HKUST Business School [SBM] Newsletter (Issue 16)

Abstract

[evdate 2002-05-15] 1 HKUST Business School Newsletter Issue 16 Acting Dean: K.C. Chan Associate Deans: Gary Biddle, Steve DeKrey, Kar Yan Tam Newsletter Editors: Elaine Chu, May Hung Sub-editor: Virginia Unkefer Contact us: bmpr@ust.hk Fax: (852) 2358 1467 Website: www.bm.ust.hk (c) 2002 by the School of Business and Management, the Hong Kong University of Science and Technology. All rights reserved.

From the Dean The latest Financial Times rankings have brought the School much welcomed recognition. We are now the only school from Asia and Australia in the paper's world top 50 list, among the 1,500-odd full-time MBA programs offered in the world. The research capability of our faculty and the international experience that our MBA program offers have again received high marks in the rankings by the Financial Times. More details of the rankings can be found in a relevant story on page two. Capitalizing on these favorable results, the MBA program office is continuing its effort to improve the quality and diversity of its student body. In addition to participating in overseas student

recruitment activities, it has also organized events across China's border in Shenzhen, a thriving market for executive education. The School intends to expand its presence in the mainland market in terms of program offerings and research activities. Several initiatives are already underway and I shall bring you

up to date with their developments through these columns in the future. Our other programs are also developing well. The Kellogg-HKUST EMBA program, for example, has now expanded to a class of 55 students. The strong student profiles of the new class reflect a high degree of receptiveness of the program and the endorsement of its quality among senior executives from around the region. But there is no let-up in efforts toward continuous improvement at the School. In the area of teaching, we organized the first school-sponsored teaching workshop, conducted by an internationally renowned teacher in March. The response was very positive and plans are in place to organize a second workshop in the fall. Our finance department has brought in Bloomberg, the leading financial

information provider, as a partner in a new course. This teaching innovation will

see some of our final year finance students benefit from the much sought-after hands-on training in the use of Bloomberg terminals and related analytical tools.

In terms of outreach, the School was involved in a series of talks and seminars,

targeted at academics, students and alumni, and the business community at large. There will be more events similar to those mentioned in this newsletter in

the future. We look forward to your support or participation in some of these events. K.C. Chan Acting Dean HKUST Business School Contents From the Dean 1 News 2-7 {????}Highest Ranked in Asia Pacific in the 2002 Financial Times Rankings {????}First Teaching Workshop Draws Good Response {????}Dean Chan Appointed Member of HK Council for Academic Accreditation {????}Talks on ENRON {????}Fourth Business Mentoring Program Kicks Off {????}MBA Office and SCMP Launch Joint Career Web Page {????}New Bloomberg Course Provides Hands-on Experience for Finance Students {????}Top Official Discusses Challenges Facing Chinese Enterprises {????}School Recognizes Good Research by Students {????}Valuing Technology Offers New Thoughts on Accounting and Valuation Approaches {????}Health Economics Conference Features Prominent Speakers {????}Kellogg-HKUST Alliance an "Example of Excellence" {????}EMBA School in Yunnan Successfully Completed {????}Fifth EMBA Class Boasts Strong Mix Viewpoints 8-9 {????}A Special WTO Zone for Telecommunications? Research 10 {????}ASEAN+3 Trading Bloc May Offer Its Members More Benefits than the WTO Students & Alumni 11-12 {????}The Marathon Spirit {????}Alumni Receive Trailwalker Fundraising Award {????}New MBAAA ExCo Formed {????}My Experience Speaking in Front of 10,000 People People 12 Photo on this page - courtesy of Robert Lendrum / HBL Network 2News HKUST Business School has moved up one place to rank 47th in the world's top business schools offering full-time Master of Business Administration (MBA) programs, according to the latest business education rankings released in January 2002 by the Financial Times. It is the only school in the Asia Pacific to make a top 50 position in the rankings. The Financial Times top MBA rankings include 100 schools worldwide. This year, six are from the Asia-Pacific region, namely: School Position 1 HKUST 47 2 Australian Graduate School of Management 67 2 Chinese University of Hong Kong 67 4 Melbourne Business School 84 5 China Europe International Business School 92 6 National University of Singapore 99 The rest includes 56 from the US, 27 from Europe, 8 from Canada and 3 from South America. The survey measures a school based on three broad dimensions: the career progression accrued from the MBA (in particular its purchasing power in the marketplace), diversity, and research. In addition to maintaining its top 50 position overall, HKUST again ranks first in the world for the international experience that its MBA program offers, second (after IMD in Switzerland) for its international faculty. Its research ranking moves up from last year's 33rd to 26th, placing it ahead of many major business schools. Of some 1,500 MBA programs available in the world, the Financial Times invited 149 schools to participate in the rankings and selected 100 as the world's top programs. The rankings are by far the most comprehensive head-to-head comparison among business schools worldwide. The favorable ranking of the School drew substantial interest from the local media. Highest Ranked in Asia Pacific in the 2002 Financial Times Rankings

Dean Chan Appointed Member of HK Council for Academic Accreditation Acting Dean K.C. Chan has been appointed as a member of the Hong Kong Council for Academic Accreditation (HKCAA) since October 2001. HKCAA is an independent statutory body that advises the local government on the academic standards of degree programs in higher education institutions in Hong Kong and on educational standards and qualifications in general. It also plays an important role in protecting local consumers of higher education services imported from outside of Hong Kong. Dean Chan joins a group of 20 members, all appointed by the Chief Executive of the HKSAR. They represent three main categories: Hong Kong academics, non-local academics; and local non-academics.

