Where are the expats? Hong Kong’s talent drive fails to bring back foreigners, and it’s worrying some experts

There has been an influx of mainland Chinese after Hong Kong pulled out the stops to woo talent, but foreigners have been slow to return. In the second of a two-part series, Laura Westbrook and Lars Hamer ask experts what the impact will be if expatriates stay away. Read part one here.

Briton Clare Voke has not forgotten how her circle of close friends in Hong Kong shrank from about 40 to fewer than 10 during the Covid-19 pandemic.

The city’s strict pandemic measures, including some of the harshest and most prolonged travel restrictions, resulted in an exodus of expatriates.

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Voke, her husband and infant son were among those who left in February last year. There had been a wave of expatriate departures that month, triggered by news of a British mother separated from her baby at a Hong Kong hospital after the 11-month-old tested positive for Covid-19.

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Voke, director of teacher training at the English For Asia language centre, said she and her husband had seriously considered leaving for good, even after returning to Hong Kong at the end of May last year.

It was only after the city dropped its mask mandate early this year, and it became clear that lockdowns and quarantines would be a thing of the past, that they put aside the idea of relocating.

“I still do not think I will be here for the long haul and a lot of expat families feel this way,” she said. “It is not like before, when families would have kids and live here for 30 years.”

Some expats who have returned say the city is not as they remembered, with their social circle greatly reduced. Photo: Elson Li

She witnessed the shrinking expatriate scene first-hand at work too, and those from the United Kingdom and United States had been especially slow to return.

“The teacher training courses we run used to be 50 per cent local Hongkongers and 50 per cent people from the UK, India and the US too. Now, we might get one person from the UK per course with more trainees from other countries in Asia,” she said.

Hong Kong’s expatriate population has been slow to replenish since the city reopened fully in February, whereas mainland Chinese migrants have flooded in through various talent schemes.

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Foreign business chambers and experts told the Post foreign talent was needed to maintain the city’s international status, and its role linking mainland China and the rest of the world.

Retaining English as a common language, improving tourism and taking measures to improve the economy would help to bring back foreign talent, they said.

According to the French Chamber of Commerce, the number of its nationals in the city had dropped from 14,000 in 2019 to 10,500.

A spokesman said the city’s pandemic restrictions, concerns over the national security law, the slow economic recovery and geopolitical tensions had all affected Hong Kong’s attractiveness to foreigners.

A US consulate spokeswoman estimated that the number of Americans in Hong Kong had “returned to roughly the same level as before the pandemic”.

The British consulate said the number of UK citizens registered with it did not reflect the total as many were Hong Kong permanent residents or dual nationals.

The Japanese consulate said that as of October last year, the number of the country’s nationals was 23,166 – 1,039 fewer than in 2019.

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‘Everything is unpredictable here’

Briton Fiona Campbell, 42, came back to the city last month with her husband and three young children. Her husband’s teaching job took them first to Malaysia in 2020 and then Dubai, before they eventually returned.

Campbell had a connection with Hong Kong, having grown up there from the age of four to 14. The city was appealing because she knew the school system and loved the proximity to the great outdoors.

“It was an emotional decision as well. I think that we wanted to come back. We’re not ready to go back home to the UK just yet,” she said.

Since returning, she noticed that there were fewer expatriates.

Aware of the impact of political changes since the social unrest of 2019 and the possibility of another pandemic, she said: “With everything that has happened over the last few years, we know that nothing is set in stone, everything is unpredictable here.”

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Paul McComb, executive director of the British Chamber of Commerce in Hong Kong, remained optimistic that foreign talent would return because there were abundant opportunities for Hong Kong as the gateway to doing business on the mainland.

Some British people had begun returning, “but it does not feel like a flood”, he said. The chamber has more than 1,000 members, including HSBC, Goldman Sachs and Swire.

McComb said top financial centres such as London, New York and Singapore had one thing in common – a diverse make-up of nationalities, backgrounds and beliefs which created a sense of vibrancy.

“If you want to be serious about being an international financial centre, you’ve got to have a diverse population, and the different nationalities who operate in that financial centre want to see that diversity,” he said.

Some expats who have returned to Hong Kong note that more Mandarin is being spoken than English. Photo: Jelly Tse

One group returning to Hong Kong at a faster rate are South Koreans. In the first seven months of this year, the number of Koreans who received General Employment Policy work visas exceeded two-fifths of those in 2018.

Jang Jung Ah, 44, an associate director of life insurance company AIA Group Limited, chose Hong Kong over Singapore because “it is like a second home to me”.

She lived in the city from 2010 to 2012, returned home and then came back last October with her husband, a venture capitalist, and two children. She said Hong Kong’s attraction was its easy access to South Korea, the financial sector and low tax rate.

On returning, she found that many of her expat and even local friends had left in recent years, mainly because of concerns over Beijing’s tightening grip on the city.

Referring to her earlier stay, she said: “Hong Kong was so much more diverse back then. Nowadays, I see a lot more mainland Chinese and hear a lot more Mandarin.”

Jang said she was the only person in her team of six who did not speak Mandarin. The others are two people from the mainland and three Hongkongers.

For Hong Kong to retain its appeal to expatriates from across the globe, she felt, multinational businesses should not stop using English.

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Sid Sibal, search firm Hudson’s vice-president of Greater China and head of Hong Kong, said that over the past five years, more employers in the city were looking for people who could speak Mandarin and that had reduced the job prospects for expatriates from Western countries.

The number of mainland Chinese firms with parent companies located outside the city has risen steadily over the past two decades to at least 2,100, according to official data, and overtook American companies in 2018.

