For some, it's a place for a holiday weekend of sightseeing, Portuguese feasts and a jetfoil ride back to HK with a bottle of duty-free vinho and a box of sesame cookies as souvenirs. For others, it's a maelstrom of spinning roulette wheels and tumbling dice'even though most of the HK dollars or Chinese renminbi they bring will likely remain in the former Portuguese enclave.
But Macau became a full-fledged special administrative region (SAR) in 1999, and the expansion of the MSAR's gaming industry under Chief Executive Edmund Ho has brought massive change in the form of land reclamation along with new hotels, casinos and other infrastructure, much of it ongoing. The gaming industry in traditional locales like Monte Carlo and Las Vegas leverages IT applications to an extent seen in few other industries. It's a niche vertical industry, but one that employs a great deal of physical security'much of which remains obscured of necessity.
Gaming has been Macau's premier industry for over 150 years, but the modern era is characterized by Dr. Stanley Ho's creation of Sociedade de Turismo e Divers'es de Macau (STDM) in 1962. Ho also introduced the jetfoil fleet that plies the 60 kilometers of ocean separating the two SARs.
Although gaming provides the bulk of Macau's revenue (and tax gains), there's far more to Hong Kong's sister SAR than 'big-small' and baccarat. Macau's first land reclamation project was over a century ago, but the scale of today's projects is unprecedented'nothing like this has been seen in the region since Hong Kong's 1990s Airport Core Program chopped into Chek Lap Kok Island and leveled an airport platform. The Cotai project (which essentially joins Coloane and Taipa Islands) is one phase: other reclamations on Macau's peninsula have produced the world's largest artificial lakes as well as land for office/residential buildings, hotels and casinos.
Macau outposts
After years of doing business exclusively via resellers and SIs (systems integrators), major vendors are now setting up offices in the MSAR'Microsoft Corp., IBM Corp., and Hewlett-Packard Co. have set up shop in the Macau's flagship Bank of China Building opposite the Lisboa Complex. 'We currently have 10 staff,' said Adam Iao, director of HP Macau technology solutions group,' but plan to expand.' HP also has warehouse facilities in north Macau, but no plans to move into neighboring the Special Economic Zone (SEZ) of Zhuhai, said Fred Sheu, marketing director of HP Hong Kong technology solutions group. 'Currently, we handle our Pearl River Delta (PRD) business through our offices in Guangzhou,' said Sheu.
What can major vendors accomplish with local offices? 'Macau's in an environment of sustainable growth across multiple areas, including IT,' said Iao. The public sector's e-government measures are boosted by gaming tax revenue, which helps fund initiatives like Macau smart ID cards'of the MSAR's 488,000 residents, about 300,000 have smart cards.
Johnny Au, executive director of Macau-based SI Netcraft Ltd., said his firm started in 1996, when the economy of pre-SAR Macau (then described as a 'Chinese territory under Portuguese administration') was stagnant. 'We focused on government, utilities, universities and major banks,' said Au, who added Netcraft currently supplies 60 percent of the switchers and routers used by clients like the Macau police force, customs department and health department.
Growth potential
The massive reclamation and infrastructure projects now underway are projected to deliver 40,000 new jobs by 2007, but are not exclusively hotel and casino-related. Sporting facilities'including the Macau Dome, known locally as the 'Macau Egg''were constructed for last year's East Asian Games and will host the 1st Lusofonia Games (comprising the world's eight Portuguese-speaking countries) in 2006 and the 2nd Asian Indoor Games in 2007.
This infrastructure is designed to operate in tandem with Macau's international airport and attract meetings/incentives/conventions/exhibition (MICE) business to the MSAR. With the recent opening of Hong Kong's AsiaWorld-Expo, the competition will be fierce (see sidebar, 'MICE space'). But Macau, buttressed by the neighboring Zhuhai SEZ, is no longer willing to concede HK's long-standing status as the 'gateway to China.' Malaysia-based budget carrier Air Asia Berhad chose Macau as its hub in the PRD, providing competition to regional destinations Bangkok and Kuala Lumpur from Macau's decade-old airport near Taipa.
