Not long ago, I came to Hong Kong and took a photo in a vegetable market. Pui Kee Vegetables, an ordinary vegetable stall in the market. What caught my attention was the arrangement and neon sign on the stall, which was both ordinary and special.
Ordinary in that the vegetables sold are not significantly different from other stalls, with slightly more varieties and better quality, that's all. The special thing is that a vegetable stall actually uses a very eye-catching neon sign to distinguish itself from other stalls.
Vegetable retailing, no matter where it is, is a small business to make a “small profit”. The installation of neon signs should be a relatively large investment for the operator. If they do not have the assurance and confidence of long-term operation, they will definitely not invest this amount of money. Once they have invested the money, their business behavior will change subtly.
Neon signs are fixed asset investments for vegetable vendors. Fixed asset investment requires a longer operating period before it is possible to recover the cost, operators are reluctant to make any long-term investment if they have not formed a stable expectation of future operation. Just imagine, if the management of this vegetable market has the right and the possibility to arbitrarily change the layout of the vegetable market, or change the size of the stalls and the contents of the business, how can the operators be in the mood to install neon signs?
If the management now expresses its support for the installation of neon signs and guarantees that it will not interfere with the operation of the stalls, will the operators happily make an investment decision as a result?
Perhaps not. The operators will worry: What should I do if the management changes its mind? Even if their ideas remain the same, what if there is a change in personnel and the successor has different requirements? If the place has had a history of management changing business decisions at will, it's hard to get the operator to pay for it, no matter what kind of assurance is given. Whatever the reason, failure to honor commitments, whether verbal or written, can have a negative impact on long-term investment that is difficult to measure and difficult to eliminate.
For entrepreneurs, investment confidence comes from a favorable market environment, from all parties to the laws and regulations firmly, without compromise, each abide by their own, each do their duty.
En out of the top, not as good as en out of the law
Nowadays, in order to encourage the development of private economy, some local governments have put forward many encouraging policies to support private entrepreneurs, but it seems to have little effect.
Not only that, the expression of goodwill may also release a very negative signal: these incentives are given by us. Since they are given by us, we can certainly change them. It is important to understand that “favors from above” cannot stabilize expectations, and “favors from the law” can only boost confidence.
How can entrepreneurs have confidence? They need to see that officials at all levels do not have the opportunity and possibility to jeopardize their interests even if they want to; their investments are protected by the law and the judicial system; and those who wield any power are unable to shake their legally-acquired benefits, even if the laws they rely on have loopholes and flaws in the legal empowerment process. To build stable expectations, entrepreneurs need to be convinced that their rights can only be changed through a rule-based, grievance-based, transparent and fair judicial process. There is a more subtle issue here: how to deal with historical legacies. Reform and opening up is a process of exploration and trial and error, during which some people at certain times and under certain circumstances have obtained benefits that now seem unreasonable and non-compliant through procedures that were acceptable at the time; the public (especially netizens) have a deep-seated hatred for such benefits. If the interests are obtained by illegal means, they should of course be deprived of by legal means within the statutory retrospective period. However, if they have not violated the law, I do not think it is appropriate to simply use today's standards to forcefully change a fait accompli.
Public opinion needs to be respected, but public anger cannot be used as a basis or excuse for solving business operation problems. The saying “not killing is not enough to satisfy the people's anger” is not a justification for law enforcers in a society governed by the rule of law, or else there will be people who will surely manipulate public opinion.
The ultimate expression of goodwill is preferential measures and supportive policies that go beyond the norms and statutory authority. Although these measures and policies are likely to usher in a wave of cheers and responses, they are equally unable to withstand scrutiny. Discretionary power at the administrative level, regardless of good intentions, brings about promotional effects that are always superficial and short-lived, and encourages often opportunistic arbitrage, as exemplified by the various fraudulent subsidies in the new energy vehicle and semiconductor chip industries. Officials at all levels unswervingly and uncompromisingly abide by the law if they can adhere to always, neither add nor subtract, it has been the best confidence guarantee for business operations.
Everything is done according to the rules,