As Hong Kong Sinks Further Into Isolation, Foreign Businesses Despair | Business and Economy


Hong Kong, China – Before the pandemic, Basil Hwang had a globetrotter lifestyle synonymous with top-flight expatriate executives in Hong Kong, traveling to visit family in Singapore two or three times a month.

These days, Hwang, who holds senior positions at several Hong Kong-based companies, only manages to see his children twice a year – due to the city adhering to some of the world’s toughest quarantine rules. .

“Every time I call they ask me, ‘Daddy, when are you coming back?’ Said Hwang, who has three children aged 12 to 16.

“If you don’t see them for six months, you’re missing out on a lot of their growth. I think my son grew 3-4 inches just when I didn’t see him.

For Hwang, the prolonged separation has prompted questions about his future in a city long known as Asia’s most cosmopolitan and connected business hub.

“Now I see my kids once every six months, and I seriously wonder if this is an acceptable compromise,” said Hwang, who is also vice president of the Singapore Chamber of Commerce in Hong Kong.

“Business is going well. It’s more on the personal side where it really takes its toll.

Hwang’s angst reflects growing frustration and desperation among Hong Kong’s foreign affairs community as the financial hub sinks deeper into international isolation even as the rest of the world opens up.

The city’s “zero COVID” policy, which requires most arrivals to undergo 21 days of hotel quarantine, prompts many expats to leave or develop exit plans, calling into question long-term viability. term of the claim of the semi-autonomous territory to being “the world city of Asia”.

As hubs such as New York, London and Singapore have opened their borders, Hong Kong, which has built its reputation on connectivity, low tax rates, free-flowing capital and a legal system inherited from the British, has doubled its zero tolerance policy. approaching, hoping to persuade Beijing to resume trade and cross-border travel.

Hong Kong’s strict “zero COVID” policy has made traveling in and out of the city a daunting task compared to other business centers such as London, New York and Singapore [File: Tyrone Siu/Reuters]

The city’s growing isolation comes as the former British colony already faces questions about its future following Beijing’s imposition of a draconian national security law – a response to pro-democracy protests often violent in 2019 – which has wiped out virtually all political opposition, drastically reduced the civil society population and silenced critical media.

Hong Kong Managing Director Carrie Lam insisted that reopening the border with mainland China was the most urgent priority for Hong Kong’s economy and gave little guidance on the when and how the city could reopen to the world.

Authorities have repeatedly stepped up their pandemic checks, in recent days removing quarantine exemptions for diplomats and tightening exit criteria for COVID patients, despite reporting only a handful of cases since May and only 213 deaths throughout the pandemic.

Despite the city’s best efforts, Beijing has provided little clarity on the conditions – if any – under which cross-border restrictions could ease.

“Forced by Beijing”

Many observers see Hong Kong’s standoff as motivated more by politics than public health amid speculation that China may keep its borders closed until 2022, possibly after a key Party meeting Communist Party in October during which Chinese President Xi Jinping is expected to extend his term.

“The problem with Hong Kong is that due to the protests, they have no leeway to make decisions that are not approved by Beijing,” said a source close to the financial industry who requested anonymity because of the sensitivity of the situation.

“Carrie Lam is effectively constrained by Beijing, and Beijing’s worldview right now is that we’ve done better on COVID than everyone else, we’ve kept it away. The rest of the world is a mess, especially the West, so they keep it going. China doesn’t really need to open the border.

The source told Al Jazeera they believe Hong Kong officials are sympathetic to the plight of foreign companies, but have their hands tied by Beijing.

“I suspect that in the next six months to a year, if this continues as we now believe, you will see companies start to move significant numbers of people out of Hong Kong,” the source said, adding that companies should paying “through the nose” to persuade foreign talent to move to the city.

You walked into a bank even 10 years ago, probably 30-35% of the population there would have been Western expats. Now it’s probably 10 percent

John Mullally, recruiter at Robert Walters

Last week, the Asia Securities Industry and Financial Markets Association, which represents the biggest names in the financial industry, including Goldman Sachs, warned in a letter to the government that Hong Kong risks losing its “vital international status” without one. clear and meaningful exit strategy “. of the current zero-case approach ”.

On Monday, the Australian Chamber of Commerce in Hong Kong became the last foreign chamber, after its American and European counterparts, to publicly criticize the city’s “zero COVID” stance, calling it “out of step” with the world.

A Hong Kong government spokesperson told Al Jazeera that the city’s “zero COVID” strategy reflects “the general interest of the Hong Kong community, taking into account the aspirations of the public and the impact on the economy ”.

“Hong Kong remains a globally competitive city and a major regional base for international businesses despite the current challenges of the global pandemic,” the spokesperson said.

“Hong Kong continues to provide foreign companies with unparalleled access to mainland Chinese markets, which is our greatest competitive advantage, supported by the city’s weak tax regime, stable financial markets, a secure business environment, a trusted legal system and a world-class workforce. “

Hong Kong has for years enjoyed a reputation as one of the major business centers in the world due to its proximity to China, connectivity, low tax rates and legal system inherited from Great Britain. [File: Bloomberg]

Yet the official account of Hong Kong’s competitiveness is at odds with the way a growing number of foreign companies and expats assess the facts on the ground.

John Mullally, regional director for southern China and Hong Kong financial services at recruiting agency Robert Walters, said the influence of the foreign affairs community on politics has waned over the past decade as the city integrated more closely with the continent.

“You walked into a bank even 10 years ago, probably 30-35% of the population there would have been Western expats,” Mullally said, adding that his company’s overseas recruitment had completely dried up. over the past two years.

“Now it’s probably 10%. Thus, the relative importance of what the expatriate business community wants in Hong Kong, both in terms of the number of people and the influence they have, is drastically reduced. “

If it’s not an exodus, at least there are signs of a constant flow out of town. The number of regional headquarters operated by foreign companies in the city has increased from 1,504 in 2020 to 1,457 this year, according to Census and Statistics Department data, although the total number of foreign companies has increased.

U.S. companies accounted for most of the decline, while the number of mainland Chinese companies with a regional office – which are included in the data – fell from 238 to 252.

In August, the city recorded its largest population decline on record, counting nearly 90,000 fewer people – expatriates and locals – than the year before.

Hong Kong chief executive Carrie Lam insisted reopening the border with mainland China was the government’s priority [File: Peter Parks/AFP]

Still, some observers warn of the death of Hong Kong’s international status, pointing to selling points, especially its proximity to the vast Chinese market, which cannot be replicated by competing hubs such as Singapore.

Jack Hoysted, CEO of Stirling Henry Global Migration, said he didn’t think many overseas companies would be tempted to leave if the city remained closed for just a few months longer than other parts of the world.

“Let’s face it, why are people here in the first place? Because you get tremendous access to East Asia and especially China and there will always be a demand for that as soon as China opens up again, ”Hoysted said.

“I really think it depends on how long it lasts.”

Policy blocking

For Hwang, business manager and vice-president of the Singapore Chamber of Commerce, there is no doubt that Hong Kong is “shooting itself in the foot”.

“Hong Kong’s selling point for China, or Hong Kong’s value for China, is the ability to be open to the rest of the world when China cannot for political reasons and Hong Kong is destroying its value to China by being closed, ”he said.

For now, however, the businessman has yet to make big decisions about his future.

“I can’t say that I haven’t seriously thought about what I should do in this situation.”

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