Educational imperative
'IT skills are important,' said Iao, 'but English proficiency is critical.' Au pointed out that Macau has gained higher-education institutions in recent years, but competing with higher salaries offered to casino workers is a perennial problem in recruiting and maintaining new talent. 'This isn't just a problem for IT SMEs (small and medium-sized enterprises) like ours, but affects other Macau SMEs.'
With the new projects coming onstream, Au sees educational support as imperative. 'Macau universities must train more professionals,' he said. But simply providing training is not enough, said the Netcraft chief. 'For example, some students in Macau are mainlanders. We train them here, but we want to keep those skills in Macau, by hiring them if possible.' Au said that labor regulations in Macau made it more difficult to hire non-residents relative to Hong Kong, and this made it more difficult for firms to attract and retain employees with IT skills.
According to Au, this human resources problem affects Macau industries like banks and even government. Iao agreed that developing and maintaining IT skills among Macau's labor force was a serious issue.
Service strategies
'We are a service-oriented SI,' said Au, 'not just a 'box-mover'.' He added that his firm prefers to hire fresh graduates, ensuring that they gain experience as well as certifications from major vendors. Netcraft has partnerships with IBM, HP, Sun Microsystems Inc., Microsoft and numerous security vendors, including Cisco Systems Inc. While Au said that while Cisco's latest vision of 'unified communication' might play well among the multinationals currently setting up shop in Macau, many of his clients have more limited networks.
Like Hong Kong, much business in Macau is conducted via quick mobile phone calls in Cantonese and faxes, but Netcraft's Au added: 'the Macau way of business [lies] somewhere between Hong Kong and the mainland.' As a result, he said, big Macau projects often are won in one single bid, but infrastructure work is then split up among subcontractors and sub-subcontractors.
'Especially in the gaming sector,' said HP's Iao, 'timing is critical.' With the current 'gold rush' spearheaded not only by various Vegas concerns but also homegrown gaming operations, many infrastructure clocks are rapidly approaching critical mass. The amount of fiber-optic cable, silicon and copper to be uncrated and installed in Macau over the next few years will be, in a word, massive.
Vendors on the jetfoils
'I travel to Macau for business at least once a week,' said Ming Wong, manager for commercial sales, Cisco. Wong said he sees a lot of businesspeople commuting via jetfoil, and predicted he would spend even more time in the MSAR once his firm's Macau office opens in Q4 2006'the new office will house sales and tech staff, but will also be used for seminars and workshops, according to Wong, who added that Cisco would 'leverage its Hong Kong resources heavily to service Macau.'
'The planned opening of our Macau office for this autumn demonstrates our commitment to delivering leading IT infrastructure to the city,' said Fredy Cheung, Cisco's managing director for South China. 'With a liberal business environment and a clearly defined development strategy, Macau provides tremendous growth potential for world-class information technologies to support its burgeoning economy and that of neighboring Guangdong region.'
Wong said one of his firm's traditional strengths is supplying verticals like financials and telcos, and described the gaming sector as a 'new vertical.' He said that converged IP networks would help spawn new uses of technology within this market. 'Casinos are looking at pioneering new uses of IP convergence,' said Wong. 'For example, video surveillance: there will be thousands of video cameras used in a casino with just 300-400 tables.'
Wong said that his firm's Networking Academy Program has partnered with six Macau educational institutions, and 'the number of graduates from the Cisco Networking Academies in Macau has increased by 30 percent year-on-year from 2004 from 2005.'
'IBM has actually been in Macau since 1985,' said Wing Ho, manager, Global Midmarket Business, IBM China/Hong Kong. 'Our focus in Macau is on helping Macau's organizations innovate to grow.' IBM opened its Macau office last year.
'Our Macau team is also focused on growing IBM's partner ecosystem in the city to provide local knowledge and tailor-made solutions,' said Ho. 'The Macau team consists over 10 professional sales, services and support staff focused on growing IBM's partner ecosystem in the city to provide local knowledge and tailor-made solutions.'
