When the People's Republic of China becomes a landlord of Hong Kong in 1997, will freewheeling capitalism receive an eviction notice? China has agreed to preserve capitalism, but its promises are shaky because of its recent history of political upheavals. Even optimists like Alan Shure have hedged their business bets in Hong Kong.
Shure, who first went to Hong Kong as a ton buyer in 1960, is chief executive officer of Chicago-based International Components Corp. (ICC), a manufacturing company. ICC's plastic molding division, located in the district of Chai Wan, will account for 23% of the company's $30 million in revenues this year. "If we had to walk away from it, it would cripple us," he admits, "but it would not kill us."
Although Shure isn't exactly lacing up his walking shoes, he is watching his step. Last winter, when ICC decided to expand its plastic molding business, China and Britain were still negotiating Hong Kong's future. So Shure ruled out adding on to his Hong Kong factory; instead, he will be opening an outlet in Taiwan. ICC will invest about $400,000 this year to improve the Hong Kong plant, but that is hardly a vote of confidence: The new manufacturing equipment will be fully depreciated before any of Peking's pols have planted the flag.
Nevertheless, Shure doesn't think that his employees will be working in the paddy fields come 1997. As a result of China's indicated laissez-faire policy on capitalism, he expects to see wages stabilize and inflation and interest rates shrink.
Shure believes the Chinese will use Hong Kong to "demonstrate to the world what they can do with capitalism." Like good Chinese cuisine, the takeover may be at least sweet as it is sour.