US firms don’t plan to move out from Hong Kong, but wary about future investment, survey shows

Riot police patrol streets near Mong Kok police station during an anti-extradition bill protest, in Hong Kong September 2, 2019. — Reuters pic
Riot police patrol streets near Mong Kok police station during an anti-extradition bill protest, in Hong Kong September 2, 2019. — Reuters pic

SINGAPORE, Sept 13 — While a majority of American companies feel that the ongoing protests in Hong Kong have affected their decisions on whether to invest in the city in the future, only a very small number who have operations there are planning to relocate their businesses.

This is according to a flash survey conducted by the American Chamber of Commerce in Singapore (AmCham) in collaboration with market researcher Ipsos.

The survey, conducted from August 21 to 29, was sent to more than 5,000 AmCham members, and 120 people, mainly those in senior management, responded.

The survey findings, released yesterday, revealed that 80 per cent of respondents felt that the Hong Kong protests, which erupted over an extradition bill that has since been withdrawn, have affected their decision to make future investments in the city.

However, among the respondents who have a business base in Hong Kong, only 5 per cent said that they were planning to move capital out of Hong Kong. An even smaller proportion, 1 per cent, were looking to relocate their business functions.

Over 20 per cent of respondents are considering such plans but the vast majority (more than 70 per cent) had no such plans.

According to Ipsos public affairs director Tan Hui Ching, the survey results showed that Hong Kong’s reputation as a regional business hub has been tarnished as a result of the protests, which has dragged on for the past 14 weeks.

However, its long-term reputation as a city with business-friendly governance and that attracts global talent has not been affected that much, she said when presenting the survey findings in a briefing.

Among those with plans to move their Hong Kong operations elsewhere, the vast majority (91 per cent) would choose to relocate to Singapore.

There is also a perception, especially among those looking to relocate, that Singapore would benefit economically from the ongoing protests.

The Singapore Government, however, has been careful not to paint itself as a beneficiary from the unrest in Hong Kong, with several politicians publicly saying that instability in the territory would affect the region as a whole and that does not help Singapore.

Anupama Puranik, managing director for management consultancy Russell Reynolds Associates, agrees, saying that the protests might lead to the whole of Asia being painted with the same brush.

‘Business as usual’ in Hong Kong

Panellists who spoke after the survey presentation believe that companies are unlikely to make decisions on relocating or moving capital over three months of protests, saying it would be premature to do so.

For one thing, technology has allowed companies to deploy operations globally without having a heavy physical presence in a particular place. This means that decisions to relocate can be deferred until there is a significant impact to businesses, said Allison Cheung, tax partner for PwC Singapore.

Also, Hong Kong’s capital markets are still intact, said Damien Ryan, Asia-Pacific chief executive officer for communications firm Teneo Strategy.

The city is still very much seen among companies as the gateway to China, said panellists.

In the words of Puranik, it is still “business as usual” for most companies.

“The protests are not anything different from the yellow vests in Paris or, for example, when Brexit was announced, there was a huge hue and cry about flight of people, flight of things,” she said.

However, she believes that the protests have affected Hong Kong’s attractiveness as a place for talent to move to.

Job offers based in Hong Kong are “no longer as easy to sell” to foreigners, she said.

A ‘phase that will pass’

But while Hong Kong’s future hangs in the balance, what may tilt it is when citizens and tourists start to feel endangered or if the Hong Kong police are given broader powers to introduce curfews and make more arrests, the panellists said.

From a company’s point of view, when its people, location and equipment are being impacted negatively, that may be the time that they start to consider relocating, said Cheung.

Given the uncertainty of how long the current unrest might last, Cheung said she believes in the resilience of the Hong Kong people, that the current chaos is a “phase that will pass”.

“I think that the outlook is not very optimistic. But I think essentially it will come to an end, whether it’s a compromised position or whether it could be a potentially disastrous ending. I think it’s not the latter,” she said. — TODAY

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