First Teaching Workshop Draws Good Response The first teaching workshop held by the School in March featured an established scholar in decision science who is also a well-recognized expert in adult education. Introduced by Acting Dean K.C. Chan as a "teacher of teachers", the speaker, Professor Harvey Brightman delivered a full day workshop that was highly rated by some 30 participating faculty members. Brightman is Regent's professor emeritus of decision sciences at Georgia State University and has been an executive education teacher for over 20 years. He has been instrumental in organizing the Georgia State University Master Teacher Program for business professors. The program has benefited over 500 professors from around the world since its inception 14 years ago. Brightman began his workshop at HKUST by highlighting the importance of teachers refocusing their style in a way that students learn best. "Students must know where they are, have been, and where they are going in their learning process," he said. The top five factors that most students consider helpful to their learning are course organization Attentive business faculty members absorb advice

on how to achieve good teaching and presentation, clarity of presentation, relevance of

the subject, stimulation of interest and encouragement of discussion/ helpfulness and availability of a

teacher, according to Brightman. In the workshop, Brightman introduced methods of understanding the learning styles of students. He also

shared his wisdom of successful teaching that he has accumulated through decades of practice and research. Harvey Brightman 3Newsletter Issue 16 HKUST Business School TALKS ON ENRON In response to the immense interest in the business community regarding the implications of the collapse of Enron, the School organized two talks on the subject, one

in March and the other in April. The first was a luncheon for the Kellogg-HKUST EMBA alumni, students and their friends. Prof. Gary Biddle, head of the accounting department, was the speaker. He

provided the audience with a thorough account of the development of the Enron case and its

implications on corporate governance in different jurisdictions. The second was a dinner panel discussion which was held as a sequel to the March

presentation. The dinner event was hosted by the MBA Alumni Association, with support from

the School. Prof. Gary Biddle (photo, center) provided a summary presentation and

moderated at the discussion. Four distinguished panelists, (photo, from the left)

Charles Grieve, director of accounting policy, corporate finance division, Securities and

Futures Commission of Hong Kong; Donald Jacobs, dean emeritus, Kellogg School of

Management, Northwestern University; David Webb, editor, Webb-site.com; and Alvin

Wong, president, HK Society of Accountants; partner, Price water house Coopers Hong Kong,

presented their views and exchanged ideas on how Hong Kong and Asia might improve

their corporate governance practice. The April event also involved some of the other alumni clubs in Hong Kong, including those of

the Brown University, University of California, University of Chicago, Columbia University,

Cornell University, Dartmouth College, Harvard Business School, Harvard University, Kellogg

School of Management, Massachusetts Institute of Technology, University of Pennsylvania, Princeton University, Stanford University, and Yale University.

SUMMARY OF GARY BIDDLE'S PRESENTATION Will Enron promote greater transparency and improved governance? "There have been proposed reforms in the US, including new audit oversight boards, auditor rotations, guidelines on audit committee roles and auditor relationships, bans on internal audits, IT consulting, taking jobs with clients, possible new rules on partnerships by the Financial Accounting Standards Board and changes to International Accounting Standards Committee (IASC) standards. In Hong Kong and the Chinese mainland, there have been some recent reforms that may or may not be due to

Enron. For example, a 16 Generally Accepted Accounting Principles (GAAP) pronouncement has been issued and national institutes of accounting have been created in Beijing, Shanghai, Xiamen, on the Chinese mainland. In Hong Kong, there have been new disclosure requirements by the Stock Exchange and HK Society of Accountants, moving towards IASC standards, along with some new governance provisions recently adopted. How much these measures will help in the achievement of better corporate governance remains to be seen. But surely Enron is far greater than a US-centric problem and its dramatic impact on global markets is a significant

