At Claremont Consulting, we have been keenly observing the volatile Hong Kong protests and the knock-on effect which has started to be felt across multiple industries. The tourism, retail and employment sectors, in particular, have all been majorly affected.
Amid the political chaos, Hong Kong’s privileged position as a leading global financial center could well be challenged. However, we feel the province shows very strong signs that it will weather the storm and emerge unscathed. In fact, our dedicated Asia-Pacific (APAC) team remains extremely positive about the IT and technology sector, based on surveys with key clients and advisors in Hong Kong.
The protests started because of proposed legislation that would allow criminal suspects to be extradited to mainland China. The bill was suspended in June 2019 and protestors have since been insisting that Hong Kong’s Chief Executive Carrie Lam must withdraw the extradition bill and instigate an independent inquiry into the use of force by the territory’s police.
What began as peaceful demonstrations have become increasingly fraught, violent and intense, with protestors expressing their anger over police handling of the demonstrations.
Services Sector Impact
As we understand it, retailers are feeling the effects of reduced tourism and a lack of confidence from both consumers and investors. Retail sales in Hong Kong plunged to a record 23 per cent low in August 2019 compared to the same month last year. This was amid the double whammy of anti-Government protests and the US-China Trade War, while Hong Kong’s benchmark Hang Seng index was down 3.14 per cent. One prominent economist even predicts a 10 per cent fall in retail sales for 2019, compared with an 8.7 per cent increase last year.
One of the biggest areas to be hit is the tourism sector. Hoteliers have observed a 30 per cent fall in global tourist arrivals. In a bid to generate more business, some groups slashed their room rates by 50 per cent compared with 2018 and some by as much as a whopping 70 per cent.
Airlines, in turn, are planning to reduce capacity. Qantas will scale theirs down by seven per cent and use smaller aeroplanes. In addition, Cathay Pacific is expecting to see "significant impact" on its revenues.
We also note that unemployment has risen for the first time in a year, particularly in the services sector. Hong Kong’s Retail Management Association is warning of staff lay-offs and store closures. Hotels are also asking staff to take unpaid leave and holidays.
Other sectors are affected and some employers are putting projects on the back burner and placing a hold on budgeted hires until the end of the protests.
We have observed a spike in candidates who have become wary of moving to or staying in Hong Kong due to the protests and the overarching political climate. We have also witnessed several successful overseas applicants who declined job offers because either they or their families expressed doubts about the short-term stability of Hong Kong. In some cases, local employees have asked about opportunities in other locations, particularly Singapore. The combined effect has been to reduce the talent pool available to employers.
When it comes to IT and technology however, there is a sustained demand from departments and companies across this sector, particularly in Hong Kong. This is because such offices are growing, all while predicting strong financial forecasts in forthcoming quarters. Business also remains strong in countries outside of Hong Kong. These organisations are using Hong Kong as their springboard to expand into these countries. Our clients frequently talk about the business opportunities that the US-China Trade War opened up for them and, of course, ambitious plans to develop the Greater Bay Area.
The longer the protests continue, mainland China cities such as Shenzhen and Shanghai will seek to take advantage of and try to leverage their financial markets to rival that of Hong Kong. However, the role of Hong Kong within the Greater Bay Area and throughout APAC is unlikely to be affected in the medium-term.
Opportunity or High Risk?
What is clear is that the Hong Kong protests are having a serious effect on the services sector, which is having a knock-on impact on employment. Recruitment is also seeing a downturn in some sectors, but IT and technology remains strong.
We have a proven track record in supporting businesses during the tough periods and through previous downturns. We boast the knowledge and expertise to manage the continued demand from tech companies and IT departments looking to hire in Hong Kong. In the best free-market tradition, we regard the US-China Trade War and the Greater Bay Area as opportunities not to be missed.
We have over 10 years’ worth of experience which is focused on recruitment within IT and technology in Asia with a proven track record of helping multinational corporations right through to start-ups. We secure both contract and permanent IT and sales talent for established local teams or for first hires in China and APAC.
We strive to ensure that our clients always have at their discretion the best candidates for their positions and that our candidates always have access to the most prominent career opportunities in the market.
So, if you want to meet the best candidates for your role, or are looking to take your career to the next level, please visit www.claremontconsulting.asia