Fear of the needle? The future of Hong Kong business

Business Horizons, Jan-Feb, 1996 by H.L. Chan

Further analysis revealed five factors that might have influenced the respondents' perceptions of the future: (1) short memory; (2) evolution theory; (3) compensation behavior; (4) rationalization; and (5) self-confidence. Each is explored below.

Short Memory

According to Schwenk (1988), people tend to base their judgment of the probability of a future event on the recollections of past occurrences of a similar event. Thus, it has been generally contended that the personal experiences of those who fled Chinese communist rule and settled in Hong Kong-- together with their knowledge of the hardships suffered by their families, relatives, and friends back in China--have led them to form a view of communist government such that anything the Chinese communists do or say is considered "evil, mischievous, and maliciously intentioned" (Cha 1992).

In this study, however, most of the respondents whose families experienced the hardships and repression of a communist regime did not seem to harbor such strong hatred or fear of the communists. Their recent experiences tended to be associated with economic prosperity' and profit, despite more distant memories of political disturbances and social disorder. Even the expropriation of private property seemed remote to them. They had the impression that what had happened in the past was gone forever and would not be repeated in the future. Because favorable experiences were more recent, they were likely to exert greater influence because of being fresh in the memory.

So for most respondents the unpleasant past sufferings in China appeared to have been selectively forgotten. But then, Hong Kong people are known to have short memories. As explained by David Nendick, former Secretary for Monetary Affairs, "It's one of the things that has kept Hong Kong sane over the years" (Taylor 1990).

Evolution Theory

Many respondents involved in business with China had several "horror" stories to tell. But many of them simply accepted the undesirable environment as inevitable phenomena in the early stages of modernization, and they believed it would improve in the future. A strong belief prevails that history progresses forward, and China therefore will not revert to its old repressive measures against the capitalists. As the last generation of political leadership is passing away, things are likely to change further. Current political doctrine will be further abandoned in favor of economic well-being and marketization that will gradually transform the communist system into a capitalist economy.

Respondents had been witnessing improvements in China since the late 1970s, and felt that the worst was over. Most perceived that the standard of living had risen quickly and believed the current economic reform and open-door policy could not be reversed. Even though there might be inevitable setbacks and fluctuations, they would be seen as temporary and short-lived.

As Brightman (1988) noted, people tend to assume that long-ran average performance will follow the trend and pattern of the past. In interpreting their recent experience or knowledge about China, the interviewees were in fact anchoring to the very bad situations in the past, such as the Great Leap Forward and the Cultural Revolution. With such a low reference point, even a minor change in conditions could appear to be comparatively impressive. In southern China and some coastal areas, improvement was particularly notable. A picture of notable advances could be drawn in people's minds, for example, by comparing the extreme poverty in a remote village during the Great Leap Forward with Shenzhen at the border and with Hong Kong nowadays. Figure 1 illustrates how' a comparison between now (B) and a very bad environment 10 years ago (A) can lead to a highly optimistic projection into the future (C).