Two generations leverage HK advantage (tdctrade.com)


	Raj Sital continues the family business exporting products via Hong Kong

The family business of Indian entrepreneur Raj Sital is a classic success story straddling the two giant economies of China and India. Sitting between the booming "Chindian" economies is Hong Kong – home to Style Asia Ltd set up in the 1950s by Mr Sital's father.

K. Sital set up his small tailoring business in Tsimshatsui, Kowloon catering to the sartorial needs of American GIs on their Rest & Recreation in the British colony.

"Business grew and we leveraged on Hong Kong's sound financial system to raise funds and expand into other businesses and other countries," said Mr Sital, who spent his younger days learning the family business in West Africa.

Style Asia Limited has since evolved into the manufacture and export of consumer electronics and watches and diversified into real estate development, trade financing and other investments, including a joint venture in Mumbai producing Bollywood movies. It exports to Brazil in South America, Russia in Eastern Europe and Dubai in the Middle East and from there much of the goods are shipped to Iran, Iraq and Jordan.

Evolving with Hong Kong

"Ours is a classic Hong Kong story," said Hong Kong-born Mr Sital. "Hong Kong's role is evolving, (so) we evolve with the cost base and this process is still ongoing."

As real estate prices in the city escalated, the family business moved production facilities several times from Chai Wan to Fotan in the New Territories. They set up a factory in Dongguan southern China but found it was more cost effective to subcontract the manufacture of their consumer electronics products and watches to a factory on a turnkey basis. Like most Hong Kong companies, they keep their front office in the city where services can be carried out, and back-office business such as manufacturing across the border.

Mr Sital was Chairman of the Indian Chamber of Commerce for eight terms and is now currently Chairman of the Council of Indian Associations – an umbrella organisation made up of nine Indian organisations. There are about 45,000 Indians in Hong Kong of which about 30,000 are long-term residents. The Indian community's roots have always been intertwined with business in Hong Kong.

"There are many opportunities in Hong Kong, you just have to look for them," he said. "There is a large capital market, skilled labour, rule of law and a transparent legal framework. Arbitration or legal problems can be sorted out quickly and easily in Hong Kong."

Natural platform

Mr Sital said Hong Kong is a natural platform for companies from India to raise funds in much the same way that Chinese mainland companies are using the city to raise funds on the Hong Kong Stock Exchange. "Hong Kong has a comprehensive and sound financial system and there are lots of opportunities for Indian firms. The next wave could be Masala Chips instead of Red Chips".

He said Indian companies wanting a slice of the Chinese pie would do well to use a Hong Kong middleman. "We have the experience in dealing with the mainland."

He said there are many pitfalls and hidden costs in going directly to the mainland or sourcing through an electronic platform. "You may be able to get them at a cheaper price but goods may not be up to standard whereas if you pay a bit more, let's say, 5 per cent to a Hong Kong company, you can get a good night's sleep."

Hong Kong companies like Style Asia HK Ltd position themselves as a conduit between India and China, offering services as one stop agency from locating for the right factory to sourcing for products and packaging to trade financing, quality control and making sure they are delivered on time to their destined markets.

"Whether it is manufacturing Diwali musical cards or puja (prayer) items in China, you will have someone in Hong Kong to look after your interests and if there are any disputes, it is easier to seek compensation," added Mr Sital.