Hong Kong Tramways (HKT) is the tram network of Hong Kong and its distinctive means of public transport. After more than 100 years of service the tramways operate a fleet of 163 tramcars that includes 2 antique tramcars. It has the world's largest fleet of double-deck tramcars still in operation, carrying an average of 230,000 passengers every day. The tramway runs on Hong Kong Island between Shau Kei Wan and Kennedy Town, with a branch that circulates Happy Valley.

HKT is owned and operated by Veolia Transport the international transport services division of the French-based multinational company Veolia Environnement. Veolia, which employs 72,000 workers worldwide, has diverse light-rail, streetcar, train, rail and road operations around the globe.

In 2009 when the French transport giant took over control of HKT, it was resolute, in that it was not only going to turn the mature yet iconic network into a profitable business, but also make it an entry point for business into mainland China, where it saw an enormous potential marketplace in light-rail systems mass transit.

Recently, however, Hong Kong is showing signs of an economic slow down. Quarterly gross domestic product data released recently showed activity contracting in the April-to-June period from the previous quarter on a seasonally adjusted basis. This means Hong Kong could technically fall into recession if figures for the current quarter ending in September are similarly weak.

Hong Kong’s economy contracted 0.5% during the three months of the second quarter, instead of 0.7% quarter-on-quarter expansion expected by economic analysts. Exports shrank 11.1% from the first quarter in a spectacular decline from a 14.4% rise in the first quarter. Japan’s destructive earthquake and tsunami dislocated supply chains and reduced consumer spending which in turn cut traffic through Hong Kong during the second quarter of 2011

If Hong Kong is a barometer for what is happening in Mainland China, Veolia may well have to reconsider its plans for expansion.

Trams in Hong Kong have not only been a form of transport for over 100 years but are also the only exclusively double-decker operated tram system in the world, and one of the only three non-heritage tram systems in the world that use double-decker cars.

HKT now owns 163 double axle double-decker trams, including two open-balcony dim-sum tourist trams for tourist trips and private hire. Passengers in Hong Kong call the trams themselves the "Ding-Ding", after the double bell ring trams employ to warn pedestrians of their approach.

HKT recently introduced its new-revamped 168 Green Tram. The aims of the new168 design are to keep the tramways appearance and iconic image and at the same time improve passenger comfort, giving more onboard information, facilitating passenger flows and enhancing safety by adding new safety features such as better braking systems and more handrails.

To pay for HK$200 million cost of the light rail engineering and construction to upgrade and improve the system Veolia proposed the first rise in fares for thirteen years. HKT had asked for HK$2.50 per journey for adults, or a rise of 25 percent. However, the government lowered the increase down to 15 percent. Tram fares for adults rose to HK$2.30 from HK$2, while the days of one-dollar rides for children and the elderly will end with them paying HK$1.20 and HK$1.10, respectively.

Added to the lower than anticipated fare increase is the additional problem that passenger numbers dropped by 1.5 percent last year and tram speeds on a number of busy sections declined. The government's approval of a fare rise of just 30 HK cents rather than the 50 demanded by the firm has slowed its plans to modernise the fleet.

Veolia hopes to overcome many of the operational problems with a new IT control centre that will allow more efficient deployment of trams that is expected to come into service this October. The company may also reach agreements in terms of traffic flow with government officials by the end of this year that will help to improve the networks efficiency and reliability.

In general economic terms Veolia must be hoping that was is happening in Hong Kong doesn’t signify a deepening slowdown. That what in Hong Kong, has until recently been viewed as a soft patch, will not become more serious downturn, that might delay or lead to the cancellation of its expansion plans into Mainland China