As the pandemic continues to grip Hong Kong, many have flocked to the city’s parks for fresh air and exercise, undeterred by face masks. This is at least the case for West Kowloon Art Park, a green oasis right in the heart of the city. “On one Sunday, our guard had counted around 9,000 people here in the park. People seem to like coming here during this time of COVID-19,” say Kitty Fung, strolling through the park’s grassy patches where a few people have set up small camping tents.
Fung is Chief Financial Officer of the West Kowloon Cultural District Authority, the statutory body in charge of developing the West Kowloon Cultural District. Stretching across 40 hectares of reclaimed land, the district is a lot more than green open space, she says.
She describes the area as being divided into three zones. “We have the green zone, which is the big Art Park; an art and cultural zone, which goes from the east with the Xiqu Centre to the west where the Hong Kong Palace Museum is still being built; then the commercial zone, which are the hotel, office and residential (HOR) projects,” explains Fung, a Hong Kong Institute of CPAs member who joined the authority last September. “It is a very complex project. I’ve never before been involved in a project that comprises all these diverse elements.”
While the project is diverse, its key focus is to cultivate local artistic talent and facilitate the development of Hong Kong’s arts and cultural industries, says Fung. It aspires to be one of the largest art and cultural districts in the world. “As Hong Kong continues to be a successful international financial hub, one of our missions is to elevate the creative industry part of it. We look at places like London and New York, which are important international financial cities but also have a lot of richness and variety in its art and cultural developments. Once the whole district is constructed and all the facilities are in place, I believe Hong Kong will be even more vibrant.”
While some facilities and venues are already operating, such as the Xiqu Centre, some are still under construction, including M+, a contemporary museum of visual culture, which will open around mid-2021; and the Hong Kong Palace Museum, which will exhibit and feature a rich selection of treasures from the Forbidden City in Beijing, and is scheduled to open in mid-2022.
With the district’s landscape continuously morphing, Fung likens the authority to a start-up. “It’s evolving and expanding. That’s why the systems, processes, tools and structures need to be built and evolved. I have to lead the finance team to revamp the financial reporting and strengthen the financial planning and analysis capability to meet the emerging operational needs of the authority. The district used to be a construction site, but now we are in a hybrid stage where we’re doing construction, planning for future HOR development, and moving onto operation mode at the same time. So even the chart of accounts need to be adjusted to suit the emerging needs,” says Fung.
Fung is currently dealing with a long-term financial plan aiming to find solutions for the structured cash flow mismatch confronting the authority. The issue, she says, is that while some art and cultural facilities have already been set up, these alone cannot generate enough income to cover its expenses. She points out that once the HOR developments are ready, the rentals will help to fund the expenses of these art and cultural activities. “Around the world, almost no art and cultural facilities are profit-making, that’s why a funding model is desperately needed.”
But before construction of these HOR developments can start, an “integrated basement,” which will keep traffic, noise pollution and parking underground, must be built first. “Without the income flow from the HOR developments, the authority will start to face a cash flow mismatch situation very soon. As the CFO, I need to help do a lot of solid financial planning and find ways to ensure financial sustainability for the authority. When I joined, I started on a long-term financial planning exercise to set out the blueprint – where we get money, where we spend money and how we can do things in a financially sustainable manner,” she says.
The long-term financial projection plan spans 50 years, making it an extremely time-consuming and overwhelming project. “You’re talking about a very long-term capital project because the entire district needs time to progress, and once the basement is developed, then the HOR construction on top also needs time to be built.” From a statutory perspective, looking so far ahead into the future is critical, says Fung. “The authority needs a solid long-term financial plan for them to see the big picture of their financial situation, and to discuss ways with various government bureaux and financiers on how to get the required funding to complete the project.”
“I find it exciting because I can utilize my skills as a CFO but put it in an arts and culture context.”
“The Financial Services and the Treasury Bureau monitors us in terms of our funding and financing, and in order to get funding we need to present our case to the Legislative Council or the Executive Council. That’s why a concrete plan, which highlights the financial situation of the authority, is very crucial for the organization,” she says.
Fung adds that she works with financial advisors to develop financial strategy and options, and perform scenario analysis and stress testing on the long-term financial projection, which is particularly important as Hong Kong’s economy becomes increasingly volatile, and as the art and exhibition industry grapples with uncertainty brought by COVID-19. Indeed, on 6 August, the authority announced it was withdrawing its tender for a massive Art, Commerce and Exhibitions project next to the Hong Kong Palace Museum.
Fung has also been busy setting up workshops for the authority’s Investment Committee members, to communicate with them on the financial projections. “Members comprise experts in the banking and investment industry. I’ve done four rounds of workshops and we all have worked very hard to explore different ideas on how to help the authority finance its needs.”
Of course, economic situations over the course of 50 years can be dynamic and unpredictable, which makes crafting a long-term financial plan difficult. Fung takes on the task by utilizing her skills and training as a CPA. “My previous jobs required me to collate data to build massive databases and then draw analytical insights from that. So I do not just work with the finance team but also with the operation teams, the performing arts team, the project construction team, and the commercial team on the financial projection. I collate all their business assumptions and inputs to map out the investment and operating cash flow, and to work out the financing strategy and solutions.” she says. “I find it exciting because I can utilize my skills as a CFO but put it in an arts and culture context.”