impetus for additional change and improvement in the various systems." Immediate repercussions of the collapse of Enron: "The truth is, we all have been affected by Enron, and will continue to be." {????}A total of US$63 billion of market value vaporized {????}Pension funds lost {????}Investors are affected unless they have been out of all equities, or short in all markets, for the past six months. {????}Massive job loss - Enron: 4,000, Arthur Andersen: 7,000 so far {????}Markets roiled worldwide {????}Public outrage {????}Calls for regulation and reform What failed Enron? "There were two main reasons: poor investments and very aggressive accounting and the way Enron did it. There were two methods that they used with the purpose of deceiving financial analysts and others." Method 1 {????}Spin money-losing, undervalued assets into partnerships (called special-purpose entities) {????}Hide operating losses and report transfer gains (Enron had 3,500 subsidiaries in total.) Method 2 {????}Sell shares to partnership in exchange for receivables {????}Reduce debt-to-equity ratio, allows more borrowing "The truth is, we all have been affected by Enron, and will continue to be." 4News MBA Office and SCMP Launch Joint Career Web Page The MBA office recently announced the launch of a joint web page with the South China Morning Post to provide job market information for MBA students. The web page will also provide information on continuing education, business news and links to career development resources. This is the first time in Hong Kong a daily newspaper has collaborated with a tertiary institution on the launch of a job market web page. Website: www.classifiedpost.com/hkustmba New Bloomberg Course Provides Hands-on Experience for Finance Students Undergraduate finance students can now learn how to use Bloomberg terminals in their final year of study at HKUST, thanks to a new elective course introduced by the finance

department with support from Bloomberg L.P. This was the first time Bloomberg participated in the offering of an academic course that was

credit-bearing at a tertiary institution. The course, Bloomberg Analytics, includes 12 sessions. Apart from meeting on the HKUST

campus for a briefing during the first session and a conclusion in the twelfth session, the ten

other sessions will be held in the Bloomberg Training Room in Central, Hong Kong. Topics

to be covered include getting started with the Bloomberg system, equity analysis, news and

search functions, warrant and options and equity portfolios. Students are also required to

attend lab sessions on Saturdays to practice and complete homework assignments. Upon completion of the course, students are expected to have a firm foundation in analytical

and practical market knowledge and a required level of proficiency in operating the Bloomberg

system. Professor Kalok Chan, the coordinator of the course, said, "this is yet another effort of the

Business School in combining theory and practice in our curriculum. Through this course,

not only will the students learn the skills in operating the Bloomberg system, but they will

also be able to get exposure to the real business world by actually going to the classes off campus

and being supervised by industry professionals. We are very grateful for the support from Bloomberg."

Ian Fallmann, general manager, Bloomberg L.P., Asia Pacific, said, "we are happy to be

involved in this innovative program for the training of future business talent. We believe

that the skills that the students acquire from the course will provide value-added benefits for

them in the competitive business environment. With the success of this pilot program, we may

consider expanding the scope of the training program." A total of 40 students are currently taking advantage of this new course and their

responses have been very positive. It is expected that the course will become part of

the regular offerings by the finance department. Fourth Business Mentoring Program Kicks Off The Business Mentoring Program entered its fourth year when it welcomed a new batch

of mentors and mentees at a ceremony held in early January. Over 90 mentors and mentees for

the classes of 2001 and 2002 attended the event. Starting from last year, HKUST MBA alumni joined with members of Friends Unlimited, a not-for-profit

organization advocating volunteering, to serve as mentors in the six-month program. This year, 13

MBA alumni and 23 members of Friends Unlimited are participating in the program. They

will share with the 37 student mentees their experiences in study, work and personal

development. Germaine Chan (ACCT Year 3), representative of class of 2001 mentees, spoke at the ceremony

to express her gratitude to the mentors in the program. She recalled her first meeting with her

mentor last year. Says Chan: "I remember sitting in the middle of Cova, expecting a stern and

mature businesswoman, and planning what to say to her. To my surprise, a very friendly

young lady, not much older than me, came and sat in front of me After that, we met

frequently. She once took me to dinner with her friends so that I could know more people

from different businesses. Sometimes we would discuss business issues together...

We eventually became good friends and I gained more than what I expected. The experience is very helpful both to my future career and myself." Professor Kar Yan Tam, associate dean and director of undergraduate programs, said "the

success of the Business Mentoring Program is due in large part to the commitment and diligence

of the MBA alumni and members of Friends Unlimited who, despite their busy schedules,

devote themselves to working with our students and giving them valuable advice and

encouragement." The Business Mentoring Program is jointly organized by the School and the HKUST Student

Affairs Office. Germaine Chan, Mentee 2001, offers a vote of thanks to the mentors on behalf of her fellow

mentees. 5Newsletter Issue 16 HKUST Business School

Health Economics Conference Features Prominent Speakers The International Health Economics Conference, hosted by the Center for Economic

Development in March, featured prominent health economists from Asia, Europe and North America. The speakers discussed and offered insights into issues concerning

health care and health insurance systems, providers of and payment for medical care,

and competition and quality in health care. According to the coordinator, Albert Ma, professor of economics, the conference attracted

20 health economists from overseas and there were 17 participants from local institutions.

"The response to the conference has been very positive. We hope to develop this conference into a regular event for top-flight scholars, policy makers and industry

practitioners from around the world to discuss health economics issues and foster research

collaboration," he said. Prof. Izabela Jelovac from Maastricht University of the Netherlands, gets into a lively debate with other

participants at the conference. Valuing Technology Offers New Thoughts on Accounting and Valuation Approaches Prof. Chris Westland, head of the department of information and systems management,

announced the publication of a new book: Valuing Technology, published by John Wiley & Sons.

