from HOKLAS in 1999 and helps ISO 9000-certification-and-inspection bodies through the Hong Kong Certification Body Accreditation Scheme and the Hong Kong Inspection Body Accreditation Scheme. On the Chinese mainland, 16 associated laboratories are credited to help Hong Kong companies manufacturing there.

By contrast, HKACLL is an industry association formed by Hong Kong-based laboratories in 1981. Operating under auspices of the Chinese Mfrs' Assn of Hong Kong, it promotes product certification and communications among interested groups.

Proper Staff Training Creates Powerful Competitive Edge

Training takes many forms, but in all cases well-trained staff members become more efficient and responsive, providing value-added services and creating a competitive edge.

MANY companies understand how to build a factory on the Chinese mainland. Some are experts on promoting their products. Others conquer the challenges of distribution. Without exception, however, every business active on the mainland must focus on effective management of human resources.

Recruiting is hard enough. Retention is even harder. Yet perhaps the greatest challenge for small and medium enterprises is preparing management and staff to perform in a manner that helps companies to excel against rising competition. Without the right people properly trained, solving all other management problems is irrelevant.

"Good staff training is an efficient way to boost customer service which is crucial for business success nowadays," says partner Terence Tang, from Terence Tang & Partners. Tang's company offers a wide range of services to SMEs in such areas as accounting and finance, management, personnel and special investigations.

First, SMEs must get recruitment right. No amount of training turns the wrong people into the right ones.

Once team members are hired, management must bring out the best in them. Employees on the Chinese mainland often have excellent academic qualifications, but are poorly prepared for the day-to-day requirements of international business.

"On-the-job training, such as coaching, is a common method to train staff, especially front-line staff who are the first interface with customers," says Tang. Such employees are ambassadors: they must represent the company well, enhance customer communications and take care of clients so as to reinforce the company image.

"One of the most significant advantages of on-the-job training is that employees learn from the work process. Coaching support from senior colleagues or trainers allows junior staff to learn from mistakes and make instant corrections," says Tang.

SMEs must be clear about what kind of training and customers are priorities, says staff and training advisor Andre Wai of Top Human Technology Ltd. This Hong Kong-based management consulting company has offices in Beijing and Shanghai, plus extensive operations in the southern Chinese mainland.

"When we discuss staff training, there are two types: in-house and outsourced. When we define customers, there are also two types: internal (within a company) and external (outside the company)," Wai says.

In developing training programmes, companies must pay special attention to senior management's attitude.

"Increasing competition means business cannot be product-oriented like before. The trend is to be customer-focused. Senior management must recognize this and communicate with staff at different levels to achieve total involvement. Everyone should have the same vision and values," Wai says.

There must be a clear understanding that staff members are the ones performing customer services. "You should value your people first, and then service will sell. That is why staff training is very important. It is the first step to enhance customer service," says Wai.

"We always stress that just talking without implementation is nothing. Having the ideas and concepts of customer focus means nothing if people never act accordingly."

The most practical training issue is "practice, practice, practice". While coaching is a powerful tool to convert cognitive concepts into reality, the essence is implementation.

"Trainees learn from mistakes. Through continuous practice, on-going coaching and monitoring, on-the-spot feedback and clear distinctions, performance can improve considerably," Wai says.

For trainees, this bolsters personal development and leads to the ultimate aim of enhanced customer service. "Satisfied staff creates satisfied customers," says Wai.

Better job knowledge raises performance and sharpens motivation, helping to serve customers' needs and wants.

Periodic briefings and reviews are helpful. Feedback between trainers (senior staff) and junior staff is essential for ongoing improvement.

Amid the Chinese mainland's many sub-cultures, customs and habits, staff training is an effective way to develop basic skills. These may include language competency, interpersonal and communication skills for customer relations and tact in handling customer complaints.

Although Hong Kong shares sovereignty and written language with the mainland, there are many sub-cultural differences.

"SMEs entering the mainland market should not be arrogant and go there with big heads," Wai cautions. "They should learn from the mainland to design good customer services that fit local needs or wants.

"At the heart of training is attitude change, making people aware of what they have been ignoring and letting Hong Kong employees know what works in Hong Kong may not work in the mainland market because of market-culture differences," Wai says.

Recruitment Experts Soothe Mainland Hiring Headaches

Search firms can pinpoint appropriate executives or workers for particular openings while assessing "soft" skills like general development potential and motivation to remain with an employer.

SECURING the best-possible staff is a major concern for businesses everywhere. Personnel directors for companies active on the Chinese mainland experience this headache as much as anyone. One possible source of comfort may be the services of professional recruiters.

