How To Be Prepared for the Competitive Mainland Market?

Extracts of the Luncheon Speech by the Guest of Honour, The Honourable Laura M. CHA, SBS, JP, Chairman, Advisory Committee on Corruption, ICAC, HKSAR

 

In the corporate world, ethical leadership is the cornerstone of good corporate governance while corporate governance must start with ethical personal governance. Through examining some of the recent cases of corporate fraud and corruption both internationally and locally, we would see that many of the companies involved all had governance rules in place. It was indeed a lack of ethics on the part of the persons who disregarded the rules and broke the law. Such actions are detrimental to the company as well as to the investors.

 

Ethics is more than just complying with the law, being unethical may not necessarily be illegal. The culture of ethical practice starts from the top, with the board of directors and senior management of a company setting the tone and establishing the core value of the company.

 

In short, in practising good corporate governance, company directors should beware of the company's operation and the work of the management, demonstrate personal governance in both words and actions, perform their fiduciary duty with honesty and fairness, concern themselves with the integrity of the company's staff and help develop an ethical corporate culture.

 

Talking about the capital market, Hong Kong is not only attractive to investors but also to Mainland companies wishing to raise capital. The basis of such confidence is that the rules are clear and the market transparent, and the business environment largely ethical. Hong Kong has indeed tried hard in establishing ourselves as a quality market.
 
 

International investors have been critical of the corporate governance of some of the Mainland enterprises listed on our market. Indeed, such criticism is equally applicable to some of our local companies. The Mainland authorities have been loud and clear about their view that they have a long way to go to bring corporate governance standards on the Mainland to international standards, and we have seen resolve in the various regulatory and institutional reforms in this direction in the last few years.
 
 

As an international financial centre, Hong Kong is uniquely positioned to benefit from and contribute to the economic development of the Mainland. This includes helping to promote corporate governance standards on the Mainland. To achieve this:

 
 

• 

Every stakeholder, including company directors, should not only ensure his company to observe and conform to law, rules and regulations but also be committed to conduct ethical business practices. This can assure a level-playing field - the foundation of the "quality stamp" of our market.
 
• 

Hong Kong professionals such as accountants, lawyers and company secretaries, through operating and practising in the Mainland as a result of the implementation of CEPA, should influence the corporate governance standards of their Mainland clients as well as their professional counterparts in meeting international standards.
 
 
With more and more Hong Kong businessmen tapping into the enormous potentials of the Mainland market, corporate leaders in Hong Kong could meet the challenges of ethical leadership in the highly competitive market environment through the "4-Ts" efforts:
 
 

• 

First, Tackle all cross-border investments in accordance with legal provisions and announced economic policies but not just rely blindly or solely on the so called customary practices;

 
• 

Second, Take positive actions to examine the risks and causes of corruption and formulate a comprehensive management system;

 
 
• 

Third, Train employees at all levels to enhance their ethical standards; and
   
• 

Fourth, Take firm action against any corrupt acts detected.
 
The above "4-Ts" efforts would be useful in creating an environment which enhances the integrity and reputation of the company, and also contribute to the growth of corporate governance standards both in Hong Kong and in the Mainland.
Back