Recently a survey was conducted by the U.N. worldwide. The question asked was, "Would you please give your opinion about the food shortage in the rest of the world?"

The survey was a huge failure.

In Africa they did not know what 'food' meant.
In Western Europe, they did not know what 'shortage' meant.
In Eastern Europe & Asia they did not know what 'opinion' meant.
In South America they did not know what 'please' meant.
And in the U.S. they did not know what 'the rest of the world' meant.

- for Hong Kong, I would add this extra line -

"...But in Hong Kong, they would pretend not to understand English and walk away...

The one thing that foreigners living in Hong Kong say after a trip to mainland China is always "the people in (Shanghai/Beijing) are so nice".

Now that the Hong Kong Special Administrative Region faces one of its greatest economic challenges ever, both the people and the government of the SAR need to take a deep and honest look at themselves and the path that lies before them. Rising unemployment, a looming budget deficit, housing shortages, and an education system that still fails to meet the needs of many of it citizens, Hong Kong will need to confront the need to say dui to better integration with China and a more enthusiastic approach to better service and compliance.

Before the opening of China, Hong Kong benefited from being the main interface into communist China. Asia, before the rise of the mainland manufacturing centers in the coastal cities of China, the opening of the European Eastern Bloc and the emergence of Indian technology exports enjoyed the role of being the low cost manufacturing center for the West. The rapid rise of China as an industrial and economic power as well as its entry into the WTO almost guarantees that those easy money days are over.

Japan's leading role as the economic beacon for Asia has also been doused by a moribund economy, a banking system creaking along, and a political system unable to enact substantial change.

Much like Japan, Hong Kong has seen a period of rapid wealth inflation as property prices magnified asset wealth. Unfortunately this type of wealth does not bring with it better technology, skills or services but increased prices for the scarce resources and land as speculators outbid each other so that they can resell the same assets later at higher prices. When Hong Kong was the default city for doing business in China, it was ok for it to be just marginally better then the embryonic Special Economic Zones like Shenzen and Zuhai. Now, with China in the World Trade Organization, Hong Kong needs to demonstrate that it remains a clear and distinct advantage for doing business with China versus such major cities as Shanghai, Beijing and Chongqing. Hong Kong has to be more than a little bit better, it has to be a lot better. It also has to be nicer place. It is the very usability of Hong Kong that makes it attractive as a business location but Hong Kong people have taken it for granted in the past until recently.

Already, many of the expatriates who have lived in Hong Kong for years and sometimes decades are now leaving. What the 1997 Handover failed to do in driving off skilled professionals, the 1998 and 2001 economic downturn has done more profoundly. The derogatory term of FILTHK (Failed In London, Try Hong Kong) has been replaced with FIHKTS (Failed in Hong Kong, Try Shanghai) as many westerners, OBCs (Overseas Born Chinese), and local Hong Kong business people flock towards the mainland cities for jobs and opportunities.

Hong Kong, however, is far from finished. During some of its most difficult times, the SAR, like the people who live and work there, show an amazing ability to adapt, change , and reorient themselves quickly. The Hong Kong financial and legal system, though at times enigmatic and byzantine, is far more transparent and efficient than other countries in the region, including Japan. Most of all, Hong Kong has a risk seeking "can-do" attitude towards investments and entrepreneurship that stands out among other cities in Asia. Note that I didn't mention innovation and thought leadership, since the risk I refer to pertains to financial risk and not creative risk to take on new ideas and approaches. They can gamble millions on long shot projects but ask them to do it an innovative out of the box way and you get sheepish answers of "that's a little too different."

Businessman in Hong Kong have little fear trying a business plan that made someone else rich even if the odds are high as long as the rewards are great enough. However, they do fear being the first to try a new idea or approach without seeing someone try or fail at it first. However, this entrepreneurial attitude is what sets Hong Kong apart from its neighbors. Where in Singapore or China you may hear "that is not allowed," in Hong Kong you will hear more often "no problem... we can try it..." At times this "we can do it" has led to terrible business campaigns and terrible decisions but as the former US president Jimmy Carter said after the failed Iran Hostage Rescue mission, "the only failure is a failure to try"...

When Hong Kong faced the loss of manufacturing to the mainland, it switched into sourcing, management and coordination functions for the factories across the border. If you need toys, clothing, consumer electronics or shoes prototyped, sourced and manufactured quickly, Hong Kong continues to show amazing resiliency in those fields. However, if you are waiting for Hong Kong as a center for semiconductor and software engineering, you will be waiting for a few years more or forever.

Old attitudes such as poor customer service, lack of English language skills, low education standards, and short term objectives of making fast and easy money has to change. Foreign investors can get that and more cheaper across the border. Many of the people who have lived in Hong Kong for more than 5 years have noted that Hong Kong merchants seem nicer now when you go into their stores after living through 2 economic downturns. "they no longer tell you not to touch anything or to leave if you're not going to buy something." Hong Kong has never been known in the past for being a polite place with nice people but is known for the pragmatism of the people who live there. Now that the Hong Kong government has been broadcasting "be nice to people" public service announcement the connection with good service leading to more business is becoming more critical.

In term of labor costs, Hong Kong technology workers and artists are finding out that many people in the mainland have skills comparable to those that they possess at a fraction of the cost. Even Western expatriates have discovered that many of the Chinese mainland students who studied, worked and lived abroad are now returning to Asia with better education, guanxi and language skills at much lower costs. The old boys network of the British trading and financial Hongs, as well as the Shanghainese tycoon clique are making way for the mainland educated professionals, the Ivy League educated 2nd generation children of overseas Asians, and the newly emerging local Chinese middle class. Expatriate housing packages will get rarer than the pink dolphin in years to come.

Hong Kong is in a tight spot. It should continue its resolve to be the most foreigner friendly city in Asia while encouraging more integration with the mainland business and culture. Hong Kong's attempt to be more Chinese than say Shanghai is doomed to fail. The city's roots and culture are not the same. It should acknowledge its inherent difference as a semi-western outpost of culture and business but encourage more integration with China at what it does best and not try to compete at what it has never been good at.

As the Jedi's say, there is a disruption in the force and the pieces are still falling in place. It seems almost conflicting that Hong Kong needs to find its role within the Mainland Chinese framework not as a semi-independent country competing with other cities in China but as the Southern trading and financial hub of China. However, the SAR has always been a city of contradiction and contrast. Hong Kong's greatest strength is the SAR's confidence to say Yes we can - it just has to say it nicer....