Following three months of protests, Hong Kong’s Chief Executive Carrie Lam gave into pressure and announced the withdrawal of a questionable bill that would allow the extradition of suspected offenders to mainland China for trials. Despite the fact that the proposed law was the original cause for protests from over a million Hong Kong occupants, the protests have extended in scope with nonconformists likewise requesting investigations into the police’s use of force, reprieves for captured protestors, withdrawal of the use of the word “agitators” against them, and all-inclusive suffrage. Furthermore, in a general sense, the protests have developed into a more extensive articulation of discontent with China’s administration of Hong Kong under the one nation, two frameworks system. Thus, it is expected that the protests be set to proceed for a long time to come. Meanwhile, the subsequent strains between Hong Kong and mainland China have presented challenges for organizations working in the region in terms of their business improvement, worker retention, and leadership in particular. To deal with these difficulties, leaders need to comprehend the context around the protests and their impact on business.
Since the British handover of Hong Kong Island to Chinese rule in 1997, most dissent in the island often emanates from growing concerns about the mainland’s authoritarian influence on the affairs of the semi-autonomous government and people of Hong Kong (Elliot and Hogan 136). For instance, the proposal in 2003 to enact a legislation that would criminalize anti-China views in Hong Kong sparked widespread protests across the island, which caused the law to be inconclusively delayed. However, protests once again erupted in 2012 when thousands protested the introduction of a pro-China national educational program in state-funded schools, which prompted the withdrawal of the policy. Later, in 2014, the Occupy Central protests—, which began with the three-month long Umbrella Revolt—were catalyzed by the protestors’ clamor for an all-inclusive suffrage in electing Hong Kong’s Chief Executive.
This time, it appears that while the protests began in dissent against one action, it has grown and caused citizens to voice their concerns about broader issues as well. This can be seen by the fact that despite recent protests having emanated from attempts by the authorities in mainland China to subvert the rule of law, the youths of Hong Kong have been propelled to the same extent into protesting due to the rising socio-economic concerns attributable to the mainland’s meddling as they are angry about Hong Kong’s distinct monetary disparities, obstacles to social portability, competition in school and work, and high housing prices, which add to an inexorably pessimistic assessment of the future (Faure 193). However, it is lamentable that none of this is astonishing to me as I see this pessimism mirrored among students at the University of Hong Kong. Most of these students were born around the period of Hong Kong’s handover. Since their childhood days, they were advised to concentrate on their education to enter a top university, after which they would secure employment. Yet, for some, this vision appears to be increasingly distant today. In this context, one review established that 60% of respondents felt that career advancement opportunities for youths in Hong Kong were limited.
Another issue that stokes the protests is inequality. The Gini coefficient for Hong Kong is more than 0.5, marking it as one of the most unequal societies globally. By correlation, the Gini coefficient for the United States is 0.39 and Japan is 0.34. These inequalities have given rise to an assortment of issues including limited access to healthcare, reduced career opportunities, and increased mental health issues. This inequality is most visible when looking at home possession. Property costs in Hong Kong have outstripped the pay of the average person so much, so that home proprietorship is a financial challenge. After graduating, a large portion of undergraduates has a pay of between $1,900–3,000 every month, while the normal home cost in Hong Kong is $1.2m. Furthermore, it is important to note that financing terms are commonly more prohibitive in Hong Kong than in the United States.
However, CEO Lam acknowledges these issues. While reporting the withdrawal of the bill, she recognized that dissatisfaction stretches out beyond the bill and covers political, financial, and social issues including those related to housing, land supply, salary dispersion, social equity, and opportunities for the youth. While addressing these issues will take a lot of time, it is the combined obligation of both Hong Kong’s public and private sectors to prioritize them and work to reestablish stability in the city.
In addition to what has been discussed above, the protests have also negatively affected business in Hong Kong. As businesses in Hong Kong generate significant revenue from the Chinese market, Beijing—aware of its economic advantage—has applied pressure on Hong Kong’s businesses. For instance, in August 2019, government officials in Beijing gathered about 500 of Hong Kong’s political and business elites in Shenzhen to give directions on the best way to help the government amidst the protests. Further, an unequivocal intercession was the Civil Aviation Administration of China prohibiting employees from the Hong Kong based Cathay Pacific carriers who had taken part in protests and strikes from serving on China flights. Eventually, the protests saw the resignations of Cathay Pacific’s CEO Rupert Hogg as well as Chairman John Slosar.
Additionally, Hong Kong’s capital markets have also been affected. As one of the world’s leading initial public offering markets, several companies have opted to change their listing plans or postpone their plans because of the recent protests. For instance, Alibaba deferred its Hong Kong offering until the political atmosphere settles. In addition, Fitch Ratings, the credit assessment office, marginally downgraded Hong Kong due to these events and based on the possibility of Hong Kong’s integration into China’s national administration framework, which will introduce institutional and administrative challenges over time.
However, despite the political turmoil, governance is vital. Thus, while political instability is by all accounts the new standard universally, business leaders need to consider the risks in their planning. Political issues that may seem unrelated to the core business activities of a company have the potential to metastasize into significant issues that do end up affecting the operations of said company. This is evident in the case of Cathy Pacific and their employees’ involvement in the protests.
Furthermore, leaders and organizations should expect to face difficult conditions as well as make tough decisions in these operating environments. Consequently, a sense of value and integrity are needed to guide decision-making. For instance, questions such as do the values of the organization support the civil freedoms of its employees should be considered while determining a course of action. Additionally, leaders should be conscious that in the long-term, political turmoil causes a degree of uncertainty in any event, which also includes those who are not directly involved. Moreover, along with the strategic, operational, and financial disruptions caused by the protests, one of the unintended outcomes is the loss of attractiveness in terms of livability. Thus, if the underlying cause of the protests is not addressed, it will become harder for Hong Kong to maintain its attractiveness as a top residential destination. Additionally, people who are already settled in Hong Kong may now choose to leave the city.
Consequently, Hong Kong businesses will find it difficult to sustain their human capital requirements. On the other hand, endless protests will also have adverse effects on the city’s attractiveness as a business hub, which could possibly lead to the emergence of another Asian city as a global center.
Elliot, Elsie, and James Hogan. Colonial Hong Kong in the Eyes of Elsie Tu. Hong Kong: Hong Kong Univ. Press, 2003. Print.
Faure, David. A Documentary History of Hong Kong Society. Hong Kong: Hong Kong University Press, 1997. Print.
Statement on US HK Embargo. Washington.
United Press. New U.S Orders on Hong Kong Embargo. Washington.