Recruiting in China

Government intervention in the labour market is making it hard to run a restaurant business and more regulations will only make it tougher, says one of the city's leading restaurateurs.

Simon Wong Kit-lung, executive director of the LHGroup his father founded about 40 years ago, said he supported the statutory minimum wage as it protected workers. He said some cleaners, for example, got as little as HK$5 an hour beforehand.

But further measures would not be good for business, he said.

"In the past few decades, because of the so-called 'small government, big market' vision, the government did little to influence the business environment," Wong said. "But in the last few years, I feel that this is changing.

"The government is obviously rendering changes in the business environment with its policies, such as the statutory minimum wage."

Wong's group has 10 restaurants, including The Banqueting House in Kowloon Bay's MegaBox mall, and he is managing director of the Kabushikigaisha chain of 16 Japanese restaurants.

The 39-year-old businessman is also one of the 12 members of the Minimum Wage Commission, which reviews the lowest statutory pay rate - set at HK$28 an hour in May 2011 and raised to HK$30 in May this year.

While some intervention was needed to prevent injustice in the workplace, he said, too much intervention, such as a standard working hours law and statutory paternity leave, would not be "ideal" for the city's business environment.

"In some third-world countries, some people, including young people, are forced to work 18 hours a day. A standard working hours law is needed in those cases, but not in Hong Kong," Wong said.

"And when France legislated standard working hours, it was because the unemployment rate was so high that the government wanted to split one job for two people," he added.

In the 1980s and 1990s, Wong said, new restaurants could break even in their first half-year. But now it took about three years, if it happened at all.

He quoted government figures as saying that 30 per cent of investments in Chinese restaurants barely break even, while 40 per cent have never broken even by the time the restaurants close down. That meant that only 30 per cent of people investing in Chinese restaurants could make a profit.

Making it even harder, he said, restaurant rents had doubled in the past five years while the price of ingredients had risen 50 per cent in three years.

Since the minimum wage law became effective in 2011, monthly pay for the job of pushing a dim sum trolley had risen from HK$4,000 to HK$7,000, he said.

This had caused a ripple effect, with staff who had been making well over the minimum wage also demanding a raise. Salaries for waiting staff and managers had risen 15 per cent and 10 per cent, respectively.

"And it is now very hard to hire restaurant staff," Wong added. "Some of us in the restaurant business have a WhatsApp group where we ask for help in recruitment if it is urgent. But everyone is saying they need help, too."