Flight bans, arrivals quarantine stays, and school closures all put the city’s reputation as a business hub under jeopardy.
Efforts to keep Hong Kong free of Covid-19 are driving away more foreign executives, eroding the city’s decades-long reputation as one of the world’s most important economic centers.
As the pandemic enters its third year and the city adheres to a zero-Covid strategy abandoned by practically all countries save China, flight bans, lengthy quarantine stays for arrivals, and frequent school closures are pushing more people to breaking point. The government has locked down buildings and placed additional individuals in quarantine as a result of a spreading outbreak at a public housing complex.
Executives claim that the travel restrictions have prohibited them from monitoring activities in other countries or visiting business partners and potential clients, even on mainland China. Meanwhile, they run the possibility of being quarantined if they come into contact with a Covid-19 patient in Hong Kong, even if it’s only visiting a pet store or having lunch out.
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In a study released Wednesday by an American business group in Hong Kong, more than half of CEOs said the city’s Covid-19 laws made them personally more likely to leave. Almost a third of respondents indicated they were having trouble filling senior positions and had postponed investments in Hong Kong. The poll was done late last year, before to the most recent set of restrictions, which have prohibited flights from the United States, the United Kingdom, and six other nations.
As officials apply increasingly rigorous border restrictions, Hong Kong’s airport arrivals area is frequently desolate, with officials prioritizing attempts to reopen the border with mainland China. Foreign firms are concerned about China’s national security crackdown and strained US-China relations, which are exacerbated by the city’s growing isolation.
The International Monetary Fund predicted on Thursday that the city’s recovering economy will suffer, with growth slowing to 3% this year, down from 6.4 percent last year. According to the report, further outbreaks in the city might stifle private demand, prolong global supply-chain disruptions, and erode market confidence in the city’s role as a major international financial hub.
Earlier this month, establishments in Hong Kong’s Lan Kwai Fong district were closed. Gyms, swimming pools, and bars are all closed.
In the face of dire warnings from international firms and foreign diplomats that the city is becoming more difficult to operate in, Hong Kong officials have stayed steady. Carrie Lam, Hong Kong’s chief executive, said Saturday that the city is sticking to its zero-infections strategy of containing breakouts, claiming that the population isn’t ready to live with the virus and that the city’s vaccination rate is too low.
Despite widespread vaccination availability, Hong Kong has struggled to vaccinate its most vulnerable citizens. A coronavirus vaccine has been administered to 71% of Hong Kong citizens. However, just around half of people in their 70s had had two shots, compared to fewer than a fifth of people in their 80s.
With its business-friendly administration, easy access to cash, and function as a bridge to China, Hong Kong has long been a centre for many of the world’s top firms. Many expatriate employees are drawn to the country because of its good quality of life and low taxes.
Foreign businesses are concerned about the city’s growing isolation. While much of the world was afflicted by Covid-19 outbreaks on a regular basis, Hong Kong managed to keep the virus at bay, with only 14,000 cases and 213 deaths since the pandemic began. A months-long period of essentially no locally transmitted illnesses was broken by recent outbreaks of both Delta and Omicron strains.
Due to the increase in community transmissions over the weekend, all schools will be closed beginning Monday, and eateries will be closed for dine-in service after 6 p.m. Gyms, swimming pools, and bars are all closed. A requirement that practically all arrivals spend three weeks in hotel quarantine or be transported to a hospital if they test positive for the virus is more concerning for multinational enterprises and employees. The majority of non-residents are denied entry.
Nicole Cheng, who arrived to the city from Canada in 2019 to work at a foreign consulate, said the city’s containment measures initially pleased her. Constantly changing constraints, on the other hand, took their toll and made visiting relatives difficult. She left for London last year after a grueling two-week hotel quarantine.
In the words of Ms Cheng, “Quarantine is honestly very mentally taxing. The rest of the world has kind of fully accepted Covid’s going to be around.”
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Kevin Tranbarger, a real-estate executive, left Hong Kong for the U.S. last summer after 25 years, though he hadn’t intended to. Vaccinated and armed with a positive antibody test, he planned to return for what was then a mandatory one-week hotel quarantine. He changed plans when city officials abruptly raised the quarantine stay for inbound U.S. travelers to three weeks.
“For personal reasons and out of principle, I won’t do three weeks,” he said. “Just from a state-of-mind and from a wellness point of view, and the cost of it.” Mr. Tranbarger never returned, and is now transferring to California.
Executives say the restrictions are making it more difficult to persuade their managers back at headquarters that staying in the city is a good idea.
According to Argyll Scott, a Hong Kong-based recruitment business, there is an increase in applicants wishing to leave the city for jobs outside the region, and more organizations will need to replace departing CEOs in the next six to 18 months.
‘It’s become increasingly difficult to attract overseas talent due to quarantine measures.’
— Gin Sun, managing director at Argyll Scott
According to government data, the number of foreign businesses with regional headquarters in Hong Kong decreased by the most in more than a decade in the year ending June 1. Following a period of political turbulence, the city’s population dropped by more than 75,000 people annually in mid-2021, according to government data.
According to an executive survey conducted by the American Chamber of Commerce in Hong Kong, more than a third of respondents believed foreign enterprises were less welcome than a year before, and 15% stated they had reduced their operations in the city. Between September 10 and October 8, a poll of 262 executives was undertaken.
Many large corporations are hesitant to leave since they have significant investments in the city and it is still a major fundraising center.
The development of cross-border programs for wealth management and mainland investment in offshore bonds has bolstered Hong Kong’s role as a financial gateway between China and the rest of the globe in recent months.
As it becomes increasingly difficult for mainland corporations to gain or retain U.S. listings, Hong Kong’s stock market is anticipated to attract more activity from China in the coming years.
According to executives and investors, many companies are relocating employees outside of the city, with Singapore being a popular choice. Even as the number of cases has climbed to over 1,000 per day in recent days, the city state has allowed many sites to quarantine-free travel. According to LinkedIn, for every one LinkedIn user who migrated from Hong Kong to Singapore last year, 0.71 moved back the opposite way, from Singapore to Hong Kong.
Former Hong Kong resident Justin Soin, who now runs a digital business in Singapore, used to come back once a month for meetings and pondered opening an office. A journey return to the city in December, which included 21 days at a hotel, put an end to the plan.
According to him, “It’s impossible with the quarantine. Doing business in Hong Kong used to be very easy.”
