Commentary: Are Hong Kong protests taking a toll on the city’s businesses?

Commentary: Are Hong Kong protests taking a toll on the city’s businesses?

With no end in sight to the protests, employers are ramping up measures to protect their staff, says Lee Quane.

Students stage a rally to call for political reforms outside City Hall in Hong Kong
A protester wears an eyepatch with a slogan as students attend a rally to call for political reforms outside City Hall in Hong Kong, China, August 22, 2019. REUTERS/Kai Pfaffenbach

SINGAPORE: The ongoing protests have affected Hong Kong’s stability, economy and how companies and workers operate.

Although Hong Kong is still considered a safe destination for those who live in the city, the escalating security situation has seen countries such as Singapore and the US issue travel warnings. 

The ongoing protests have had a mixed impact on business travel to the city.

READ: Commentary: Hong Kong protests - a rising China clashes with frustrated Hong Kong

READ: Commentary: Struggles within Hong Kong’s political system the new battle frontier

MIXED IMPACT ON BUSINESS TRAVEL

Media reports indicate that domestic airline Cathay Pacific Airways – which controls half of all take-off and landing slots at the Hong Kong International Airport – saw passenger numbers fall 7 per cent in October. It has since reduced capacity due to the escalations.

On the other hand, other airlines recently reported that passenger levels have returned to pre-protest levels, including US-based carrier United Airlines, which recently launched its second daily flight from San Francisco to the city. 

FILE PHOTO:  A Cathay Pacific flight flies over the city of Hong Kong
FILE PHOTO: A Cathay Pacific flight flies over the city of Hong Kong, China on Sep 6, 2019. (Photo: Reuters/Amr Abdallah Dalsh)

However, with protests growing increasingly violent, several Asian airlines have since cut flights to Hong Kong. 

As of November, Garuda Indonesia adjusted its flight frequency from Jakarta to Hong Kong from 14 flights to two flights per week, while AirAsia decreased the number of flights coming into the city from Kuala Lumpur and Kota Kinabalu for December and January.

Other airlines have also followed suit, reporting a challenging and uncertain business outlook.

Hotel bookings remain depressed, with occupancy rates down in tandem with the drop in visitor arrivals in July. This extends to four- and five-star accommodations normally frequented by business travellers. 

Demand for other services such as transport, food and beverage and tourist activities have been hit as a consequence. 

Transportation disruptions are commonplace, and some shopping centres and other businesses close early when the unrest worsens. 

Inevitably, the tourism sector has been affected, with the city’s tourist arrivals plummeting by nearly 50 per cent in October, which in part led to Hong Kong’s current technical recession. 

Hong Kong has been crippled by months of sometimes violent protests that have hammered the
Hong Kong has been crippled by months of sometimes violent protests that have hammered the city's tourism sector AFP/Philip FONG

The recession is Hong Kong’s first in a decade, with the economy shrinking by 3.2 per cent in July to September from the previous quarter. 

READ: Commentary: A very gloomy outlook for Hong Kong’s economy

READ: Commentary: Why economists are terrible at predicting the state of the economy

CHALLENGES FACED IN RETAINING AND ATTRACTING TALENT 

While the protests have been volatile, there have been no signs of employers facing difficulties in retaining or attracting talent to Hong Kong for now. This may soon change given recent developments that have brought the city to a standstill. 

At present, the expatriate population, including families, remains largely unchanged in terms of numbers. 

Companies have not reported requests from expatriates in Hong Kong to leave, nor revealed that employees are refusing to relocate to the city. 

The protests began over the summer, which typically sees a peak in departures and arrivals associated with the start and end of school terms. Therefore, it is difficult to say whether outward movements since the protests started were directly influenced by the protests or part of the normal rotations of expatriate staff in Hong Kong each year. 

If the protests remain disruptive, especially towards expatriates’ lifestyles and their family weekend activities, employees may relocate themselves and their families. 

