US firms with HQs in HK plunge to 18-year low

The number of American companies with regional headquarters in Hong Kong has fallen to an 18-year low, while the number of start-ups in the city surged to a new high.

There were 254 American companies with regional hubs in Hong Kong as of June 1, compared with 282 a year earlier, according to new data from the Census and Statistics Department.

That marked a 10 percent drop from the previous year and the lowest number since 2003, when there were 242 American companies based in the city, Bloomberg reported.

At the same time, the number of mainland Chinese firms rose by 5 percent last year to 252. Mainland Chinese and American firm now account for an equal share - 17 percent - of regional headquarters in the city.

US President Joe Biden issued a business advisory in July warning American companies operating in the Asian financial hub of a "new legal landscape" under the national security law that "could adversely affect" their operations.

Two months earlier, more than 40 percent of members surveyed by the American Chamber of Commerce in Hong Kong said they might leave the city, with the new security law topping their list of concerns.

The imposition of the law collided with Hong Kong's strict Covid-containment policies that require citizens to spend as long as 21 days in a hotel quarantine, even if fully vaccinated.

The European Chamber of Commerce has voiced its members' frustration over doing business in an environment that thwarts international travel. The number of French, German and Italian firms headquartered in the city also fell in the year leading up to June 1.

When pressed last month on whether her government would ease pandemic controls, Chief Executive Carrie Lam Cheng Yuet-ngor made her priorities clear.

"Of course, international travel is important, international business is important," she said. "But by comparison the mainland is more important."

Meanwhile, Hong Kong grew the overall number of start-ups by 12 percent to a record high of 3,755 from 2020. A survey by Invest Hong Kong showcased the positive impact across the job market with the number of staff hired by start-ups rebounding by 29 percent year-on-year.

Key factors driving start-ups to set up in the city were accessibility to international or regional markets, business opportunities in the mainland, access to funding, the simple tax system and low tax rate.