The chain grew and became iconic for the city’s tourists, selling a range of East Asian snacks to locals and visitors alike. Over the years, it overcame both recessions and hurricanes. But this month, after three of the most turbulent and transformative years in Hong Kong history, Lai was forced to close all 20 remaining stores. The reversal of the businessman’s fortune is emblematic of the new, fighting Hong Kong. Since 2019, the city has seen the strongest anti-government protests on Chinese soil from Tiananmen Square, zero border controls due to Covid that have destroyed the economy and suppressed the dispute that has ravaged the city’s social fabric. Together they have crushed its tourism market, silenced its once-vibrant culture and caused residents to flee – arguably Hong Kong’s greatest peacetime crisis. Authorities insist the situation is temporary. Tourists will return when the borders reopen, they say, and any outflow of locals will be easily replenished by millions of talented professionals from the mainland. Hong Kong’s elected chief executive, John Lee, left, and new cabinet members at a news conference earlier this month. Xi Jinping ordered him to start the city in a “new era” © Kin Cheung / AP Chinese President Xi Jinping, who will visit the city on July 1 to mark the 25th anniversary of the UK’s delivery to China, has instructed the city’s new CEO John Lee to start the city in a “new time”. Interviews with business leaders and data collected by the Financial Times show that Hong Kong will be less international and closer to China, both economically and culturally. For many living in the city, it is a landmark moment for Hong Kong. “At this point, we can only know our fate by rolling the dice,” says Lai.
The world city of Asia
After the British handed over Hong Kong to the Chinese, the authorities tried to erase its international credentials. In 2001, Hong Kong was renamed “Asia’s global city” to try to combat post-tradition concerns that the city would be seen by global businesses as another part of China under communist rule. But the name did not matter, as Hong Kong’s wealth grew in parallel with China’s economic prosperity. The city skyrocketed in the rankings of the freest international economies, and global investment banks rushed to expand into the city. Until 2012, American banks were the largest employer of financiers. At that point, China’s economic output was about half the size of the United States. “There has always been noise in Hong Kong,” said a senior Singaporean businessman in the city. “Foreign companies saw Hong Kong as the gateway to mainland China, so there is a lot of history and investment here, they set up important offices.” With guarantees offered by the British common law system and the international stock market, Hong Kong has consolidated its importance as a window into investing in Chinese companies, which quickly expanded their presence as the economy grew. In recent years, however, Chinese companies have overtaken Western companies as a dominant force in the Hong Kong corporate world. The city’s largest staff employer among financial groups is now Shenzhen-based Citic Securities.
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In banking and law, both Chinese and international companies have become increasingly likely to be dominated by employees from the mainland to match the composition of their customers. “When I was hired, I would always prefer someone with a Western education who speaks fluent if not native Mandarin,” the American lawyer added, referring to the national language of China. Now, being a native Mandarin speaker means you are more likely to earn more than those who speak Cantonese, the southern Chinese language spoken in Hong Kong, according to Liu Pak-wa, a professor of economics at the University of Hong Kong in China. “In 1991, the [Mandarin]”Male immigrants who spoke earned an average of 16.8 percent less than Cantonese immigrants, but by 2016 they earned an average of 34.6 percent more,” says Liu. The city was the main beneficiary of the so-called “miracle of China”, as the country built the services, trade and tourism sectors. At the height of Hong Kong’s tourism industry in 2018, 65 million visitors came in a single year, four-fifths of which came from the mainland. Local restaurant baron Simon Wong, who oversees a portfolio of more than 45 franchises as head of Hong Kong-listed LH Group, says the influx has boosted profits, especially in downtown areas. “Chinese tourists on the mainland before the pandemic made up about 30 percent of our customers at our restaurants in Tsim Sha Tsui and Causeway Bay,” he says.
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Three years of change
The party stopped for tour operators, hoteliers and retailers in the city in 2019, when anti-government demonstrations erupted in opposition to a proposed law allowing the transportation of criminals to the mainland for the first time. The demonstrations turned into an unprecedented public uprising not only against the city authorities but also against the Chinese Communist Party in general. Protesters and pro-democracy activists have accused the Hong Kong government of eroding the “one country, two systems” guarantee of autonomy that the Chinese had agreed to hand over after surrender. Continental tourism figures have plummeted following heavy publicity by Chinese state media over some incidents of protesters targeting mainland residents. In response to the protests, Beijing imposed a draconian law on security in Hong Kong, which was criticized by foreign governments and human rights groups. In addition to eliminating political opposition, the law paved the way for a broad reshuffle of political life to bring citizens closer to mainland China. Organizations that were considered hostile to the government have disappeared and children up to the age of six are now subject to nationalist education. Dozens of Hong Kong residents chose to flee the city in the wake of the law, but for many in the business community, China’s response to Covid-19 had a greater impact. Since the beginning of the pandemic, Hong Kong has implemented a weekly quarantine that has expelled new entrants and demanded quarantined contacts of Covid-19 cases in government camps. Even now, incoming travelers have to be quarantined for a week, despite the city registering hundreds of cases a day, angering executives who had previously chosen Hong Kong as a regional base, in part because of its role as a transportation hub. . “Hong Kong was an aircraft carrier that you could get in and out of so easily,” said a former chief executive of a Hong Kong-based law firm. With easy travel routes to Southeast Asia for customer meetings, “You could have your main office in Hong Kong and a smaller one in Beijing or Shanghai.” The rigid measures for the pandemic, in addition to the inability of the Hong Kong government to deviate from the Beijing doctrine, were considered by many locals, immigrants and expatriates as an expression of where the city is heading. Many decided that was enough. Since the beginning of the year, more than 130,000 people have fled Hong Kong. At least 123,400 more have applied for the UK’s UK’s overseas immigration program, which was set up in the wake of the 2019 pro-democracy protests.
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Even some people on the mainland who were initially attracted to the culture and spirit of Hong Kong no longer see attractiveness. “Even as an outsider, I still wonder why Hong Kong ends up like this,” said Lee, a 27-year-old immigrant from mainland Hong Kong who plans to move to Canada with her partner later this year. “When I was in college, Hong Kong was an inclusive and free place.” Companies are temporarily relocating some of their staff elsewhere in Asia, a situation that threatens to become permanent over time, with global companies questioning the suitability of Hong Kong as their base in the region. “They will kill this city, they will sterilize it to a point where. . . it will be just a small Chinese town, “said a former senior lawyer in Hong Kong from the company’s new overseas base. While Beijing has cleared the city of public opposition, it has failed to cultivate a new sense of Chinese identity. More than ever, the city’s youth are identified as Hong Kong residents, with the latest figures showing just 2 percent as Chinese.
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“It will be an explosion time”
However, Hong Kong has been declared “dead” many times in the past and has managed to maintain its global character. Despite the problems of the last three years, the city is still proud of a convertible currency, a busy port and mechanisms that allow international investors to gain exposure to the Chinese market through Hong Kong. Despite the pandemic’s restrictions and gloomy atmosphere, no major bank has closed offices in the city. But the government and its supporters place its recovery after Covid in an explicit Chinese context. Instead of advertising his role as …
