It has been a year of massive change for Hong Kong. As we look ahead to 2020, take a moment to reflect on where we are: What do we love about this city? Why do we choose to base our lives here?
The perspective below is BY and FOR expats with poor Chinese language skills. (“Expat” includes anyone without a HK/China passport, even if HK-based for 20+ years and working on local terms)
I came to Hong Kong a decade ago. The city became home, and I planned to live here forever. I loved so many things about Hong Kong in 2010:
- Growing economy
- International & diverse (great for English speakers)
- Predictable, stable & transparent legal system
- Minutes away from hiking, paddling, beaches & plenty of friends to enjoy these activities
- Safe
- No huge visible issues with homeless, drug addictions, violent youth
- Cheap, efficient & clean public transport & taxis
- Great airport for both regional & long-haul
- Easy border crossings
- Access to Mainland China (business & personal, eg TaoBao shopping)
- Affordable maids/helpers
- Lifestyle via bars, restaurants, private clubs
- Low taxes (even if I have to still pay USA tax)
Here’s the same list updated going into 2020:
- HK economy in recession due to recent political developments. China’s growth rate is coming down sharply and “flashing warning signals” per Bloomberg
- Noticeable decline in English speaking population & roles for non-Chinese speakers
- Legal system in flux with recent developments around police, chief executive, judicial review, role of Mainland in HK governance
- Outdoor activities still great (if no impacts from unrest / transport suspensions on a particular day)
- Still safe in general, but not so much when riot police or the most militant protester factions are nearby
- Still no vagrants / addicts / gangs. But the grafitti & debris looks like their handiwork
- Transport & taxis still OK except parts impacted by unrest (eg tunnel shutdowns, station closings)
- Airport only slightly less convenient with new security measures
- China border crossings are slightly more risky for Americans with phone inspections & trade war concerns lingering
- China access less compelling for Americans during trade dispute
- Still great to have affordable domestic helpers
- Still great bars and private clubs (but less important at my current age)
- Still great to have low, simple taxes
Overall there is still a lot to love about Hong Kong. The real question: After all these changes, is Hong Kong still the right place to be?
In other words, now that the upsides are a bit less compelling… Consider whether they still offset the well-known downsides of Hong Kong:
- Overpriced “sardine can” living
- Automobiles cost a fortune including parking, taxes, tolls, fuel
- K-12 school tuition cost as much as universities
- Business consideration 1: Talent pool is light on developers and other key specialties, forcing outsourcing of key functions.
- Business consideration 2: Costs are crazy high (eg rent)
- Business consideration 3: Compliance burden becoming overwhelming & impractical for banking & finance, especially for smaller firms & FinTech players.
- Amazon is so much easier than TaoBao (even if TaoBao is cheaper)
- Many everyday items are hard to find and overpriced (fine cheeses and sneakers my size). No Costco, Target, etc
- Hard to find good Tex Mex, Greek, and other cuisines
Netting off the pros and cons… Here is how my thinking changed over time:
- Pre-2010, Hong Kong welcomed “Western” talent. Generous expat packages were common for senior leaders, and relocation packages were often offered to mid-level staff. This was the golden age for expats.
- Hong Kong remained a “slam dunk” for me and my clients/employers from 2010-2014. Expat packages were disappearing as local talent were increasingly ready to take on senior regional leadership roles in Western companies. There was still a critical mass of Western expats and the city remained a truly international business hub.
- The 2014 “umbrella revolution” changed the equation somewhat. International companies began to re-think whether to base their Asia-Pacific headquarters in the SAR. There was no rush to shrink Hong Kong footprints, but future growth plans definitely shifted offshore. Businesses “localized” more aggressively by replacing staff attrition with Hong Kongers or Mainlanders possible. Net outward migration of Westerners became noticeable and accelerated.
- The 2016 USA presidential elections increased the divide between China and “the West”. The trade dispute and related issues increased bifurcation of business that was China-focused vs. USA-focused. Even within Western companies, they largely walled off their China operations from the broader business. This was partly due to China regulations requiring local storage of customer data and mandatory sharing of all source code used in PRC. At this point, there were very few new incoming expats that didn’t speak chinese well.
- Now it’s 2019. The protests began June 9 with one million people on the streets. Tear gas and rubber bullets began making regular appearances June 12. I write this 173 days later, and the unrest is ongoing. It is hard to predict what will happen now. For example, USA passed a law favored by Hong Kong’s protestors, and Beijing promised unspecified consequences. What is clear is that these uncertainties make it harder for Hong Kong’s businesses to attract capital, talent, and customers. Hong Kong’s hospitality and retail sectors are struggling as Mainland and overseas visitor volumes have declined 40-50%. Is this the “new normal”? Will HK return to prosperity under its previous model? Is there an opportunity to rebrand HK and find new foundations for accelerating growth?
THE NEWS IS NOT ALL BAD… There are always opportunities. When it rains, sell umbrellas.
The Good News: Hong Kong is still home to >7 million amazing people, and the China market still has 1.4 billion people with lots of upside. Hong Kong and Mainland regulators have begun pushing an innovation agenda to drive growth in new sectors such as FinTech & Blockchain.
There might not be as many “low hanging fruit” as there were 8-10 years ago… But climb a little higher, a little harder. There’s plenty more if you work for it.
Oh and learn to speak, read and write Chinese. It is getting pretty important over here.