'We see our growth in Macau coming from three main sectors: entertainment and tourism, government and banking,' said Ho. 'Our presence in Macau reflects our confidence in Macau's growth potential...IT services and solutions that help address the needs of Macau's booming tourism and gaming industry, will help businesses there to innovate, and to position Macau as Asia's entertainment hub.'
'We foresee the tourism and gaming industries as major growth areas, including gaming, hotel, catering and retail'all of which are major driving forces in Macau's economy,' said Keith Chang, business development manager, Microsoft Macau, whose office opened in June 2004. 'With the Macau government's 'e-Macau' initiative we see the public sector as another area of growth.'
'Our establishment of a local Macau office as a long-term commitment to our customers and partners...with onsite engineers providing Premier Support service to enterprise customers here, said Chang. 'I believe Microsoft is the first major software vendor with a comprehensive local support infrastructure in Macau.'
'At the moment, we have four full time staff at the Macau office while all the staff at the HK office are mobilized to support the work at Macau,' said Chang. 'Most of the IT products and skills come from HK. The local SI is focused on 'box moving',' he added, saying that most of his firm's 'public sector customers have in-house developers to develop tailor made in-house applications.'
Chang had an interesting anecdote about doing business in Macau: '[During] the Macau government public tender procedure, all bidders [could] explore each other's proposals during [the] tender opening. There was tremendous transparency (including pricing, technical solutions etc.) between bidders after you submitted your proposal, and this is very unusual in our industry.'
'Different IT firms target different customers,' said Lawrence Ho, chairman and chief executive officer (CEO) of Melco International Development Ltd. 'In Macau, there is a potentially huge customer base for gaming companies. With casinos expanding rapidly and continuously in Macau, the city is fast becoming a magnet for gaming technology.' Ho explained that Melco has established a technology subsidiary called Elixir, which he described as a 'premier gaming IT infrastructure specialist capable of offering clients with a full range of system integration and network services.'
'As Elixir focuses on developing gaming machine content and technologies specifically for the Asian market, Macau [would be] ideal for establishing a research and development center,' suggested Ho. 'Knowledge of Asian gaming habits would be conducive to developing localized gaming technology for customers in the Asian Pacific Region.'
Ho said that Elixir has formed 'a gaming alliance with Shuffle Master Inc., a market leader in gaming utility products, for a term of 20 years. They will develop localized gaming technologies for different gaming jurisdictions in Asia.' He added that the alliance agreement included 'an exclusive distributorship [for] existing gaming products of both Shuffle Master and its Australian-based Stargames Corp. Pty Ltd., co-development of an R&D center and a manufacturing base.'
'In the future, I expect gaming technology to dominate the IT market in Macau and as such having gaming technology expertise would be an advantage for those who wish to work for an IT firm in Macau,' said Ho.
The Macau edge
'Our edge is localization,' said Netcraft's Au. 'We have dedicated local people here in Macau, and a great opportunity to improve our overall infrastructure.'
As for Macau's prime sector: 'the evolving and liberalized gaming industry in Macau contrasts sharply with what was once a monopolized and torpid sector,' said Melco's Ho. 'Gone are the days when one could just put a baccarat table in a corner and customers would come. Nowadays, in this 'Las Vegas of the East', only those who are capable of providing the best products and quality services, backed by world-class branding and marketing, can thrive.'
SIDEBAR:
MICE space
With five airports and a plethora of convention centers and hotels, the Pearl River Delta area is a magnet for meetings/incentives/conventions/exhibition (MICE). But new venues like AsiaWorld-Expo near Hong Kong's international airport are now operational. How can the MSAR compete?
"The Macau government has been relentless in its effort to put the city on tourists map and enhance Macau's profile as a MICE center and entertainment attraction," said Lawrence Ho, chairman and CEO of Melco International Development Ltd. Ho added that governmental efforts included the organization of events like 2005's East Asian Games.
