‘No light at the end of the tunnel’: Americans join Hong Kong trade exodus | hong kong
In July 2018, Tara Joseph, President of the American Chamber of Commerce in Hong Kong, wrote an article in the most well-known local English-language newspaper, the South China Morning Post, highlighting to Americans the territory’s unique position as a center of Asian business. .
“The United States forgets the differences between Hong Kong and China. Remind them,” she wrote. “Hong Kong continues to have a strong and solid infrastructure of values, practices and institutions that could not contrast more starkly with those of the mainland system.”
Now packing up and leaving town after more than 20 years there, Joseph listed “dizzying changes” since that op-ed. In 2019, the “anti-extradition bill protests kicked off…then we had worsening US-China relations…now there’s Covid.”
For Joseph, Hong Kong’s strict zero-Covid rules were the final trigger for his departure. She joins a growing list of American expats who have left the territory or are considering leaving. According to a recent survey by the American Chamber of Commerce, 44% of members considered leaving Hong Kong due to the territory’s strict pandemic rules. Of the companies surveyed, 26% said they were considering offshoring.
“One of the things that really hurts at this point is that there doesn’t seem to be any light at the end of the tunnel,” Joseph said.
The administration of Carrie Lam, the territory’s chief executive, has insisted its coronavirus rules will not affect Hong Kong’s position as a business hub. But Willie Walsh, chief executive of the International Air Transport Association, said last month that travel restrictions left the territory “increasingly isolated”.
Yet for many Hong Kong-based businesses, the Covid-induced separation is just the latest in a series of complications they have faced. Since Beijing imposed the national security law in the summer of 2020, leaders say there has been a growing sense of uncertainty among businesses, local and foreign.
Authorities insist the law put the territory “back on track” after months of street protests in 2019 and was necessary to ensure China’s national security. The law matches a range of crimes, including secession, subversion, terrorism and collusion with foreign forces, with penalties as severe as life in prison. Opponents called its broad reach “draconian.”
Alina Smith (pseudonym), an American senior executive, said that although the law does not directly affect most companies, the consequences of its passage have created more uncertainty in the operating environment and left companies facing to “a very special situation”. enigma”.
Smith has lived and worked in Hong Kong for over a decade. She said until recently the business community there didn’t have much to worry about. “We were able to put our heads down and do business. Now we have to play all sides,” she said. “But it’s mission impossible, and you don’t know where the line is these days either.”
More than three years of protests, the imposition of the national security law and Covid restrictions have had their effect on Hong Kong’s once freewheeling business community, Smith added. “And especially for those also operating in China, you have to toe the government line. But the irony is that if you toe Beijing’s line, Washington will be unhappy.
“So what are you going to do? Well, don’t say anything…Meanwhile, we’re watching more of our friends leave because the territory has changed. As some say, ‘It’s no longer a matter of know if, but when.’
Political capital vs ‘capital capital’
However, not all companies feel the need to hide their political leanings. Some – for example banking giants HSBC and Standard Chartered, headquartered in London – have already expressed their position.
“We respect and support the laws and regulations that will enable Hong Kong to recover and rebuild the economy and, at the same time, uphold the ‘one country, two systems’ principle,” HSBC said in 2020. Roughly at the same time, Standard Chartered said, “We believe the national security law can help maintain Hong Kong’s long-term economic and social stability.”
These public policy statements were not well received in the UK, which had opposed the law. After HSBC’s statement, then Foreign Secretary Dominic Raab said his government “will not sacrifice the people of Hong Kong on the altar of bankers’ bonuses”.
“Everyone is walking a fine line here, and I’m afraid things won’t improve,” said Professor Bhaskar Chakravorti, dean of global affairs at the Fletcher School at Tufts University in Boston. “Companies these days feel they have to balance their political capital against their ‘capital’.”
Xinjiang is perhaps the thorniest issue many companies faced with China in Hong Kong last year: the far western Chinese province where United Nations experts and rights groups believe that more than a million people, mostly Uyghurs and members of other Muslim minorities, are being incarcerated.
While Beijing has denied all accusations of human rights abuses in the region, last summer the US Senate passed a bill banning imports from Xinjiang.
This immediately affected those working in supply chain and procurement. For decades, Hong Kong has been Asia’s main supply hub, through which materials flow in and out of mainland China. Now, increasingly hostile exchanges between Washington and Beijing are forcing the industry to choose sides, analysts say.
While many smaller companies, such as Smith’s, refuse to make public statements on controversial issues, others, especially major clothing brands, have been caught in the crosshairs.
Last March, Swedish clothing chain H&M was singled out by Chinese state media and faced a huge backlash after it expressed concern over Beijing’s alleged use of forced labor in cotton production. in Xinjiang. Immediately, some Chinese netizens called for a boycott and e-commerce platforms caused H&M’s sales to plummet.
As a result, the world’s second-largest global clothing retailer has seen its revenue drop significantly. He then indirectly addressed the controversy in his first quarter 2021 earnings report: “We are committed to regaining the trust of our customers, colleagues and business partners in China.”
Such conflicts are not limited to Chinese territory. Late last year, US short-term vacation rental company Airbnb was discovered by US media as listing more than a dozen properties on land owned by the Xinjiang paramilitary corporation, which was sanctioned by Washington for its alleged involvement in massive human rights violations.
US outlet Axios said the company risked exposure to US regulations preventing business dealings with sanctioned entities. Airbnb, which is also sponsoring the Beijing Winter Olympics in 2022, said US rules require it to “screen the parties we deal with, not the underlying landowners”.
“Increasingly, procurement and supply chain companies have no choice. Yes, they may have their concerns, and some might move to Singapore or South Korea, but their businesses are fixed pipelines. It would be extremely expensive to change that, and Beijing understands that,” Chakravorti said. “For most players, they’re just stuck.”
Despite politics and the pandemic, Joseph said the Chinese market was simply too lucrative for ambitious Hong Kong-based executives to miss.
“The Hong Kong that I have known for 20 years is coming and going. A new Hong Kong is emerging. Now it is a very painful time,” she said. “But in many In all respects, Hong Kong remains a major business hub. After all, capital flows don’t have to wear a mask; money doesn’t have to wear a mask.