The Census and Statistics Department’s latest report on foreign companies operating in Hong Kong says the number of regional headquarters operated by US companies in the special administrative region has fallen to 254 this year, from 282 for the same period last year, while those of Japanese enterprises has gone down to 210 from 226.
While these figures may arouse concern for Hong Kong, it would be alarmist to conclude that the city has lost its attractiveness to foreign capital.
The “black revolution” in 2019 had severely threatened law and order in Hong Kong, and contributed to the decline in the number of foreign companies with headquarters in Hong Kong. The number fell to 1,504 last year after peaking at 1,541 in 2019, according to the report. After all, uncertainty is considered the biggest risk for business operations.
The months-long violent anti-government campaign forced Beijing to take decisive action by promulgating the National Security Law for Hong Kong in mid-2020. In a knee-jerk reaction, some foreign companies got worried. However, a year after the National Security Law was enacted, expatriates and foreign businesses no longer doubt the purpose of the law — it’s merely intended to crack down on anti-China proxies in Hong Kong and activities that endanger national security, and no foreign company has been affected in any way. Rather, the National Security Law, along with the city’s improved electoral system implemented this year, has effectively eliminated forces that are detrimental to Hong Kong’s stability, and created a much healthier political environment that’s conducive to business. It also marks the beginning of Hong Kong’s transition from chaos to order and good governance.
One should assess Hong Kong’s business environment based on China’s national policy instead of the temporary changes in the city. President Xi Jinping has repeatedly emphasized that the central government’s commitment to “one country, two systems” will not change or waver. In other words, ensuring Hong Kong’s long-term stability remains a fundamental principle of national policy. This is the very reason behind Beijing’s moves to help the HKSAR government end the 2019 social unrest. These measures, including the promulgation of the National Security Law and the electoral revamp, have created a much better business environment with political and social stability restored and lower risks for businesses to operate.
Hong Kong is now not only back on track but can also offer unprecedented opportunities for economic development. The 14th Five-Year Plan (2021-25) fully demonstrates the central government’s staunch support for Hong Kong in enhancing its status as an international hub for finance, transportation, aviation, trade, legal and dispute resolution, high-end services, innovation and technology, as well as cultural exchanges and arts. Not only will Hong Kong further consolidate its existing competitive edges, but will also be given abundant space to tap into many new industries.
Hong Kong has entered a new era in which its development will synchronize with that of the Guangdong-Hong Kong-Macao Greater Bay Area. The proposed development of the northern New Territories — the Northern Metropolis — has drawn great public attention as it will facilitate Hong Kong’s further integration into the Greater Bay Area. This would eventually create a development pattern that excels in finance in the south of the city and innovation in the north, with the advantages complementing each other. The Northern Metropolis, which encompasses the Hong Kong-Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop, would morph into an innovation and technology corridor that would resemble a miniature “Silicon Valley”. With innovation in the driver’s seat, there’ll be no shortage of reputable global enterprises that will work with Hong Kong’s higher institutions in procuring the finest IT talents and innovative resources from overseas. A pool of talents and resources will, undoubtedly, help to unleash the huge development potential of Hong Kong, presenting golden opportunities for ambitious companies to expand their global footprints.
Such favorable conditions have been observed by some discerning entrepreneurs. According to the Census and Statistics Department’s latest report, the number of United Kingdom firms with regional headquarters in Hong Kong has rebounded to 138 so far this year — an increase of about 5 percent year-on-year. Chinese mainland enterprises are among the most robust, with the number of their regional headquarters in Hong Kong having gone up by some 6 percent year-on-year to 252 in 2021 to date. Conceivably, no ambitious firm with sound judgment would overlook Hong Kong’s advantages as a place for setting up a regional base.
The author is senior research officer of the One Country Two Systems Research Institute.
The views do not necessarily reflect those of China Daily.