"The MGTO [Macau Government Tourist Office] has 17 overseas marketing offices, said MGTO director Joao Manuel Costa Antunes, "and they are our marketing and facilitation arms for international MICE marketing. Antunes added that his organization also advertises in regional MICE related magazines.
Antunes described Macau's MICE attendees as "two types, (1) small size incentive groups from Singapore/Taiwan/Japan/Malaysia etc with average size of 30-200+ pax, (2) bigger conventions/conferences from any country in the world."
"Macau is visa-free to some 64 countries and this eases arrival and immigration procedures for most international MICE attendees," added Antunes. "[With] the support and aggressive promotion of the Macau Government, the number of visitors to Macau from the Asia Pacific Region--especially China, Hong Kong and Taiwan--has skyrocketed," said Ho. "In 2005, accumulative arrivals in Macau hit 18.7 million, an increase of 12.3 percent compared to 2004."
"There are many projects announced by private investors at the Cotai Strip," said Antunes. "We are expecting a total new picture of convention activities in that area, especially in the exhibition venue area."
"Macau's competitive edge is that Macau is a free economy, and we always follow free economy rules," said Atunes. "For example, the Macau government does not build MICE venues, but does encourage private investors to build such venues. We let the free economy build their own, and focus on the macro approach in promotion and facilitation of any MICE event."
But as Macau rises, they face competition within the region, particularly from their fellow SAR. "We position AsiaWorld-Expo as a global trading platform and identify quality international MICE events and long-term partners that fit into our positioning," said Kenneth Chan, marketing communication manager for Hong Kong's latest convention center: AsiaWorld-Expo. "We leverage the many advantages of Hong Kong, and our positioning is different: global, international events."
Chan said the Expo's event calendar for onwards includes exhibitions and functions on a wide variety of themes, including the China Sourcing Fairs, ITU Telecom World 2006 ("the Olympics of the international telecommunications industry"), and the Asian Aerospace International Expo and Congress 2007.
"Our partner hotels offer guaranteed room blocks for AsiaWorld-Expo event attendees," said Chan. "For example, Novotel Citygate in Tung Chung, Hong Kong Disneyland Resort (including Hong Kong Disneyland Hotel and Disney's Hollywood Hotel) and Regal Airport Hotel are our 'On-site Hotel Partners'." According to Chan, there are currently are over 30,000 hotel rooms available within 30 minutes of AsiaWorld-Expo, while "the in-venue AsiaWorld-Expo Station also provides convenient access to all train services on the MTR network."
"The increasing number of MICE visitors and tourists to Macau has translated into a strong demand for hotel rooms," noted Ho from Melco. "However, I believe the pressure will be relieved with the opening of new hotels in Taipa and Cotai, specifically the Crown Macau for high rollers, and the City of Dreams: a Melco project which is an integrated entertainment resort with 2,000 [rooms]. The City of Dreams plus the first few Cotai Strip resorts will together have as many hotel rooms as now available in all of Macau."
"A lot of cities see the importance of the exhibition industry," said Chan from AsiaWorld-Expo. "With the opening up of the China market, the market demand for international exhibitions is huge and the growth is phenomenal."
Still, Ho offers a few perks to MICE attendees that Hong Kong likely won't be able to match. "The Cotai Strip is expected to offer a critical mass of business, leisure and entertainment attractions, including world class meeting and convention facilities and the most modern and exciting casinos in Asia," said the Melco chief.
SIDEBAR:
'gua de Macao
By Sheila Lam
A business continuity plan (BCP) is important for any businesses, but for Macao Water Supply Company, Macau's sole water supplier, it is essential. Owned by a joint venture between New World Group and French water services company Suez Group, Macao Water provides a maximum daily throughout of 255,000 cubic meters of water for household and business users within the city.
The outbreak of SARS (severe acute respiratory syndrome) and avian flu in recent years rang a bell for the company's executive to develop a formal business contingency strategy, said Paul Lam, deputy general manager of Macao Water. 'We have a backup center in another building,' he said. 'But we are planning to further enhance our BCP strategy.'
