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Opinion | Foreign firms will boost Hong Kong only if local industries benefit
- For a ‘headquarters economy’ to work, foreign corporations must be encouraged to connect with local industry and local talent, and strengthen the local supply chain
- Hong Kong’s true competitiveness does not lie in attracting more foreign companies but in building up a strong local economy
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In his policy address, Chief Executive John Lee Ka-chiu outlined the important task of creating a strong impetus for economic growth in Hong Kong. The measures introduced so far include making the city more attractive to foreign talent and large international corporations, furthering collaboration with mainland China and pledging more support for small and medium-sized enterprises.
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With the government largely looking outwards, however, it needs to strengthen the link between incoming enterprises and local industries, helping the latter thrive to maintain a strong local economy. After all, it is easy for large corporations to leave.
Over the past several months, the government has invested in efforts to attract companies to set up their headquarters or regional offices in Hong Kong. This, said Lee, would develop a “headquarters economy” in the city and boost its competitiveness.
The idea is not new. Hong Kong has long been home to the headquarters, regional offices and local offices of many international corporations – HSBC being one successful and well-known example. And it is hard to say how significant the improvement to the economy will be.
According to the census, the number of regional headquarters in Hong Kong dropped from 1,457 in 2021 to 1,411 last year, with regional offices falling from 2,483 to 2,397 – while local offices increased from 5,109 to 5,170. The drops might seem small but they are an alert: foreign-affiliated companies’ perception of Hong Kong’s position in their global strategies is changing.
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Hong Kong faces a dilemma. US-China tensions are causing international corporations, in particular Western companies, to re-evaluate their investments in Hong Kong. Meanwhile, the city’s growing collaboration with Shenzhen, coupled with Shenzhen’s own efforts to attract foreign investment, are making Hong Kong seem less attractive. Foreign companies can simply set up their regional offices in Shenzhen instead, with the added advantage of gaining more direct access to the mainland market.
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