Please stand back from the door

Recently, i bought an interesting tourist guide titled <<台北吃喝玩樂捷運遊>> (English translation: The Metro Ride for Food, Drinks and Entertainment in Taipei), which recommends places to go along the metro route in the capital city of Taiwan. The book is full of informative description and illustrative pictures about tourist attractions and exciting restaurants, but what most distinguishing this book from a dozen similar books in the shelves of bookstore is its theme, which is playing around along the metro line. What a great idea for touring.

The metro, put it in Hong Kong's prospective, the MTR (Mass Transit Railway), has integrated into everyone's daily life so naturally that a day without MTR has become unthinkable. It has become the center of our "universe" where we eat, shop, meet and sleep.

How does MTR benefit us apart from saving us from the frustration of traffic congestion and spare us half an hour in the bed on the working days? What does MTR actually bring us? To answer this question, different people would have different answers.

Fellow columnist Henry Chan, with his eagle eye for investment opportunities, would say the investment return of the MTR share (66), now trading historical highs of around $20. Shih Wing Ching, chairman of real estate agency Centaline who used to contribute to a Quam column, would say the appreciation of the value of residential properties.

Mr. Shih's second answer would probably be that MTR gave the birth of free newspapers, as he owns one of them. The MTR trains happen to be a perfect place to force people to read when they, once getting aboard, are not allow to eat or drink, not able to talk with one another as most being strangers, not able to listen to radio, having nothing to see outside the windows and, worst, not getting comfortable enough to take a nap. See my earlier entries in this column.

My answer is: Admiralty and Octopus.

Admiralty was born from the opening of an MTR station. i myself haven't known of the name of the district between Central and Wan Chai until the opening of an MTR. To myself, Admiralty means nothing but merely the shopping district built around the Admiralty station. i think i am not the only one who has such an illusion.

In fact, Admiralty was where British Navy anchored in the 19th Century. That's how the district got its name. However, Admiralty has become the busy district, with up-market shopping malls, five-star hotels and premiere movie theaters, it is today, only after the opening of the MTR in 1980. Before that, there weren't any economic activities going on there.

i am not talking about Tseung Kwan O and Tseung Wan, the satellite residential areas. These areas already existed with many estates and residents before MTR reached them. MTR brought transport service to these areas, but it did not cause the birth of these areas, unlike what MTR did to Admiralty.

Admiralty is like a miracle that only MTR made possible. If Central belongs to tie-and-suit bankers, Admiralty would belong to elegantly dressed shoppers. Walking a mile further east to Wan Chai and you can easily spot the difference made by the power of MTR and the absence of it.

Wan Chai was developed after the World War II, and it had not enjoyed an MTR access until 1985. Wan Chai is also a prosperous district with shopping malls, movie theaters and hotels, but these operations are all in a much smaller scale. To be more accurate, there are no shopping malls, but shopping arcades. There used to be many cinemas, but most of them cease to exist lacking the economies of scale. Stripping out the more recently developed north Wan Chai, where the Hong Kong Convention and Exhibition Centre is located, there is no world-class hotel.

Generally speaking, the businesses in Wan Chai, to a great extent, serve the local residential community only. The absence of a mass transit system during its development warrants a lack of power to draw demand from outside the district. In contrast, there wasn't, and isn't, a residential community in Admiralty which the businesses in Admiralty can rely on. Fortunately, MTR brings in shoppers, moviegoers and travelers.

MTR is like a campaign runner, inducing people to act together and hence achieving something otherwise impossible. Apart from building Admiralty, it created a new currency in Hong Kong, the Octopus.

Octopus has become so popular in the city nowadays as if a second currency after the Hong Kong dollar. The debit card was used to pay MTR and bus fares only when it was launched in the 1990's. Today, it is acceptable in vendor machines, fast food shops, convenience stores and supermarkets, and will soon be acceptable in taxis. The payment system is ever expanding.

Hong Kong people like Octopus so much that each of them carries, on average, more than one card. The outstanding Octopus in circulation amounts to 12.4 million, outnumbering Hong Kong Identity Cards. i don't know why a person has to carry more than one Octopus, anyway.

Octopus is so great because it saves people time for exchanging coins. In Hong Kong, it seems anything that saves time is great. A survey said China and Hong Kong combined has become the biggest instant noodle consumer in the world, leaving Japan, the product origin, in the dust.

Should there be no MTR, there would not be such a successful debit card system like Octopus. Think about credit card. The adaptation and popularization of credit cards took several decades, if not almost a century.
The initial promotion of a payment system, whether it is for credit card or debit card, runs into the "chicken or egg" dilemma. No consumer cares to use it unless there are enough shops accepting it. In reverse, no shop dares to accept it unless there are enough consumers using it. In the end, neither the consumers nor the shops take the first step to adopt it. That largely explains the slow adaptation of credit cards.

In the case of Octopus, MTR broke this "chicken or egg" dilemma.

MTR was able to do so because it, being a prominent means of transport, captured a vast number of people. It took the first important step to adopt Octopus. People started to use it, without much hesitation, because they knew Octopus was accepted at the gates of any MTR stations, wherever they go.

Having broken the dilemma, Octopus is quickly adopted in other places outside MTR stations because the likes of McDonald's, 7-Eleven, Park'N Shop knew there are enough Octopus users in the street.

"Please stand back from the door", every time i hear this message, i know the train is about to bring me to the next station. Every time i hear "dud" at cashier, i know i can go without the hassle of exchanging coins. MTR reaches far beyond its stations.


Disclosure of interest: i am not holding any MTR shares. But i am looking forward to the initial public offering of Octopus shares.

Sep 6, 2006
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