Last year, the number of US companies with regional headquarters in Hong Kong fell to 240, lower than the 251 mainland Chinese firms with such bases.

Sibal said regional headquarters of major foreign firms that moved to financial hubs such as Singapore also had an effect on jobs for expatriates, who were among those who filled Asia-Pacific roles.

To attract expatriates to return, he said, it would help if the Hong Kong government convinced companies to set up their regional headquarters in the city again and have more roles for English speakers.

Basil Hwang, vice-chairman of the Singapore Chamber of Commerce in Hong Kong, said employers were being careful in hiring in the legal and banking sectors, which meant fewer job opportunities for foreign talent during the ongoing economic uncertainty.

Hwang, a managing partner at law firm Hauzen LLP, said Mandarin proficiency was more important at the junior level and he valued senior job candidates for their relationships.

For example, two candidates from Britain whom he interviewed did not speak Mandarin or Cantonese, but had mainland clients who used them despite their lack of Chinese.

But, recalling how one job candidate in London asked if Hong Kong was still the way it used to be, he said: “There’s that fear factor or uncertainty about whether Hong Kong is the Hong Kong they have from their memory.”

Hwang said Hong Kong’s separate legal system was unique in China and its banking and financial systems made it special in the region, but there was no doubt that the presence of international talent was its value proposition to the country and the world.

“Smart and talented people are found on all continents, but there are certainly a lot of talented people from the West who have helped make Hong Kong what it is, and in future could help Hong Kong become even more valuable,” he said.

He added it was important to have Western expatriates as well as mainland Chinese or Asians who had lived or studied in the West, because they brought different perspectives to the city.

Experts say to remain vibrant and retain its international hub status, Hong Kong needs more foreigners. Photo: Sam Tsang

However, Alicia Garcia Herrero, an adjunct professor of economics at the University of Science and Technology, said if Hong Kong was to be the offshore financial centre of China, hiring mainland talent would serve the city’s purpose.

Noting that 54 per cent of all listed companies in the city were from over the border, accounting for 77 per cent of the stock exchange’s capitalisation, she said this was where mainland companies were comfortable doing initial public offerings.

“This means the talent the city needs is different than before, mostly looking at the mainland and not so much to the rest of the world,” she said.

How to bring them back?

Inaki Amate, chairman of the European Chamber of Commerce in Hong Kong, which represents 15 European chambers, said the exodus of foreign talent from the international business community had affected the diversity that organisations needed to remain innovative and competitive.

As a result, many organisations had reduced not only their staff numbers, but also the “weight and importance” of their regional headquarters if they had not relocated altogether.

Amate, who is Spanish, said the current number of expatriates was well below what chamber members preferred it to be, while the wave of migrants from the mainland was steering Hong Kong towards focusing more on that market.

“If we focus entirely on driving towards serving the Chinese market, we risk losing a lot of what made Hong Kong an international business hub,” he said.

He was concerned that Western expatriates had been slow to come back.

“Diversity is one of the pillars for competitiveness, innovation and productivity and it is hard to find at the moment in Hong Kong,” he said.

German chamber president Johannes Hack agreed that it mattered to have Western expatriates as well as mainland talent to “retain a balance of people from all over the world”.

He said when German investors came to Hong Kong, it was important to have “a German on the ground because, let’s face it, people just tend to feel a certain degree of ease with their compatriots”.

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Top Hong Kong government adviser Regina Ip Lau Suk-yee told the Post it was important to attract talent from different countries, and to lure them back.

She said Hong Kong had to stay international or it risked becoming “just another Chinese city” or even inferior to the mainland’s top-tier cities.

“Our understanding of Western culture and values and ability to function as effective intermediaries between China and the rest of the world is one of our unique strengths,” she said.

To bring back foreigners, especially those in finance, business and IT, she said, the city had to organise more mega events such as the global financial summit hosted by the Hong Kong Monetary Authority last year.

“Although economic integration with mainland China is important for Hong Kong, English language skills and an understanding of Western culture and systems are equally important,” she said.

A spokesman for the Labour and Welfare Bureau said the government would set up a physical office for its “Hong Kong Talent Engage” online platform, “to step up efforts on talent engagement, promotion and networking around the world and enhance support for incoming talents”.

Japanese Consul General Okada Kenichi told the Post in a written reply there had been a decline in people-to-people exchanges following negative media coverage of Hong Kong in his country.

To continue being regarded as a global city, he said, Hong Kong had to retain the “one country, two systems” principle of governance, especially its separate judicial system.

Japanese firms have accounted for the largest number of foreign companies in Hong Kong since 2016, exceeded only by mainland Chinese ones.

Critics say signature neon installations in Hong Kong are fast vanishing in another sign the city is losing its uniqueness. Photo: Yik Yeung-man

International government adviser Simon Anholt said overseas talent and visitors might not be drawn to Hong Kong because the city was not “constantly reinventing itself”.

“Talent schemes and drives will work to fill a specific need, but they will always only be a drop in the ocean,” said the British founder of the Good Country Index, which measures people’s perceptions of different places and how they contribute on the world stage.

“If you look at Singapore, Dubai, Riyadh and other places Hong Kong is competing with, they are reinventing themselves and making headlines,” he said, referring to Singapore’s successful tourism drives, Dubai’s redevelopment and Saudi Arabia’s push to host sporting events.

Hong Kong used to be famous for its neon lights, but recent enforcement of rules has left the city streets mostly devoid of these bright, multicoloured signs.

“We do not see these things any more. Hong Kong made headlines for the wrong reasons in 2019, but since then, the world has not really heard from it,” Anholt said.

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