An influx of foreign-invested enterprises (FIEs) in the past 20 years has dramatically boosted the number of companies seeking staff with international-standard qualifications.

With the Chinese mainland securing membership in the World Trade Organization, both mainland companies and FIEs in the more developed labour markets like Shanghai, Beijing and Guangzhou face heightened pressure to recruit capable and professional staff members to improve competitiveness in a less regulated economy.

As a result, finding highly qualified and motivated employees has become more challenging. Professional recruiters and executive search firms long active in Hong Kong now find their services required on the mainland too.

The underlying reality is that Hong Kong and overseas companies no longer see the Chinese mainland as merely a source of almost unlimited, cheap, but relatively unskilled, labour.

Professional recruiters and executive search firms can help in building a workforce that contributes strongly to company success.

Recruiting firms tend to focus on mid-level management and jobs requiring specific technical qualifications. "The available labor pool is huge, and selecting ideal candidates can be difficult. We help clients to find that one perfect match and in much less time than they could do in-house," says SBS Recruiting (Asia) Ltd senior consultant Maggie Gu.

SBS serves foreign-invested clients in various industries. Recruiters can play a vital role in checking qualifications against resumes, an important service given a rash of forged university and technical credentials in Guangzhou and Shanghai.

Recruiters can also assess basic soft skills, such as ability to fit into corporate culture and mesh with a new organization, general development potential and ability as a team player.

Another problem is the high staff-turnover rate. Losing new employees is especially costly to FIEs investing time and money in training. Many recruiters offer guarantee periods for each individual placed, providing added security to clients.

Executive search firms, meanwhile, assist in hiring senior executives. Since the target candidates are usually well established, the focus is often on soft skills rather than technical qualifications. Recruitment specialists can evaluate such qualities as leadership, problem solving, strength of personality and ability to oversee expansion.

Many search and recruitment firms operate offices in mainland cities while others serve mainland clients by working from Hong Kong. Those with a mainland presence often focus on mid-level recruiting because senior FIE posts are usually filled by the overseas parent companies. However, this may change as the pool of internationally qualified candidates on the mainland soars. Mainland enterprises competing against FIEs may soon also seek executives with proven international experience.

"Some locally-run businesses fail to see the value in [executive] search firms. The exceptions are public companies with responsibilities to investors to place highly qualified people in senior positions," says OS Ltd managing director Chris Strachan. OS Ltd is a Hong Kong-based executive-search firm with operations in Shanghai and Singapore.

Strachan says the mainland recruiting market should mature significantly as multinational companies continue arriving in the country's leading cities.


Behind-The-Camera Skill Counts

Pictures can be more important than words in making products appeal to potential customers. Securing an ideal image can be difficult without first finding a skilful photographer. Shown are samples of work from some of the leading product photographers in Hong Kong.

SOMETIMES a good photograph can be worth millions of dollars. It can fuel successful advertising campaigns and create the desired public image for a product or company. Unfortunately, a bad picture can do the opposite. Finding the right photographer is important.

"I always ask lots of questions so I have a good idea what my clients want, what their limitations are and how I can help them to realize their concept," says Chau Studio's Jennifer Chau, a photographer for more than 25 years in Asia and North America.

Props, lighting and style are necessary. "A good photographer needs a good eye and must know how to convert a three-dimensional object into two-dimensional media in a three-dimensional way," says Chau.

Pictures can be more important than words. "These days people do not always read the writing. They just want to see a good photograph. A professionally shot photograph enhances promotional material and a client's image, whereas an amateur photograph can give the wrong image," says Chau.

Eden Man of 4D Studio agrees the difference between amateur and professional photos is huge. "An experienced professional photographer knows many techniques," he says.

"It is important to have a good understanding of the product and how to show it best," says Man. He stresses interesting set-ups and good colour combinations.

"Camera techniques, such as focus and angles also have impact. Professional photographers contribute these things to a good ad campaign," says Man.

"Personal styles and areas of expertise, like still photography, architecture or fashion photography, are important," says Stephen Cheung of Stephen Cheung Studio.

"How you use lighting and focus is all part of style. Hot lights, hazy lights and spotlights have a big effect on how a product looks," says Cheung. Spotlights make colours look rich while hazy light blends them together a bit.

Focus can bring a product to the foreground to stand out more. "For products, you want the object to stand out so you use spotlights and one-point focus. But for image-selling, the whole picture must catch the eye, not just one part, so background and props are essential," says Cheung.

While computers can retouch pictures, they should not be relied upon for positive results. "Good photography should come first," says Cheung. For that, the most basic requirement is a good photographer.


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