Government figures show that the number of foreign parent companies based in Hong Kong this year is only 9,025, down slightly by 15 from last year, but the first drop in a decade; if the influx of Chinese companies is excluded, the number of foreign firms in Hong Kong has dropped by 202 in a year, to 2.7%. A further 4% of foreign companies indicated their intention to divest from Hong Kong in the next three years, up one percentage point from last year. The number of foreign companies employed in Hong Kong also fell for the first time in at least five years, to 483,000, a drop of 2%. However, Secretary for Commerce and Economic Development Edward Yau described the change as “similar” and said that most of the US and European companies that had expressed concerns were still in Hong Kong.
The Census and Statistics Department of the Hong Kong Government conducted a survey on the presence of overseas companies in Hong Kong by means of a self-administered questionnaire from June 1 to mid-September this year, i.e. the data have reflected the impact on the business environment in Hong Kong of last year’s campaign against the amendment of the Fugitive Offenders Ordinance, the Wuhan pneumonia epidemic and Beijing’s enactment of the National Security Law for Hong Kong.
According to the survey, the total number of responding companies with overseas parent companies in Hong Kong fell to 9,025, a year-on-year decline of 0.1% and the first decline in a decade since 2010. Among them, the number of Hong Kong-based regional headquarters also fell for the first time in at least five years, dropping by 37 companies, or 2.4%, year-over-year.
When broken down by region, the trend of foreign capital moving out and Chinese capital moving in is clear: the total number of companies from Mainland China rose to 1,986, up 187 or 10.3% from last year, making it the source of the largest number of foreign companies in Hong Kong. The U.S. dropped by 61 companies to 1,283, or 4.5%, while the U.K. dropped the most with 48 withdrawals, bringing the total to 665, or 6.7%.
In addition, the survey also asked companies about their development plans in Hong Kong in the next three years. 56% of the total number of companies remained unchanged, an increase of 4 percentage points from last year; only 15% of the companies intended to expand their business in Hong Kong, a sharp drop of 8 percentage points from last year; and 4% indicated their intention to partially or completely withdraw from Hong Kong, an increase of 1 percentage point year-on-year.
Secretary for Commerce and Economic Development Edward Yau said in a radio program that although many people are worried that the number of foreign enterprises in Hong Kong will be reduced significantly, the latest figures show only a slight decrease, and the number of overseas start-ups in Hong Kong has increased rather than decreased. He also revealed that from the end of last year to the beginning of this year, many European and American companies were worried about the impact of social unrest and epidemics on sales in Hong Kong, but most of them are still in Hong Kong, but they will adjust their business strategies. Asked about the concerns and worries expressed by many countries about the implementation of the National Security Law in Hong Kong, he stressed that the National Security Law has its needs, and asked if foreign investment will also suffer without a stable constitution and a society based on the rule of law.
Associate Professor of the Department of Economics at The Chinese University of Hong Kong, Mrs. Chong pointed out that the loss of global economic momentum may cause many foreign investors to relocate their capital back to their home countries and abandon their Hong Kong-based companies, and the anti-amendment conflict last year may have weakened the confidence of some foreign investors who eventually decided to move out or close their strongholds in Hong Kong. However, he believes that many foreign investors hope to increase their investment in China and develop the Mainland China market, and the geopolitical problems are not expected to lead to massive divestment from Hong Kong.
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