Hong Kong unrest prompts expats to pack their bags
More to leave if protests continue; companies also review contingency plans
It was one of Hong Kong's most peaceful weekends in recent memory as voters went to the polls for local elections widely seen as a referendum on the anti-government protests that have rocked the city since June.
But while the vote was hailed as an overwhelming victory for democracy, it was not enough to change Mark Larsen's mind. After six months of upheaval, the 30-year-old software engineer had decided to move back to his native Denmark.
For Larsen, the last straw was the standoff between police and students at Hong Kong Polytechnic University.
"We're not sure there is a rule of law any longer," Larsen said. "It becomes painfully clear that the society you live in isn't healthy when the police force sieges universities."
The problem for Hong Kong is that Larsen is not the only expat with his eye on the exit.
While there is no exodus yet, expatriates and recruitment agencies say prolonged protests and escalating violence have already pushed some of Hong Kong's 650,000 foreign residents to start packing, with many more poised to leave if the demonstrations continue into next year.
A recent poll by the American Chamber of Commerce in Hong Kong echoed that sentiment, with a quarter of respondents saying they were considering scaling back their operation in the city or moving away completely.
"We are moving to Singapore," said an American entrepreneur who started a fintech business in Hong Kong two years ago. The startup, which raised more than $100 million last year, was planning to hire 75 people locally. But with tear gas scaring away investors and disrupting its day-to-day operations, the company has decided to downgrade Hong Kong from its headquarters to a satellite office.
"[I] don't care who is right or who is wrong," the founder said. "The net effect is that people are leaving."
Singapore was the most preferred alternative location in the AmCham poll. Of the businesses surveyed, 28% expressed fear of a talent drain while 15% said they had either experienced difficulty in hiring or were worried about future hiring.
"The fact that a majority of companies surveyed say they will not leave the city highlights the importance of Hong Kong as a strategic and irreplaceable business hub for Asia. But the increasing risks still serve as a factor which may eventually push them out," said Tara Joseph, AmCham President in a statement accompanying the roll.
Ross Darrell Feingold, a director at global travel security consultancy SafePro Group, agreed.
Although Hong Kong is "not at an inflection point" yet, Feingold said more foreign companies have begun to review their contingency plans. He also said a growing number of expatriates are starting to reconsider where to build their careers and raise their families, something that did not happen when the protests erupted in June.
"Stability and safety are always foremost in people's minds, and companies are ultimately made up of individuals," Feingold said. "The current tense situation has caused damage to Hong Kong's reputation as a stable and safe city."
The anti-government demonstrations -- triggered by a now-withdrawn extradition bill -- turned several universities into battlefields earlier this month, with students hurling petrol bombs and bricks and police firing tear gas and water cannons. Thousands of protesters have been arrested since June, and vandalism has been widespread. At one point, least 22 countries had issued travel warnings for Hong Kong, a city that once enjoyed a global reputation for safety.
One Australian marketing professional said she is taking her school-age children back to Melbourne as soon as the Christmas holiday break begins.
"I'm worried about my children's safety," the mother of three said. She also voiced concerns about her children's mental health, saying she was worried that the increasing violence from both protesters and police would "leave a permanent scar" on them.
The departure is temporary for now, but the family -- who have lived in Hong Kong for five years -- said they would leave for good if the tensions continue into the next school semester.
"We want our children to grow up in a healthier environment," she said.
The recent elections, meanwhile, have done little to reassure worried expats.
"It remains to be seen if the result will have any actual impact on the way the government deals with the protests," Larsen, the software engineer, said.
Pro-democracy candidates claimed at least 385 of the 452 elected seats on the city's 18 district councils. This should give them considerable influence in selecting the city's top official, the chief executive, as well as in the Legislative Council elections next year.
But while the former British colony enjoys a semi-autonomous status under the "one country, two systems" legal framework, Beijing has the final say in the choice of the city's leader, and protesters have long accused it of meddling in Hong Kong's affairs.
In her first appearance since the election, Hong Kong Chief Executive Carrie Lam told the media on Tuesday that she would not offer any concessions to protesters' demands despite the result of the poll, fueling concerns that violence could soon flare up again.
Making matters worse, the political upheaval has dragged Hong Kong into its first recession in a decade. The economy shrank 3.2% in July-September from the previous quarter, according to the Hong Kong Census and Statistics Department. Investment, private consumption and exports of goods and services were all on the decline, and observers worry the outflow of foreign talent will further hamper the city's growth.
Signs from the real estate market reinforce such fears. Demand for upscale residences in Kowloon -- a district where many of Hong Kong's expatriates live -- was down 3.6% in the third quarter, following a 0.8% slide in the quarter before, according to a global property consultancy Savills.
"We have seen companies freezing head counts due to uncertainties in business prospects. At the same time, negative news on the protest is dissuading some people from moving into Hong Kong," said Simon Smith, a senior director at Savills in Hong Kong.
An agent working at an international relocation company, meanwhile, told the Nikkei Asian Review that about 10 clients had either canceled their plans to relocate to Hong Kong or applied for early repatriations, citing personal safety as their major concern.
"In the beginning, companies wanted to wait and see... but in the past one or two months, it became apparent that the protests would persist for a longer period of time," the agent said.
"I definitely think that the number of [people moving] to Hong Kong will decline if the protests persist and spread further," she added.
Some, however, may see the chaos in Hong Kong as an opportunity. Local executives are starting to join their foreign counterparts in moving out of the city. At the same time, multinational corporations are keen to avoid potential hostilities between Hong Kong-born employees and their mainland Chinese clients. The result is a growing demand for non-Hong Kong talent, said a Singaporean banker who works in one of the city's biggest private banks.
"Ambitious young professionals -- especially singles and young couples -- will want to come and fill the vacuum," the banker said, adding that he has witnessed several relocations from Taiwan and Southeast Asia to Hong Kong in recent weeks.
Still, the number of foreign passport holders applying for work visas totaled 4,433 in October, a decline of 4% on the year, according to the Immigration Department.
Smith of Savills said the clock is ticking for Hong Kong, as the first three months of 2020 will be critical for expatriates to decide whether to continue their commitment in the city. "If the situation does not get any better after the Chinese New Year [in January], I think people will begin to make the move," he said.
But for the American fintech entrepreneur, the damage is already done.
"No, we are not going to move back [even if the situation quiets down]," he said. "Humpty Dumpty is not being put back together again."
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