The book describes how accounting must evolve to effectively guide investors and managers in the

technology-intensive, knowledge-centric industries of the twenty-first century. It identifies four major factors, namely, time (technology acceleration), space (geographical

scaling), customers (network externalities), and employees (organizational scaling), that are

emerging in the knowledge economy and describes how each has changed simple accounting for wealth and value creation to a complex economics of knowledge. The book also offers a new science of valuation in knowledge intensive industries that will help investors, managers and advisors to separate

the future giants of the knowledge economy from their less fortunate brethren.

School Recognizes Good Research by Students The School presented the first "PhD Students Research Paper Competition" awards on 19 April. The award

was created as an additional incentive to enhance the quality of research carried out by postgraduate research students.

All three winners are fourth year students. The picture shows from the left Wei Wei Fan (Economics), Ming Xu (Finance) and Tao Li (Economics) with Acting Dean K.C. Chan.

Top Official Discusses Challenges Facing Chinese Enterprises Cheng SiWei, vice chairman of the Ninth National People's Congress Standing Committee, spoke to some 60 MBA students last November.

He gave a brief lecture on "The Challenges Facing the Management of Chinese Enterprises" before taking questions from the audience. A veteran member of the PRC's ruling party, Cheng serves as chairman of the Seventh Central Committee of the China Democratic National Construction Association. He is the author of the monograph Studies on Economic Reforms and Development.

Cheng SiWei (center) receives a souvenir from Acting Dean K.C. Chan, while Prof. Yuk-Shee Chan, vice-president for academic affairs, looks on. 6News Kellogg-HKUST Alliance an "Example of Excellence" The Kellogg-HKUST (KH) alliance is an example of excellence that we are proud of and which we wish to emulate in other fields," said Fanny Law, secretary for education and manpower, to the large audience that filled the Citibank Lecture Theater at the EMBA KH-04 Graduation Ceremony in April. "This EMBA program represents a true partnership of two great institutions that are committed to the pursuit of excellence, bonded by a shared vision to nurture executives with a global perspective and to create an international network of business leaders," according to Secretary Law. Law was the keynote speaker at the ceremony, which saw 51 senior executives celebrating their successful completion of the 16-month part- time program.

She congratulated them on "having received the best education from two parts of the world in one program". "I speak from personal experience that it is not easy to go back to the classroom after many years of work. It requires discipline, determination and perseverance, the same qualities that underpin generations of successful leaders. You have made it and proven your qualities; they augur well for your future," said Fanny Law. The graduating class is an epitome of Hong Kong as an international city. Great diversity is represented in the class with participants from 13 different nationalities and 14 birth places. Some 30% were working outside of Hong Kong during the course of the program. Their industry backgrounds are equally diverse, spanning the accounting, banking, construction, consulting, IT, logistics, manufacturing, tourism and nonprofit sectors. Student representatives Judy Qua and Eddy Chan addressed the audience on behalf of the class while Susan Yuen presented the Top Professor Award to Donald Jacobs, dean emeritus of Kellogg School of Management, who accepted it on behalf of Prof. Sunil Chopra of Kellogg. The ceremony was presided by Prof. Donald Jacobs, Acting Dean K.C. Chan, Associate Dean Steve DeKrey, and Erica Kantor, assistant dean of Kellogg. Prof. Paul Chu, president of HKUST, attended the ceremony as one of the speakers.

EMBA School in Yunnan Successfully Completed Representatives from KH-03 and the inaugural students of the Lin San school. EMBA director Steve DeKrey (third from the right) receives a collection of photos of the Lin San school from KH-03 representatives. From the left are Poh-hoon Khor, Jin Wang, Wallace Li, Dan Tagliere, Thomas Chan, Michael Urquhart and Charles Ng.

The "Lin San" elementary school, a class gift from EMBA KH-03 to the School, has now been completed and is in full operation. The school, situated in a small village three hours by car from Kunming, Yunnan Province on the Mainland, provides education to 60 kids. Eventually, up to one hundred students are expected at the school.

The new school also brings to the homes of some of the village residents running water and electricity as the project entailed an infrastructure development that covered more than just the school itself. A framed collection of pictures of the Lin San school is displayed on the executive education floor of the Business School. Fanny Law 7Newsletter Issue 16 HKUST Business School Fifth EMBA Class Boasts Strong Mix Fifty-five students in the EMBA KH-05 class convened on the HKUST campus in the third week of January for their first live-in week in Hong Kong.

As in previous years, the Kellogg-HKUST EMBA program continues to attract the cream of the crop of senior executives from the region. The class for this year is even more diverse and cosmopolitan than before. "This year's group distinguishes themselves by their strong professional and international backgrounds, with

16 different nationalities and 19 birth places. The students have, on average, over 15 years of work

experience and an annual compensation of US$240,000 (HK$1.9 million). The average age is 38.

