Hong Kong's Status as Asia's Economic Hub 'Shaken' Amid Political Unrest

[Image source=AP Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] Hong Kong's status as a business hub in Asia is being shaken as companies continue to leave due to political instability and other factors.

On the 6th (local time), The Wall Street Journal (WSJ) reported, "As China's influence expands and uncertainty about Hong Kong's future grows, multinational companies and skilled personnel based in Hong Kong are moving to competing cities such as Singapore and Shanghai."

According to a survey released last month by the American Chamber of Commerce in Hong Kong (AmCham Hong Kong), 42% of the 325 respondents said they are planning or considering relocation due to concerns about the Hong Kong National Security Law (Hong Kong Security Law) and pessimistic outlooks on Hong Kong's future.

Since 2019, dozens of companies have relocated their regional headquarters or offices from Hong Kong, resulting in the office vacancy rate reaching its highest level in 15 years.

For example, VF Corp, which owns brands such as Timberland and The North Face, announced in January that it would close its Hong Kong office, which had operated for 25 years with about 900 employees.

Japanese companies Sony Interactive Entertainment, Louis Vuitton Mo?t Hennessy (LVMH), and L'Or?al have relocated some of their Hong Kong office staff to places like Singapore.

Naver changed the country where it backs up user personal data from Hong Kong to Singapore after the Hong Kong Security Law came into effect, and Facebook and Google canceled plans to connect the US and Hong Kong via an undersea data cable.

The vacancies left by multinational companies are currently being filled by Chinese companies. In the year before June 3 last year, 63 Chinese companies established new regional headquarters in Hong Kong.

Some financial institutions, such as HSBC, still emphasize Hong Kong's significant role for their China business. However, WSJ assessed, "The political instability caused by the intense protests in 2019 and the Hong Kong Security Law enacted last year is shaking Hong Kong's status as 'Asia's international city.'"

It added, "Especially as political instability continues, signs of residents leaving Hong Kong are emerging, and pessimistic views suggest that only certain industries useful to China, such as finance, will remain in Hong Kong."

This content was produced with the assistance of AI translation services.