(Bloomberg opinion) Life for Cathay Pacific Airways Ltd was never going to be easy amid conflict between protesters in its home city of Hong Kong and a Chinese government with the power to destroy its business.
Still, the company and its controlling shareholder Swire Group might have been in a better position to defend the city’s apolitical business values if its leaders had deeper local roots.
That’s the lesson from the departure of American-born John Slosar as Cathay chairman this week and his replacement by another foreign-born “Swire boy, ” Patrick Healy. Slosar had angered China by saying the views of employees on Hong Kong’s protest movement were none of the company’s business.
He follows former chief executive officer Rupert Hogg, who quit last month, out the door.
In appointing Healy instead of equally qualified locals, Cathay has missed an opportunity.
As we’ve written, the way in which Cathay and Swire still promote a class of mostly British-born executives to the top jobs at the expense of local talent should be an anachronism in any modern company.
The two-tier system under which Oxbridge graduates were traditionally groomed for the very top jobs as so-called “house staff, ” while Hong Kong-born executives remained trapped below a bamboo ceiling, was always poor practice.
That it’s only gradually breaking down now, when Cathay risks simultaneously angering local consumers and the Chinese government on which it’s dependent for overflight rights, is a remarkable failure.
Consider some of the executives who were overlooked as a replacement for Slosar.
As we’ve argued, former Cathay Pacific chief executive officer Ivan Chu is a long-time Swire loyalist with just the connections in mainland China to smooth over relations with Beijing.
There’s also Michelle Low, the finance director of the main listed holding company, Swire Pacific Ltd.
Low sits on the boards of Cathay Pacific as well as the property arm that accounts for most of the group’s profit, and joined the group in 1987, one year before Healy started the management trainee programme.
Unlike Healy, a veteran of the company’s Coca-Cola Co bottling divisions in mainland China, Low has spent years in senior roles on the aviation side of the business.
For three years from 2007 to 2010 she was finance director of its Hong Kong Aircraft Engineering Co, and she’s sat on the Cathay board since 2017.
Low is a dual British-Chinese national, according to filings with the UK’s corporate register, in common with many people who were Hong Kong residents before the 1997 handover.
Granted, Healy may prove an excellent chairman. Irrespective of whether their background is Chinese; British; or American like Slosar, long-standing inhabitants also have as much right to be proud Hong Kong residents as anyone else.
Slosar, for what it’s worth, now lists his nationality as Chinese in filings with the UK’s corporate regulator, while Chu is also an Australian national and Cathay’s first ethnic-Chinese CEO Philip Chen has Singaporean nationality. Given the groundswell of popular resentment against China in Hong Kong, Beijing may even prefer a British-born executive with long years of working in the mainland to be running Cathay Pacific, rather than a local.
That’s just the problem, though.
A Cathay and Swire led by executives without deep roots in the city is in an impossible position when trying to retain the loyalty of Hong Kongers while simultaneously making necessary concessions to Beijing.
If the companies gave due credit to their locally born employees, they might be able to hold their heads higher in acting as advocates for the city. — Bloomberg
The views expressed are solely the writer’s.