Big mo­nop­o­lies

China Daily (Hong Kong) - - FRONT PAGE - STEPHEN VINES The au­thor is a for­mer news­pa­per ed­i­tor who now runs com­pa­nies in the food sec­tor and moon­lights as a jour­nal­ist, writer and broad­caster.

In the­ory, Hong Kong is a vi­brant free mar­ket center where avid com­pe­ti­tion en­sures that con­sumers get a fair deal. How­ever, the re­al­ity is very dif­fer­ent be­cause mo­nop­o­lies lit­ter the com­mer­cial land­scape and the dom­i­nance of very big com­pa­nies is grow­ing rather than di­min­ish­ing.

One of my fa­vorite Amer­i­can ex­pres­sions is: “go fight city hall”. It’s a way of say­ing don’t waste your time get­ting into a bat­tle with a more pow­er­ful op­po­nent be­cause the out­come is pre­de­ter­mined. Un­for­tu­nately, I am one of those peo­ple who tend to ig­nore this wise ad­vice. Ex­pe­ri­ence should be suf­fi­cient to know that lit­tle peo­ple should not try and change the way Hong Kong’s big mo­nop­o­lies do things be­cause they are so pow­er­ful and we are so weak.

In the­ory, Hong Kong is a vi­brant free mar­ket center where avid com­pe­ti­tion en­sures that con­sumers get a fair deal and com­pa­nies are kept on their toes by com­pe­ti­tion.

The re­al­ity is very dif­fer­ent be­cause mo­nop­o­lies lit­ter the com­mer­cial land­scape and the dom­i­nance of very big com­pa­nies is grow­ing rather than di­min­ish­ing. The all im­por­tant prop­erty mar­ket, for ex­am­ple, is dom­i­nated by less than half a dozen com­pa­nies; in some dis­tricts there is only one land­lord worth speak­ing about and else­where it is prac­ti­cally a fore­gone con­clu­sion that at gov­ern­ment auc­tions prime land will only go to the big com­pa­nies. There are mo­nop­o­lies for cer­tain key prod­ucts such as petroleum and liq­ue­fied petroleum gas, re­sult­ing in the elim­i­na­tion of price com­pe­ti­tion. Ba­sic food­stuffs such as rice and meat are sold in the whole­sale mar­ket by mo­nop­o­lies reg­u­lated by the gov­ern­ment, thus keep­ing lo­cal prices among the high­est in Asia. Sim­i­larly gov­ern­ment cre­ated mo­nop­o­lies also con­trol elec­tric­ity and town gas sup­plies. Then there are a myr­iad of smaller mo­nop­o­lies elim­i­nat­ing com­pe­ti­tion in the pro­vi­sion of such sta­ples as school uni­forms and text­books. Mean­while, the gov­ern­ment it­self has its own mo­nop­oly over postal ser­vices and a web of li­cens­ing sys­tems re­quir­ing those want­ing to ob­tain li­censes to em­ploy a small num­ber of “con­sul­tant” com­pa­nies largely run by for­mer civil ser­vants.

The one area where the gov­ern­ment made a great fuss about cre­at­ing com­pe­ti­tion was in the sup­ply of telecom­mu­ni­ca­tions ser­vices, pre­vi­ously un­der the mo­nop­o­lis­tic con­trol of the Bri­tish-based Cable & Wire­less Cor­po­ra­tion.

C&W’s Hong Kong op­er­a­tions were bought out by PCCW, a com­pany con­trolled by Richard Li, the son of the ty­coon Li Ka-shing. Un­der new man­age­ment it held on to a sub­stan­tial share of the busi­ness de­spite com­pe­ti­tion around the edges.

For some of us old-fash­ioned enough to use land­line tele­phones and liv­ing away from cen­tral ar­eas of Hong Kong, the PCCW mo­nop­oly re­mains in­tact be­cause there is no other ser­vice.

When the time came to re­new my con­tract with PCCW an af­fa­ble sales­man of­fered terms that seemed more or less rea­son­able. How­ever, when the con­tract ar­rived in pa­per form it bore no re­sem­blance to the ver­bal agree­ment reached over the phone.

I do not have the en­ergy nor, I sus­pect, do read­ers have a suf­fi­ciently high bore­dom thresh­old to want full de­tails of the many hours spent try­ing to get the ver­bal and writ­ten agree­ments to match.

I was ba­si­cally told that PCCW had its way of do­ing th­ese things and a mere cus­tomer (i.e. a small cus­tomer) could not ex­pect any­thing would be done to change this sys­tem. Lurk­ing in the back­ground of in­creas­ingly bad-tem­pered tele­phone ex­changes was the knowl­edge on both sides that if I didn’t like how PCCW did things I had no al­ter­na­tive.

At one stage I made what I thought was a good point that if my own com­pany tried to give cus­tomers a con­tract that didn’t match a ver­bal agree­ment we would soon be out of busi­ness. How­ever, that’s small com­pany talk. Re­ally big com­pa­nies, such as PCCW, do not need to be­have like this be­cause even if push comes to shove they have the fi­nan­cial mus­cle to go to court and out­spend small cus­tomers any day of the week. Ev­ery­one may well be equal un­der the law but there is no equal­ity for ac­cess to le­gal re­dress. On the con­trary, ac­cess is en­tirely de­pen­dent on how much money you have to pay lawyers’ fees and can af­ford to risk los­ing in the end.

I am still not sure what the out­come will be in my lit­tle tele­phone drama but I should have learned a les­son long ago be­cause this is not the first time that I’ve made a hap­less at­tempt to se­cure a fair deal with one of Hong Kong’s mo­nop­o­list com­pa­nies.

So, what is to be done to give cus­tomers a break? The ide­al­is­tic an­swer is to cre­ate a more level play­ing field with more com­pe­ti­tion but, frankly, this is not go­ing to hap­pen any­time soon … if ever.

Iron­i­cally the only re­al­is­tic so­lu­tion lies with more gov­ern­ment in­ter­ven­tion. Free mar­ket ad­vo­cates will prob­a­bly shud­der at this sug­ges­tion but it is the only way for­ward. As mat­ters stand Hong Kong has weak con­sumer pro­tec­tion leg­is­la­tion and a Con­sumer Coun­cil that lacks statu­tory pow­ers. It does its best to name and shame cus­tomer abusers, but it has no way of se­cur­ing re­dress.

Other ju­ris­dic­tions have found ways to cham­pion cus­tomers’ rights with­out re­course to ex­pen­sive le­gal re­dress. At the very least Hong Kong should be look­ing at th­ese mod­els for ideas.

Mean­while, the small cus­tomers will prob­a­bly have the re­solve not to fight city hall, how­ever tempt­ing it is to do so.

Stephen Vines

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.