Global companies are being forced to reconsider their future in Hong Kong as China’s crackdown on civil liberties and the freedom of media and tech companies continues to accelerate, according to business figures in the region.
With businesses already facing restrictions due to the pandemic, the introduction of the National Security Act last year and the government’s shutdown of the pro-democracy Apple Daily has sparked its biggest outflow of people and have shaken confidence in a city once synonymous with dynamic economic activity.
Some companies have already announced their departure, such as the media Initium, which is setting up in Singapore. In an open letter, editor-in-chief Susie Wu said she would continue to operate on a decentralized online basis “as the road to freedom becomes more and more dangerous.”
Other companies may not be moving locks, stocks and barrels, but they were starting to build their offices in Singapore, the rival Asian warehouse city of Hong Kong, said Frederick Gollob, chairman of the Chamber of Commerce. Hong Kong European trade.
Hong Kong has always been seen as a safe haven, he said, due to a UK legal system that businesses could rely on to ensure a just rule of law.
But companies were reassessing their presence due to doubts about the reliability of the legal system and restrictions on movement.
“There are questions about potential conflicts for the management of companies,” he said. “That’s what I hear in business. Is it safe to operate a data center in Hong Kong? Is it safe to have R&D for an international company in Hong Kong? How stable is the rule of law?
“If you listen to boards around the world, they can’t avoid this discussion of whether or not to stay. The question is on the table. This is something new.
The largest number of people left Hong Kong for good last year since records began, official data shows. The exodus of nearly 90,000 people reduced Hong Kong’s population by 1.2 percent to 7.39 million, the city’s census and statistics department said, compared to steady population growth over the course of the previous decade.
Gollob believes the number of departures will be even higher this year, in what he called a “dangerous development” for Hong Kong.
David Lesperance, a European-based lawyer who specializes in helping wealthy people relocate from Hong Kong, China and other jurisdictions such as Saudi Arabia where they believe they and their families could face to a sudden change in their legal status, has seen a surge in demand for its services since Beijing began to exercise political power in Hong Kong.
Many so-called wealthy individuals expected the crackdown to come, he said, but were taken by surprise when mainland authorities used the pro-democracy protests in Hong Kong that exploded. in 2019 to pass the national security law and arrest dozens of activists for alleged sedition.
“My clients are now starting to assume that there is no difference between Hong Kong and China,” he said, noting that the National Security Law had formalized some of China’s previous arbitrary detentions. , like the kidnapping of billionaire Xiao Jianhua at the Four Seasons. hotel in 2017.
Lesperance said investigations doubled with the push for the Extradition Bill in 2019, then doubled again with the protests, and rose again following attacks on tech billionaires such as Jack Ma on the mainland and media mogul and Apple Daily owner Jimmy Lai in Hong Kong. More and more high net worth individuals were expanding their escape plans to cover areas such as taxation, domicile and family law.
“It is becoming more and more difficult to move around. A lot of families had nothing in terms of a plan, so they think of it as fire insurance – you don’t get it because you want a fire, but because it’s a potential problem.
‘Sit down and wait’
Despite the blows Hong Kong has suffered for its reputation as a good place to do business, there remain many compelling reasons why the city has not seen any major multinational companies fully pull the baton.
Gollob said most international companies were in a “sit and wait” logic to see what would happen next in terms of new laws or new restrictions on freedoms, but “the acceleration towards China is felt by everyone ”.
This more nuanced view is shared by many in the business community who have always expected China to assert its authority in Hong Kong, but perhaps not as quickly as in the past 18 months.
A senior financial industry executive said Hong Kong had overcome many existential challenges over the years, such as the 1997 transfer and the Sars outbreak, but used to adapt and reinvent itself.
“There is no doubt that this is an important moment,” said the executive, who declined to be named. “We’re going to be in Hong Kong for the longer term, although over time we might end up with that many people in Singapore. Multinationals and foreign companies reassess their situation, but are they running for exit? I don’t think so, although on the family side it might be more because of the Covid restrictions. “
But that, he said, was inevitable, and the view of most professionals was that Hong Kong would simply become a “bigger Chinese city” as opposed to a self-governing city. Beijing’s investment in the region, China’s cultural ties, and sheer economic might meant companies would always want to be there.
“Big international companies know where their bread is buttered,” he said. “They will play the game with the Chinese government. People who ignore Hong Kong will ignore China and they don’t want to do that. Like it or not, they’re here to stay.