Hong Kong, the last vestige of the British Empire, is still run by a colonial governor answerable to the British Foreign Secretary. On 1 July 1997, it will be given back to the People's Republic of China which already has its own twin city for Hong Kong, the Shenzhen Special Economic Zone immediately over the border. Shenzhen has been a magnet for Chinese citizens seeking wealth through employment or enterprise and usually both. It has its own boundary fence between itself and the rest of China. Hong Kong is a frontier town in every respect, including the business ethics American readers might more readily associate with the Old West than the Far East. "Making a quick killing" is a phrase that applies to both of them.

When the Chairman of the Hong Kong Stock Exchange was arrested in 1987 on corruption charges for accepting shares as sweeteners from applicants for stock market listings, many local operators regarded the authorities as harsh. Some regarded them as scapegoating. However, when judge Barker acquitted George Tan in the Carrion fraud case on a technicality, the outcry was virtually unanimous here.

During the last five years or so, financial and business regulations have greatly increased, bringing the statutory and paralegal framework of business up to Anglo-American levels of social responsibility. There is, for example, an ordinance outlawing insider trading in securities. There are laws against air pollution by factories.

On the other hand, sexual and racial discrimination are allowed, imprisonment for debt is still theoretically lawful, and a general spirit of caveat emptor pervades the consumer field. There are many agencies to protect and advise the public, ranging from the Consumer Council to the ombudsman, but they are generally seen as lacking bite.

The legislature is largely appointed by the governor, but even the few elected representatives could not be said to be accountable to their electors in a Western sense. What we have is Anglo-American regulatory structures superimposed on a Chinese society of entrepreneurs and gallerymen who are largely unconsulted about new regulations and who largely ignore them as far as safe to do so.

The local business community does not lack ethics. Rather it does not readily connect with Anglo-American preconceptions regarding the content of ethics. For the local Chinese businessman or businesswoman, social responsibility begins (if at all) below the earnings line. The "Royal" Hong Kong Jockey Club is the monopoly purveyor of legal gambling in Hong Kong. Dr. Stanley Ho is the near monopoly purveyor of legal gambling in the neighboring colonial enclave of Macau. Both the Club and the Doctor donate regularly, generously, and effectively to almost the entire gamut of charities, voluntary welfare associations, educational institutions, and other good causes. Both have a formidable business reputation as, shall we say, winners. The concept of doing business under environmental, consumerist, and related restrictions is widely seen here as merely antienterprise, possibly socialist. The ideal is total laissez faire above the earnings line, conspicuous corporate citizenship below it.

Surveys of ethical attitudes of Hong Kong's managers and management students over the last five years have reported a widespread identification of legality with ethicality. If something is not illegal, it is seen as not unethical. Indeed, the law tends to lead community concepts of ethical conduct rather than follow them, as shown by the antipollution ordinances.

Professional ethics in Hong Kong can be contrasted with managerial ethics up to a point. Professional lawyers, auditors, doctors, architects, and so forth all have professional codes of ethics fully consonant with Anglo-American norms (which are their usual explicit source). These codes are quite strictly controlled and enforced.

Client privilege, however, is rated rather more highly than in the West. It is considered wrong to report a client to the authorities even if the paralegal regulations require it. A client discovered to be evading tax, for example, would be refused further service by many accountants surveyed but not reported. However, mast accountants would answer authorities' questions fully and honestly concerning client wrongdoing. They just feel uneasy about initiating such a process.

Acceptance of gifts and sweeteners is both illegal and against professional regulations in Hong Kong. Reasonable Christmas gifts, sponsorship to golf clubs, and quite lavish entertainment are seen as sufficiently normal and widespread to be ethically acceptable. There is, however, a penumbra of suspicion, that competitors are less resistant to sweeteners; and the reporting of such suspicions to the Independent Commission Against Corruption is not unknown.

Whistleblowing is almost unheard of and employee loyalty is still the norm, even as fears of 1997 prompt increasing emigration and job hopping. One is not expected to bite the hand that feeds one, even if the hand is dirty.

A principal effect of the 1997 fear is to reduce payback horizons, and to prefer the certainty of a modest but quick pay off to the uncertainty of a large but deferred one. Companies are using short-term loans more; investors are using local T -Bills more. Stock price volatility has increased and short-term securities performance has moved further from corporate fundamentals. Complaints to the Independent Commission Against Corruption from the private sector have risen (both absolutely and relative to the number of complaints from the public sector).

In China itself, so called "economic crimes" are punishable by death, but corruption is said to be widespread.

In early 1991, a row broke out between China and the UK over Hong Kong plans to build a new airport by 1997. China suspected the UK of wanting to run down Hong Kong's central reserves to fund the project as a kind of financial scorched earth policy. The incident underlined yet again the continuing mistrust between China and Hong Kong.
In such an insecure atmosphere, the ethics of survival tend to seem more appropriate than the ethics of professional probity. For companies, risk reduction has often meant relocation of group head quarters from Hong Kong to London. For individuals, risk reduction means obtaining a Western or Singaporean passport even at the cost of considerable career dislocation and financial sacrifice. If California were to be handed back to Mexico, would Californians behave much differently from present day Hong Kong residents? For many in Hong Kong, the party is nearly over, because the Party is nearly here.