About one-third of the students fly in from other places including the Philippines, Singapore and Taiwan to

attend classes," said Steve DeKrey, director of the EMBA program. The 16-month program is taught by a 50-50 split of HKUST and Kellogg faculty. Participants attend classes

twice a month on Friday afternoons, Saturdays and Sundays. In addition to the live-in session at HKUST,

participants are also required to attend a 14-day live-in session in August on the Kellogg campus at

Northwestern University where they interact with other EMBA students from Kellogg and its partner universities

in Canada, Germany and Israel.

8Viewpoints A Special WTO Zone for Telecommunications? Yan Xu Department of Information and Systems Management One key element in the negotiation between China and the WTO, as China sought to join the group, was a concession by China on foreign direct investment (FDI) in the country's telecommunications operations. The door that had been tightly closed since 1949 has finally

been opened to reveal a new era in the telecommunications businesses in China. Table 1 outlines the schedule China will follow in opening up its telecommunications market.

China currently owns the largest cellular network and the second largest fixed line

telecommunications network in the world. The relatively lower teledensity (the number of phones

per one hundred inhabitants) in China, which is 11.3% for cellular and 13.9% for fixed lines at

present, in contrast to 84.7% for cellular and 58.3% for fixed lines in Hong Kong, implies that

there is a huge potential for investment. As might be expected, China's accession to the WTO has

raised considerable expectation from investors around the world, even though the industrial, regulatory and legal

frameworks in the Chinese telecommunications sector remain to be reconfigured. As the closest neighbor of this immense market, Hong Kong may be able to enjoy some privileges by taking advantage of its particular economic and political status. The Closer Economic Partnership

Arrangement (CEPA), which was proposed by the Hong Kong General Chamber of Commerce and is currently being negotiated with Beijing, is one of the initiatives that may pave the way for Hong Kong's investors.

The CEPA seeks early application for Hong Kong to all liberalization commitments on market accession and national treatment by the Chinese government. In a recent telecom focus group discussion on CEPA, conducted by the Hong Kong General Chamber of Commerce, interested parties, including the author, presented a wish list to the government, which includes provisions for early removal of geographical restrictions and ownership caps, redefinitions of value-added services, network interconnections and management participation.

It seemed clear from this focus group discussion that it is necessary to understand the background

of China's accession to the WTO before a realistic proposal can be made. For example, representatives

from some telecom businesses suggested that the Chinese government should grant management

control to Hong Kong telecom companies because of the investment caps stipulated in the WTO

agreement. Indeed, there are no terms on management control in the newly published

"Provisions on the Administration of Foreign-Invested Telecommunications Enterprises". However, it is with

management control that the Chinese government is most concerned. Figure 1 illustrates the factors that have influenced the Chinese government's policy stance on foreign investment in the telecommunications sector. Factors on the left side are those that favor China's accession to the WTO and opening the door to foreign direct investment. Factors on the right side, however, indicate China's concerns about foreign direct investment in the telecommunications sector. The Chinese government is thus caught in a dilemma: on the one hand, it favors a well-financed competitive telecommunications market; on the other hand, it intends to secure control over the telecommunications system. In this case, the preferred strategy of the

Chinese government has been to take advantage of foreign investment and, at the same time, to maintain control over telecommunications operations. The bottom line for China lies in maintaining operations

control. This is one of the reasons why China Mobile's (HK) and China Unicom's (HK) foreign indirect investment schemes, namely setting up branches in Hong Kong and listing some provincial networks in overseas

stock markets, has been the sole favored way of attracting foreign investment so far. Consequently, this scheme has not challenged the state's control over the telecommunications sector. Foreign investors

have obtained some indirect ownership of these two Chinese mobile networks via their listed branches in Hong Kong, but they have been blocked from participating directly in routine operations.

To secure its control in the post-WTO era, China's government has been adament about the foreign direct investment cap of 49% for basic services and 50% for value-added services in its WTO negotiations.

The Chinese government believes that ownership control by default equals management control. In this case, requesting to take management control is tantamount to asking for ownership control,

and the Chinese government will undoubtedly reject such a request. Nevertheless, with its fully liberalized telecommunications market, Hong Kong has profound experience with regulatory policies and market competition. Since 2001, several groups of senior officials from the

Ministry of the Information Industry and executive managers from China Telecom and China Mobile have attended training programs given by the Office of the Telecom Authority (OFTA) and the HKUST Business

School in Hong Kong. Business exchange has intensified between operators on both sides. To turn these activities into concrete benefits, for both Hong Kong's investors and China's telecom operators, creative

solutions need to be found, provided the bottom line is not infringed. One of the possible solutions is to suggest that the central government set up a Special WTO Zone for telecommunications by applying China's

WTO commitment to Hong Kong companies ahead of the timetable in this zone. In this way, the government can by-pass other WTO member states' complaints because it is not a member-to-member offer, and

the agreement is to be made between Hong Kong and a designated zone. The benefit for China is to use this special zone as a testing ground to obtain early experience in how to regulate the market smoothly

in the post-WTO era. The special zone would also enable Hong Kong's investors to gain pilot experience in the nuanced Chinese telecommunications market. International business theory suggests thatinitial entry into a liberalizing market by overseas investors is normally relevant to market size but not to other factors. Lessons obtained from the special zone will undoubtedly enhance a more sophisticated strategy

when the nationwide market is opened.

