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HONG KONG (Reuters) - In the run up to Hong Kong's handover to China in 1997, Britain's venerable trading houses in the city faced a choice: back Beijing, or back away. Swire, which started trading tea and silk in Shanghai more than 150 years ago, chose China.
More than 80 percent of its staff are now in China, Hong Kong or Macau, along with its core businesses, from airlines to property, bakeries and Coca Cola bottling plants - even if Swire House is still in Westminster and the Hong Kong office overlooking Victoria Harbour owes more to British club chintz than new China.
"If you look back at what was being said before the handover, most of the worst cases that people were fearing did not happen," said John Slosar, chairman of Swire Pacific Ltd (0019.HK) and Hong Kong veteran of almost four decades.
"Hong Kong became the biggest (initial public offering) market in the world - bigger than New York and bigger than London. No one thought that would be the case, or that that would be the result of reunification with China - but it was."
It hasn't all been plain sailing: Swire Pacific reported an almost 70 percent drop in underlying profit in 2016, dented by its best-known brand Cathay Pacific Airways Ltd (0293.HK), battered in turn by aggressive Chinese rivals.
Swire has grown since 1997 - revenue and assets almost tripling from 1997 to 2016 - but by some measures other firms such as CK Hutchison Holdings Ltd (0001.HK) have grown faster.
Choosing China was not obvious, two or three decades ago.
Swire's rival Jardine Matheson Holdings Ltd (JARD.SI) moved its domicile to Bermuda in the 1980s and then angered Beijing again in the sensitive pre-handover years by shifting its primary stock exchange listing to London, and its Asian listing to Singapore.
It later restored ties.
Swire, on the other hand, tied its fate to the mainland.
Most emblematically, it struck the ultimate Hong Kong-mainland venture - a cross shareholding deal with Air China Ltd (601111.SS) (0753.HK). The Chinese flag carrier owns 29.99 percent of Cathay Pacific, which in turn holds roughly 18 percent of Air China.
Swire also owns Dragonair, bought to access China's tightly regulated skies. Dragonair, now Cathay Dragon, became a wholly owned unit in 2006.
Slosar, who is also Cathay Pacific's chairman and a former chief executive of the airline, said he visits Air China on most trips to Beijing.
"As markets change, will we change how we work together and what we get out of it? Sure, probably," he said of ties with Air China. "But it's a good relationship."
Certainly, it has been lucrative: Air China reported almost $1 billion in profit in 2016 - albeit almost flat on the year prior. Cathay, by contrast, posted its first annual loss since 2008 and only its third since the company was founded.
Cathay is in the throes of a three-year turnaround plan, and last month announced it would cut 600 jobs, among management and head office staff. Pilots and crew, much tougher for Cathay to cut, have so far emerged unscathed.
"We are trying to make ourselves more efficient, but we are still trying to grow the airline," Slosar said. "You can never say never, but that (reducing pilot and crew headcount) hasn't been the focus of attention."
In the 1970s, British trading houses dominated Hong Kong's business life, and their presence is still keenly felt. You can fly in on Cathay, stay at Jardine Matheson's Mandarin Oriental hotel, shop at CK Hutchison's Watson pharmacy chain and then have dim sum for lunch at Maxim's restaurant - again part of the Jardine empire.
Some things have changed: The group, which argues it was always less colonial than it was perceived to be, is hiring more Mandarin and Cantonese speakers, Slosar said.
Other things have not. For Swire - whose Chinese name is Taikoo, meaning great and ancient - property has long been and still is a mainstay, even if Hong Kong retail has suffered as spending by mainland tourists dipped, forcing a rethink of its malls to add in better cinemas or more restaurants.
Swire has been less active in residential property, where Slosar said sky-high prices meant the group that helped transform entire blocks of Hong Kong was working through its existing portfolio, rather than investing in fresh plots.
"It is hard to imagine how it works with some of the land prices being paid," Slosar said.
There are risks ahead, including China's leadership reshuffle during the upcoming 19th Communist Party Congress, and potential changes as China navigates uncharted economic waters.
A peaceful transfer of power "seems very easy until you don't have it", Slosar said. But as befits a 'taipan', as trading house bosses were once known, he is also optimistic on the growth of an economy set to once again become the world's largest.
"China is big enough to have oil tanker characteristics," he said. "They can change direction, but they can't turn on a dime."
Reporting by Clara Ferreira Marques; Additional reporting by Venus Wu and Donny Kwok; Editing by Christopher Cushing