As the CFO, Fung says she is a coach, a catalyst and a steward. As a coach, she teaches and equips her team to evolve alongside with the business development. “When I came to the authority, the finance team was so used to the construction stage bookkeeping and reporting, so I had to bring in more planning and analytical elements to their role to meet the changing needs of the business, which is now a hybrid of construction and operations,” she says. “I also need to get them ready for the future commercial need when we have more HOR developments.”
Fung also oversees innovation and technology across the authority, looking at ways to use technology to drive revenue and enhance productivity. This is where her role as a catalyst comes in. “As a CFO, you have to be a catalyst that promotes positive and constructive changes to the business,” she says. For example, she is developing a mobility app for visitors to interact with the venues in the cultural district. “If you take a photo of a building, the app will list out what’s inside and what’s going on, such as the different dining outlets and the most current exhibitions. Nowadays, we need to embrace technology to enrich the customer experience, which will help generate business,” she says. “There are also some fundamental systems we need to build for the daily operations, such as the SmartBike booking system, the staff rostering system, the venue management system, and the online donation system, just to name a few. You have to create all these systems and tools from scratch, so as a catalyst, I make sure these things happen in the right way and at the right time.”
“As a CFO, you have to be a catalyst that promotes positive and constructive changes to the business.”
Lastly, Fung points out that as a steward, she serves the board, the supervisory committees, the government bureaux, the management team, the different operations and her own staff. She wants to leave a legacy for the next generation of staff members. “We have a lot of repetitive manual processes, for example ticket refunding, ticket cancellations, and revenue reconciliation. I’m working with the finance and IT teams as well as consultants to employ robotic process automation to streamline and automate manual tasks wherever possible.”
Prior to her current role, Fung was chief financial officer of Vitasoy then executive director and group chief financial officer of Dah Chong Hong.
Path to leadership
Accounting was not something Fung enjoyed at university. She was more drawn to activities that are arts-related, such as drama and music. She studied economics and political science at the Chinese University of Hong Kong, which included a yearly course in accounting. “It was a required subject, so I had to do it. I was a bit sceptical about accounting at that time because when it came to a quiz or exam, if you couldn’t balance that balance sheet question, you wouldn’t score a high mark,” she laughs.
She later moved to the United States to do her masters in marketing and finance at Kelley School of Business at Indiana University. After graduating, she started her career as a financial associate at General Foods Corporation (now Kraft Heinz), where she met an important mentor. “His words changed the way I scoped my career. He told me, ‘Kitty, if you want to be good in finance you have to learn accounting because accounting is the grammar of finance. It is just like the manuscript in music. You cannot play the piano well if you can’t even read the manuscript,’” she recalls. “So I made myself go back to school again to study accounting seriously as a part time student, and then pursued my CPA qualification in America and joined the Institute when I returned to Hong Kong. That’s where I learned about auditing, taxation and company law.
“When I started my career, I was more on the financial planning and analysis side. I started with corporate finance and doing a lot of financial modelling. Later on, I gained practical experience on the controllership side. In 2010, I became a listed-company CFO and got more into corporate governance, listing rules, environmental, social and governance reporting and investor relations. So, I’ve been able to expand my exposure and strengths throughout my career,” she says.
Fung was CFO of Hong Kong beverage company Vitasoy from 2010 to 2016. “That was the first time I had to deal with stock analysts and researchers, and work with the media. Before that, it was about taking care of the finance function, and not being exposed to external stakeholders. I needed to promote the corporate value to investors and fund managers.”
She also spent a lot of time building the company’s corporate brand equity, which led to positive outcomes. “I remember the stock price was HK$4 when I joined and HK$16 when I left. The brand was already well-known as a beverage, but we wanted people to know Vitasoy as a good company that cultivates a healthy lifestyle.” She then moved to Dah Chong Hong, the motor and consumer products conglomerate, where she was executive director and group chief financial officer until she joined the authority. The experiences at both companies taught her what it really means to be a financial leader, she says. “At those two jobs, I found myself stepping away from being a bean counter and being more of a communicator because I needed to share the strategy and the business performance of a company to external stakeholders. I was able to really open up a lot of channels just because the job required it.”
Outside the office, Fung, a Christian, likes to serve her church on Sundays. She also volunteers for the Fullness Social Enterprises Society, a non-profit organization, in providing business training to social entrepreneurs. “They assist those people trying to establish business and become entrepreneurs of their own and help them with the application for seeking government funding. They also encourage ethical consumption with these social enterprises, which offer job opportunities for the underprivileged and handicapped,” she explains. “I really believe in contributing back to the place I call home.”
Some venues at the West Kowloon Cultural District are currently under construction, including M+, a contemporary museum of visual culture, which will open around mid-2021; and the Hong Kong Palace Museum, which will exhibit and feature a rich selection of treasures from the Forbidden City in Beijing , and is scheduled to open in mid-2022.