Foreign executives in isolated Hong Kong head for the exit, sick of zero-Covid curbs
HONG KONG – Strict rules to try to keep Hong Kong free of Covid-19 are keeping more foreign executives away, eroding the city’s decades-old status as one of the world’s leading business hubs.
Flight bans, long quarantine stays for arrivals and repeated school closures are pushing more people to breaking point as the pandemic enters its third year and the city clings to a zero- Covid abandoned by almost all countries except China. A growing outbreak in a public housing estate has prompted the government to lock down buildings and send more people into quarantine.
Executives complain that travel restrictions have prevented them from monitoring operations in other countries or visiting business partners and potential customers, even in mainland China. Meanwhile, there is the ever-present risk of being sent to quarantine if they cross paths with someone with Covid-19 in Hong Kong simply by visiting a pet store or having lunch at a restaurant.
More than half of executives polled in a survey by a US business group in Hong Kong released on Wednesday said the city’s Covid-19 policies made them personally more likely to leave. Nearly a third said they had difficulty filling senior positions and had delayed investing in Hong Kong. The survey was carried out late last year, before the latest round of restrictions which banned flights from the US, UK and six other countries.
The arrivals area at Hong Kong airport is often deserted as authorities impose ever-tighter border controls, with authorities prioritizing efforts to reopen the border with mainland China. The city’s growing isolation is heightening foreign business concerns, including a crackdown on Chinese national security and strained U.S.-China relations.
The International Monetary Fund on Thursday estimated that the rebound in the city’s economy could suffer, with growth slowing to 3% this year from 6.4% last year. He said further local outbreaks could weigh on private consumption, fuel global supply chain disruptions and alter market confidence in the city’s status as a major international financial hub.
Hong Kong officials have stood firm in the face of dire warnings from international companies and foreign diplomats that the city is becoming increasingly difficult to operate. the city was not ready to live with the virus and its vaccination rate is too low.
Hong Kong is struggling to get its most vulnerable vaccinated despite the wide availability of vaccines. Overall, 71% of Hong Kong residents have received two doses of a coronavirus vaccine. But less than half of septuagenarians have received two injections, while the rate is less than a fifth for octogenarians.
Hong Kong has long been a hub for many of the world’s biggest companies, with its business-friendly government, easy access to capital and its role as a bridge to China. Its high quality of life and low taxes attract many expatriate workers.
While much of the world has been repeatedly hit by massive outbreaks of Covid-19, Hong Kong has largely kept the virus out, recording fewer than 14,000 cases and 213 deaths since the pandemic began. Recent outbreaks of the Delta and Omicron variants ended a month-long period with almost no locally transmitted cases.
With community transmissions rising to more than 100 over the weekend, all schools will be closed from Monday, while restaurants remain closed for dinner after 6 p.m. Gyms, swimming pools and bars are closed. Of more concern for international companies and employees is the requirement that almost all arrivals spend three weeks in hotel quarantine or be sent to hospital if they test positive for the virus. Most non-residents are barred from entry.
Nicole Cheng, who moved to the city from Canada in 2019 to work in a foreign consulate, said she was initially impressed with the city’s containment efforts. But ever-changing restrictions have taken their toll and made traveling to see family difficult. Last year, after a difficult two-week hotel quarantine, she left for London.
“Quarantine is honestly very mentally taxing,” Ms Cheng said. “The rest of the world has kind of fully accepted that Covid is here.”
Kevin Tranbarger, a property manager, left Hong Kong for the United States last summer after 25 years, although he had no intention of doing so. Vaccinated and armed with a positive antibody test, he planned to return for what was then a mandatory one-week hotel quarantine. He changed his plans when city officials abruptly increased the quarantine stay for incoming American travelers to three weeks.
“For personal reasons and on principle, I will not do three weeks,” he said. “Just from a mindset and a wellness standpoint, and the cost of it.” Mr. Tranbarger never returned and is now being transferred to California.
Leaders say the restrictions make it harder to convince bosses at headquarters that it makes sense to stay in the city.
Hong Kong-based recruitment firm Argyll Scott said there was an increase in the number of candidates in Hong Kong looking to leave the city for roles outside the region and more companies will need to replace executives leaving within the next six to 18 months.
““It has become increasingly difficult to attract foreign talent due to quarantine measures.””
“It has become increasingly difficult to attract overseas talent due to quarantine measures,” said Gin Sun, managing director of Argyll.
The number of foreign companies with regional headquarters in Hong Kong fell the most in more than a decade in the 12 months to June 1, government data showed. The city’s population recorded an annual net decline of more than 75,000 in mid-2021, according to government data, after a period of political upheaval.
The executive survey conducted by the American Chamber of Commerce in Hong Kong found that more than a third of members who responded felt that foreign companies were less welcomed than a year ago, while 15% said they had reduced their operations in the city. The survey of 262 executives was conducted between September 10 and October 8.
Many companies with large operations are reluctant to leave as many have large investments in the city and it remains a major fundraising hub.
Hong Kong’s role as a financial gateway between China and the rest of the world has been strengthened in recent months with the launch of cross-border wealth management programs and mainland offshore bond investments.
Hong Kong’s stock market is expected to gain more business from China in coming years as it becomes increasingly difficult for mainland companies to obtain or maintain listings in the United States.
Many companies, however, are moving staff out of town, executives and investors say, with Singapore a popular alternative. The city-state has opened quarantine-free travel for many locations even as cases surged to more than 1,000 a day in recent days. Last year, for every LinkedIn member who moved from Hong Kong to Singapore, 0.71 moved the other way, from Singapore to Hong Kong, according to the professional networking platform.
Justin Soin, a former Hong Kong resident who runs a tech startup in Singapore, used to come back up to once a month for meetings and planned to set up an office. A trip back to the city in December, involving 21 days of hotel isolation, scuttled the idea.
“It’s impossible with quarantine,” he said. “Before, doing business in Hong Kong was very easy.”
—Stella Yifan Xie, Newley Purnell and Quentin Webb contributed to this article.
Write to Dan Strumpf at [email protected]
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