The strategy includes the development of a disaster recovery (DR) site, which could be located in Taipa or Coloane. The company also performs an annual drill in case of system failure, added Chapman Wong, assistant manager, information services division.
'Once a year we developed different scenarios and causes of system failures for the drill,' said Wong. 'Business users are often involved in these drills, since they also need to practice on how to react in case of systems failure.'
Wong added that the team also submits annual reports to its holding company, Suez, to ensure the BCP is updated and implemented as planned.
These plans help Macao Water to better cope with emergency and better comply with Suez's BCP guidelines, said Lam. Suez released guideline 18 months ago detailing five different levels of BCP strategy. With the recent plans and implementations, Macao Water is now close to Level Two, Lam added.
'The strategy is based on ISO 17799,' he said. 'It's quite a complicated and demanding strategy, which covers policies, IT infrastructure and physical infrastructure.'
SSL-VPN brings continuity and remote access
As part of Macao Water's BCP, Wong said the company plans to upgrade its IP-Sec VPN to SSL-VPN. The decision was made after a successful implementation of its sister company, Sino French Water Development (SFWD) Ltd.
SFWD invested in F5 Networks Inc.'s SSL VPN product FirePass to provide remote access, noted Yu Xiao Li, manager of IT at SFWD. With a total investment of over US$420 million, SFWD has established 18 cooperative joint ventures in China, delivering 3.91 million cubic meters of water per day to more than 10 million people.
With 80 staff often on the road visiting 18 different cities, Yu said providing SSL-VPN access to the corporate applications is essential.
IP-Sec VPN also provides remote access for users, but Yu said SSL-VPN brings better manageability. For starters, no installation is required in client-devices. 'IP-Sec VPN provides access to the entire corporate network once the user's verified,' said Yu. 'But SSL-VPN allows us to configure users' access to only the relevant applications.'
Although the two companies have separate operations and IT teams, SFWD shares office building and some IT resources with Macao Water. The latter also helped SFWD in the assessment process of its SSL-VPN purchase.
During the three-week assessment process, Wong said they tested three different products at the same time. 'User-friendliness and price were other major considerations,' he said.
Wong noted with the easy management and user-friendliness of SSL-VPN, Macao Water also plans to displace IP-Sec VPN to support remote access for its 30 business users by 2H 2006 to enhance its BCP strategy.
SIDEBAR:
Macau's IT pro organization
The Macau Computer Association (MCA) was established in 1983. According to the MCA's website, the association was established to provide a gathering place for people interested in computer science and computer applications.
The MCA has organized and participated in seminars and computer knowledge-related competitions over the years, including the Chinese National Olympiad in Informatics (NOI) and International Olympiad in Informatics (IOI)--Macau hosted NOI 2000 in March of that year.
The association includes computer professionals, students and others interested in computer and IT, with a current member population of about 300, said the site.
SIDEBAR:
APICTA 2006 set for Macau
The Asia Pacific ICT (Information and Communications Technology) Awards (APICTA) was initiated by the Multimedia Development Corporation of Malaysia, and the first two Awards ceremonies were held in Kuala Lumpur in 2001 and 2002, moving to Bangkok in 2003. The program is designed to stimulate ICT innovation and creativity, promote economic and trade relations, facilitate technology transfer, and offer business matching opportunities via exposure to venture capitalists and investors, said the APICTA website.
Its 15 member-economies include Australia, Brunei, Hong Kong, India, Indonesia, Korea, Macau, Malaysia, Myanmar, Philippines, Singapore, Sri Lanka, Thailand, Vietnam and China. APICTA member-economies take turns in hosting the annual Awards Program, which is won through a bidding process.
Meanwhile, nominees to the different awards are presented to APICTA by the respective economy coordinator and assessed by a panel of judges representing every member-economy. The fourth Awards was held in Hong Kong, the fifth in Chiang Mai, Thailand with the sixth to be held in Macau in November 2006.