The effect of “Yellow-Economic-Circle”: the huge modification of business cycle for Hong Kong

Disclaimer: the article here is only analyzing in business subject and there is no “color” meaning towards this topic.

Abstract

After 6-months protests from huge group of Hong Kong citizens to the government, and after the great changes for the District Council from “blue” to “yellow”. It seems to be quite obviously that these things are changing the whole economy system towards Hong Kong. In fact, the protesters also invent an new concept — “Yellow-Economic-Circle”. For this article, we would try to work on some ideas and thinking about the effects due to the business cycle and system changed in Hong Kong.

Meanwhile, during these 7-month protests, there are quite a lot of shops are identified as a “yellow-shops” and a for the “blue-ribbon” shops and companies are being varnished by the protesters for many times as per the comments from their management and owners. So finally, who will win the game in the economy cycle?

One of the slogan from “LIHKG” for promoting Yellow-Economic-Circle

Size of the “Yellow-Economic-Circle”?

Before that, there were rumors that this circle would not be big and effective towards Hong Kong. However, my opinion is, it does have at least 1.7 million Hong Kong citizens are identified as “yellow-ribbon”. Especially after the election, it showed that how many citizens were unsatisfied the “Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation (Amendment) Bill 2019”. The election results truly showed on the big difference between Year 2015 and this year, while it was not counted that some of the votes were being “forced” to vote.

voting results from the District Council in 2019 and composition before the election

For identifying the The effect of “Yellow-Economic-Circle”, there are some main points we could focus on:

The spending power between the “yellow” and “blue”

There is no doubt that the “yellow” citizens are having more spending power than the “blue” citizens. Mostly as report said that the most of the “yellow” citizens are comparatively younger than the “blue” one. That does not mean the “blue” citizens are having no spending power but the range are comparatively lower than another one. In addition, “blue” citizens were not willing to go out from the “war-zone” since the society was in a mess right now. As reported from the news that one of the famous “blue-ribbon” food and beverage company Maxim’s, due to being demolished strongly by the protesters, there are rumors that over 70 shops had to be closed for operation, without the timetable for reopen.

Rumors that over 70 shops from Maxim’s Hong Kong were closed due to the protests. (Picture from on.cc)

On the other side, the “yellow-ribbon” shops are benefited from the protests. One of the famous Food and Beverage shop is “Dragon-Gate Cafe” as their Co-Founder is fully support towards the protests. Comparing to the closing operations from Maxim’s, there are a lot of citizens queuing in front of their stores everyday for supporting their sales. So for the results, we could see that the spending power from two groups are way different.

Despite on the attack from the people, the “yellow” citizens were still supporting “Dragon-Gate Cafe” (Picture from Standnews)

Supply Chain effect

But still, some of the “blue-ribbon” companies are still holding the main supply chain not only just food production but also something else — however as per the economy cycle and multiplication effect, this would be changed. Before the companies were doing on all areas such as supplying raw materials and products to their own branches, and also the shops who are purchasing them. However, since right now the own branches are closed off, so the multiplication effect would be greatly affected to the business — they could only rely on providing more to outside but they could not earn more by their own. Looking at the longer term of this issue, this would be truly affect the stabilization for the company.

Stock Market

We could also find out some supporting from the stock market. As per this interesting finding comparing from these two stocks: HKTVMall /(1137.HK) and TVB (0511.HK). We could find out that the changes within this month are way different. We could see that there is a dramatically raise for HKTVMall and then the weak performance from TVB, while quite a lot of the citizens thought that TVB was having an imbalanced news report, on the other hand the CEO of HKTVMall Mr. Ricky Wong Wai Kay, supported the protesters during the protests happened in CUHK.

Conclusion: can it be step backward? Yes, but depends on the management from the Hong Kong SAR Government.

In conclusion, it is quite possible that there would be a very great problem would be occurred for the “blue-ribbon” companies for their long term development and doing their business. We are not sure if Hong Kong Government could truly understand this could be really bad when the problems are coming up. Solving the gap between these two parties are not easy but also not hard. It really depends on the action from the Hong Kong SAR Government in the coming future, especially to rebuilding the economy for Hong Kong.

My blog: http://nickylkc.pw/the-effect-of-yellow-economic-circle-the-huge-modification-of-business-cycle-for-hong-kong/