A rally by workers from the advertising sector this week. Violence has lessened in Hong Kong
A rally by workers from the advertising sector this week. Violence has lessened in Hong Kong protests following recent local elections AFP/ANTHONY WALLACE

Singapore is often seen as a top competitor to Hong Kong in attracting global talent. Should assignees move out of Hong Kong in light of the present situation yet choose to remain in the region, they are likely to look at Singapore first before considering other locations such as Shanghai or Tokyo.

READ: Commentary: Why aren’t there more Singaporean CEOs?

HOW COMPANIES CAN ADAPT TO A FLUID SITUATION

As the demonstrations evolve and violence increases, companies have taken precautions to ensure the safety of their assignees. For example, many companies have begun to implement flexible or remote working arrangements for their assignees. 

Such practices are less embraced by Asian companies compared to European and North American firms. 

READ: Commentary: Here’s how to remove the roadblocks to flexible working arrangements

READ: Commentary: Are you better off working from home than in the office?

A report by the Bauhinia Foundation Research Centre in 2017 found Hong Kong employers are open to flexible work arrangements, but fear staff members will abuse the system. 

The protests have warranted the need to do so, with several multinational corporations operating in Hong Kong drawing up contingency plans. 

More companies, particularly those in the Central and Admiralty financial districts, have adopted flexible working hours and work-from-home arrangements for all staff members. 

On the back of MTR rush-hour shutdowns, disruptions, and the firing of tear gas in the Central financial district, HSBC, UBS, Goldman Sachs and BNP Paribas have cautioned employees to take extra care during their commute and communicate with managers if they experience difficulty getting to the office, according to local media reports.

Office workers shout slogans as they attend a lunchtime anti-government protest in the Central dist
Office workers shout slogans as they attend a lunchtime anti-government protest in the Central district of Hong Kong, China, November 25, 2019. REUTERS/Thomas Peter

Some, like HSBC, have also urged their employees to work from home if they have the necessary access and laptops, after authorities closed all schools in mid-November.

In light of developments that have paralysed the city’s business district, Hong Kong-based employees have received frequent communication updates on travel and safety issues, including advice on contingency plans. 

Finance firm JPMorgan sent a text message alert to staff in mid-November, urging staff to take shelter for their safety. 

Moreover, since clashes between protestors and authorities intensified, employers have set up dedicated channels to relay urgent updates affecting each coming work week.

ADAPTING TO HEIGHTENED SENSITIVITIES 

The change in how people in Hong Kong interact with each other is also notable. 

READ: Commentary: This may be the end of Hong Kong as we know it

READ: Commentary: An independent and thriving Hong Kong is a fantasy

While foreign workers in Hong Kong were traditionally able to engage with their Hong Kong clients and colleagues freely without fear of prejudice regarding political opinions, the protests have polarised society, with people less willing to discuss politics for fear of a heated discourse. 

Protests ordered for lunch all week in Hong Kong's business district (2)
A woman holds a placard that translates as "Five demands and not one less" as she and other workers from the advertising sector attend a rally to commence a five day strike, at Chater Garden in Hong Kong on Dec 2, 2019, to demand the government to respond to the five demands of the city's protest movement.  (Photo: AFP/Anthony Wallace)

Business travellers should also take note and avoid potentially being associated with political symbols or colours representing either side’s cause – including the former Hong Kong colonial flag, flags of the US and China, or yellow umbrellas.

ADDITIONAL WAYS BUSINESSES CAN PROTECT ASSIGNEES 

Current developments in Hong Kong are extremely fluid. With no end in sight to the protests, employers in the city will need to stay alert and minimise the impact of disruption to their staff. 

As long as the protests are ongoing, companies should continue to re-evaluate business travel procedures accordingly. 

In instances where business travel is disrupted, companies should provide travelling staff with access to tracking tools to notify relevant points of contact if they are in an unsafe situation. 

Companies need to keep an eye on the developing situation to best advise and manage their mobile employees, including business travellers and short- and long-term assignees who are travelling to or working in the city. 

MORE: Our coverage of the Hong Kong protests

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Lee Quane is Regional Director (Asia) of global mobility consulting firm ECA International.

Source: CNA/ml

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