Table 1: China's commitment to FDI in telecommunications under its WTO service schedule

Type of Service Percentage and Geographic Coverage of Foreign Investment Permitted 12/2001-02 12/2002-03 12/2003-04 12/2004-05 12/2005-06 12/2006-07

Basic Telecom 0% 0% 0% 25% in Beijing, 35% in 17 cities 49% with no Services - Fixed Shanghai and geographic Guangzhou restrictions Basic Telecom 25% in Beijing, 35% in 17 cities No change 49% with no No change No change

Services - Mobile Shanghai and geographic Guangzhou restrictions Value-Added Services 30% in Beijing, 49% in 17 cities 50% with no No change No change No change

and Paging Service Shanghai and geographic Guangzhou restrictions Yan Xu 9Newsletter Issue 16 HKUST Business School

Source: Yan Xu (2002) "China's Accession to the WTO and Its Implications for Foreign Direct Investment in Chinese Telecommunications",

Communications & Strategies, Issue 45, March Figure 1: Impact of external factors on the Chinese government's policy stance regarding

foreign investment in telecommunications operation Foreign Indirect Investment {????}No direct foreign operations: China Mobile (HK) investment scheme Foreign Direct Investment {????}Setting investment cap: China's WTO commitment Sovereignty Concern {????}Unfortunate historical precedent Security Concern {????}Prevent the state secrets from being leaked Competitiveness Concern {????}Weak competitive strengths of domestic operators Political Motivation {????}Nation reunion & by-passing political constraints on trade Economic Motivation {????}Transition from state planning to market force Financial Motivation {????}Financing capital-intensive telecommunications sector Policy Stance of the Chinese Government over Foreign Investment {????}Accession to the WTO is critical for China {????}Taking advantage of foreign investment {????}Remaining control over telecommunications operation 10 Research ASEAN+3 Trading Bloc May Offer Its Members More Benefits than the WTO Adapted from Yum Kwan and Larry Qiu, "The ASEAN+3 Trading Bloc" Larry Qiu ASEAN website: www.aseansec.org

The ASEAN+3 proposal has attracted attention in Asia. We argue that a free trade agreement (FTA) for the ASEAN+3 countries is beneficial to all member countries.

In particular, the vertical foreign direct investment linkage between Japan/Korea and

ASEAN member countries, the potential growth of the Chinese economy, and the economic diversity among members of the ASEAN+3 group should make the proposed FTA attractive to all. Background Since the inception of the General Agreement on Tariffs and Trade (GATT), there have been

more than 190 regional trade arrangements (RTAs) or preferential trade arrangements

(PTAs), a large portion of which are regional FTAs. The pace of PTA growth since the

establishment of the World Trade Organization (WTO) has been much faster than before the

WTO existed. The proliferation of PTAs has attracted public attention. While many countries are involved in more than one PTA or FTA, it is interesting to observe

that there are relatively few PTAs or FTAs in Asia and that some Asian countries have not

participated in any PTA or FTA. The Association of Southeast Asian Nations (ASEAN) was

formed in 1967 by the Bangkok Declaration, but it was initially for political purposes. It was

only in 1992 that ASEAN became an economic entity when members decided to establish the

ASEAN Free Trade Area (AFTA). In 1994, the leaders of China, Japan, and South Korea were invited for the first time to

attend the annual ASEAN forum as dialogue partners. During the November 2000 ASEAN

summit in Singapore, the idea of extending AFTA to Northeast Asia to create a greater East

Asia trade and economic grouping - the ASEAN+3 FTA - was suggested by President Kim Dae-jung of South Korea. In addition, Premier Zhu Rongji also proposed the creation

of a China-ASEAN free trade zone in a move aimed at easing the region's concerns over a

negative backlash from China joining the WTO. Although the goal of formally enlarging AFTA

to include all countries in East Asia was deemed premature, the leaders of the ASEAN+3 countries agreed to form an expert panel to study the idea seriously. The main motivation behind the ASEAN+3 proposal is to help all members match the

pace of globalization and benefit from the economic developments of the region. Benefits of the Asean + 3 Bloc While the formation of an ASEAN+3 FTA may produce both negative and positive effects for

each of the member countries as well as for the rest of the world, we argue that it will

provide great benefits to the member countries. Among many reasons for the need to establish an FTA among the ASEAN+3 countries, we focus on three important characteristics of this region's economic ties and developments. First, the existing foreign

direct investment linkage between the Southeast Asian countries as represented by

the ASEAN and the Northeast Asian countries (Japan and Korea) makes such a regional FTA

desirable and beneficial. An FTA would further facilitate flows of foreign direct investment from

the Northeast to the Southeast. Second, China has a large and rapidly growing economy.

