Number of US businesses setting up regional hubs in HK drops

The number of US companies setting up regional headquarters in Hong Kong has dropped by 10% this year, while Chinese companies with regional headquarters in Hong Kong has increased from 238 to 252, according to statistics from the Census and Statistics Department of Hong Kong. 

As of 1 June, there were only 254 US businesses with regional hubs in Hong Kong, down from 282 in 2020, marking a 10% year-on-year drop. The number was the lowest since 2003, as there were only 242 companies with regional hubs from the US based in Hong Kong that year. At the same time, the number of Japanese businesses with regional hub in Hong Kong has dropped from 226 last year to 210 this year. Since 2018, Japanese businesses have been leaving the city as the number has dropped four years in a row. 

On the contrary, the number of mainland Chinese firms increased by 5% last year, totaling 252. Both Chinese and American companies account for an equal share (17%) of regional headquarters in the city.

A Bloomberg report said the latest figure was the result of the national security law imposed by China in 2020, which is impacting international business in Hong Kong. In July, businesses from the US operating in Hong Kong said they hoped that the city's government will continue to enable the free flow of information. However, they have been told to reassess their operations and decide if the risks of operating in the city are worth the reward, according to multiple reports.

Additionally, the US government issued an advisory, warning businesses of the growing risks of operating in Hong Kong. The advisory highlighted concerns pertaining to data privacy, transparency and access to critical business information, as well as the risk of breaching US sanctions against Chinese officials and entities. 

Tara Joseph, president of the American Chamber of Commerce said it was unusual for the US government to issue a business advisory. Although businesses in Hong Kong were adapting to legal and political changes, she admitted there were increased risks, adding that companies in Hong Kong are caught in the middle of tensions between the US and China.

CNA cited a report from Bloomberg Television where Joseph said that American businesses in the city fear internet curbs in China and hope local authorities will continue to commit to the free flow of information. She added "one of the key attributes of Hong Kong is that you can go onto Google, you can go onto Facebook and any other platform you want versus what you can do in mainland China."

However, the Hong Kong government said the city is still attractive to businesses from China and foreign countries despite the social and economic challenges faced by Hong Kong over the past two years, as the the number of business operations in Hong Kong with parent companies overseas or in China has reached record-high to 9,049. 

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