While China's economic development is still on a par with many of the ASEAN countries,

China and the ASEAN countries are not competing head-to-head in every sector. There are many complementary areas between China and ASEAN members. The establishment of an FTA is unlikely to create much tension between China and its ASEAN

neighbors and the gains from trade creation are likely to be substantial and hence should

outweigh any losses from opening up domestic markets. Third, there exists great diversity among all member countries of ASEAN+3 in terms of natural endowments, technology advancement, and industrial structures. Such diversity would help minimize

trade diversions in the formation of an ASEAN+3 FTA. Regional trade liberalization like ASEAN+3 would provide to its members more benefits

than multilateral trade liberalization like that offered by the WTO. Although a country may

continue to benefit from multilateral trade liberalization within the WTO, the ASEAN+3

countries may benefit more and realize the benefits more quickly from regional trade

liberalization. There are three basic reasons for this. First, because there are too many

members in the WTO, the pace of global trade liberalization is inevitably slow. Second, some

very large countries have definite power in determining the ultimate pace of the multilateral

trade liberalization within the WTO. Countries of the ASEAN+3 cannot afford to wait that long.

Third, negotiators within the WTO have been increasingly shifting their agendas towards

issues other than tariffs, such as environmental protection, intellectual property rights, labor

standards and competition policies. These are important issues related to international trade,

but there is still plenty of room for ASEAN+3 to benefit from trade liberalization per se.

11 Newsletter Issue 16 HKUST Business School Students & Alumni The Marathon Spirit Twenty-five MBA students and alumni took part in the Standard Chartered Marathon in February. This is the first time HKUST MBAs participated in the event as a group. Andrew Ko (Part-time 99) and Howson Wong (Full-time Year 1) were the only two who ran and completed the full 42-kilometer marathon, while the others participated in the 21-km half marathon and the 10-km races. The Standard Chartered Marathon is organized by the Hong Kong Amateur Athletic Association and is one of the most important international sports events hosted by Hong Kong annually. This year, over 13,000 local and overseas running enthusiasts participated in the event. New MBAAA ExCo Formed The 2002 Executive Committee (ExCo) of the MBA Alumni Association (MBAAA) was formed during the association's annual dinner-cumannual general meeting in January at the American Club. The new ExCo comprises alumni and students of the EMBA and MBA programs. Lawrence Liu (EMBA 2000), the 2002 president who was also a vice president in 2001, spoke at the annual event: "It is an honor to be the president of the alumni association of the top business school in Asia. I am glad that I have with me a great team of ExCo members who are equally enthusiastic to serve you all."

Alumni Receive Trailwalker Fundraising Award The 16-strong MBA Trailwalkers 2001 received an award from Oxfam Hong Kong in recognition of their fund raising efforts. They raised a total of HK$136,510 and were the top fund-raisers in the education category and fifth among the eight categories of the charity event. The proceeds will go to Oxfam to support its poverty alleviation projects in developing countries. This is the third year in a row that the MBA Alumni Association has participated in the Trailwalker event. All members of the four teams in 2001 completed the 100-kilometer MacLehose Trail. HKUST MBA participants in the Standard Chartered Marathon; from the left are Leo Lim (part-time 2000), Grace Lo (part-time 01), CM Yuen (friend), Lesley Kong (part-time 2000), Ida Lee (part-time 01), Raymond Fong (friend), and Franklin Leung (part-time 99). Lesley Kong (part-time 2000 ) and Carsten Paasch (full-time 94) receive the award from Michael McCarthy of State Street, principal sponsor of Trailwalker 2001. Back row (from left to right): Acting Dean K.C. Chan, H.P. Suen, Oscar So, Eric Yu, Winston Siu, Steve DeKrey, program director. Front row (from left to right): Jessie Lee, Regina Wong, Lawrence Liu, Isabel Lui, Miranda Poon, Delphine Lee. 2002 MBAAA ExCo President Lawrence Liu, EMBA 2000 Vice President, Communications and Public Affairs Isabel Lui, MBA (Part-time 99) Vice President, External Susan Yuen, EMBA 02 Vice President, General Affairs Winston Siu, EMBA 2000 Vice President, Internal H. P. Suen, EMBA 01 Vice President, University Liaison Eric Yu, MBA (Full-time 02) General Secretary Lily Li, MBA (Part-time 01) Membership Secretary Regina Wong, MBA (Full-time 01) Social Secretary Miranda Poon, MBA (Part-time 01) Treasurer Delphine Lee, MBA (Full-time 02) Web Master Oscar So, MBA (Part-time 2000) 12

Students & Alumni People Faculty Promotions and Appointments The School is pleased to announce the following new appointments and promotions.

In Choi joined HKUST in January 2002 as associate professor of economics. Choi was

associate professor at Kookmin University Korea, from 1999-2001. Prior to that, he was

on the faculties of Yale University, University of Southern California and the Ohio State University. His research interests are focused on time series, simultaneous equation models, panel data analysis, and exchange rate dynamics.

Francis Lui, professor of economics, has been appointed acting head of the department of economics for

the period 1 January to 30 June 2002. Lui joined HKUST in 1991 as a founding faculty member. He came from the

State University of New York at Buffalo, where he was associate professor of economics from

1991-93. He is currently director of the center for economic development at HKUST. His

research interests are economic growth, social security, corruption, family economics, and

exchange rate systems. T.J. Wong has been promoted to professor of accounting effective 1 January 2002. Wong

came to HKUST in 1994 as assistant professor and was promoted to associate professor in

1999. Before joining HKUST, he was assistant professor at the University of Maryland from

1990-94. His research focuses on the accounting and corporate finance issues in China, East Asia and the US.

My Experience Speaking in Front of 10,000 People Have you ever had the chance to speak in front of 10,000 people? Have you ever participated in an Internet event that was streamed live to over 50 countries around the world? With two other students, Cecilia Cheung (BBA Marketing, Year 2) and Andrew Lam, I had the opportunity to do both last

December, when we were invited to participate in the first-ever Internet debate in Hong Kong.

The Internet debate was part of the inaugural activities of the Hong Kong chapter of the English

Speaking Union (ESU), a global non-profit organization that aims to promote international

understanding through the use of the English language. Six debaters were selected after an extensive

search in both the U.K. and Hong Kong by the ESU delegates. From the U.K., students from the

University of Cambridge, University of Oxford and University of Birmingham, were chosen, while

from Hong Kong all three representatives were selected from the English debating team of

HKUST. In order to promote cultural understanding and the sharing of ideas, the debaters were

mixed and each of the two debate teams eventually included both British and Hong Kong students.

The Internet debate was simultaneously held at the Hong Kong Baptist University and the

ESU headquarters in London. Dignitaries including the former Chief Secretary of the HKSAR, Anson Chan, and the Chairman of the ESU, Lord Watson of Richmond, and a large audience

were present at the Hong Kong site to witness the groundbreaking event. The debate was a truly unique experience. I had never dreamed of being able to speak and debate

in front of such a large audience. Before I went up to the podium to speak, my hands and legs were

shaking. I had hardly any notes ready and I was very nervous. By the end, I was very happy to

receive recognition from the audience. Cecilia was on the proposition side with two other

students from the U.K. She said, "I was not afraid because the debate was organized in such a

casual setting." The motion of the debate was "this house believes that true international understanding can only come from a common culture". The event was about the experience itself and not about and there was no judge. Cecilia

said the experience has made her a more proactive person. She is now more apt to seize

opportunities when she sees them. For me, I believe that if I can speak in front of 10,000 people over the Internet, I can achieve many other

great things. This Internet debate was an amazing experience for all of us. In fact, there are many such

opportunities available to HKUST students, one only has to be willing to try out and participate to find rewarding experiences such as ours.

ESU Chairman Lord Wilson (right, back row) and HKUST business students, Timothy Tsui (standing)

and Cecilia Cheung. Timothy Tsui (BSc in Economics & Finance, Year 3), currently works

at Goldman Sachs as part-time financial analyst. By Timothy Tsui 13

Professor Featured In Photo Exhibition Professor Featured In Photo Exhibition A photo exhibition, entitled "Land and People", was held from19 March to 2 April in the Chia-Wei Woo Academic Concourse. One of the featured artists was Oliver Zhao, adjunct assistant professor of information and systems management. His work captured the stunning beauty of nature and profiled people from all walks of life. Zhao has always been consumed and inspired by the people and the landscape of places that he has visited. "I have been traveling to many places in the world and have always been overwhelmed by what I saw and experienced on the road. Taking pictures helps me to capture and revisit these precious moments. It really enhances my travel experience," said Zhao. Zhao never received any formal training in photography. "It is a sense of expressing the feeling of yourself. However, you can learn the techniques from others. When I worked in the Silicon Valley in California a few years back, I met a group of people who were professionals. We formed an interest club to travel and take pictures together. We also shared and discussed our work together. It was then when I started to delve into the skills and became more conscious of what I took," he added. To Zhao, the simple pleasure of photography is, in his own words, "when people are motivated to visit and experience those beautiful places after seeing my pictures To view more of Zhao's work, please visit his website: www.zhaoyue.com. Swiss Mountain - one of the highest peaks in the Alps. Alaskan Mountain - midnight in Alaska in mid-June, when the sun does not set. Weaving - a well-honed handcraft of villagers in southwest China. Southwest people and lands - a remote mountainous town in Yunnan, China. Sahara - a late afternoon in the desert. Sahara - a late afternoon in the desert.