EuroCham study: 25% plan to close ops in HK as talent woes ensue

Only 17% of businesses from Europe in Hong Kong have no plans to leave the city in the upcoming 12 months, while the European Chamber of Commerce in Hong Kong (EuroCham) believed that the ongoing “Zero-Covid" strategy has taken a toll on Hong Kong's business community.

According to EuroCham's recent survey "Impact of COVID-19 on the Business Community", 25% of respondents said they will close their operations in Hong Kong in the upcoming 12 months, and 24% said they will partially relocate their business to other cities. Only 17% said they will remain in the city, with the remaining 34% saying they were unsure about their future.

The study has also delved into the impact of the pandemic on talent acquisition and retention. To assess their responses, EuroCham used a five-point Likert scale to study their sentiment, in which "5" denotes the highest level of turnover. A total of 35% of respondents said they had encountered high staff turnover in their companies, with 16% and 19% giving the score of "5" and "4" respectively. To understand more about this trend, EuroCham asked its respondents to share additional data on the number or percentage of staff who had decided to leave either their company or Hong Kong due to quarantine or other restrictions related to the pandemic. Around 40% of respondents said "quarantine, travel restrictions, and not being able to see the family" were the major reasons for the difficulties in bringing talent to Hong Kong from overseas countries. In addition to this concern, 12% said social distancing measures and school closures hampered them to attract talent.

The Hong Kong government has rolled out another phase the Employment Support Scheme. It is expected to open for application in April. In 2020, the government rolled out the same scheme to provide financial support to businesses, helping employers to retain employees. In EuroCham's study, 58% said they had received funding from the government before. Although the percentage was moderately high, the effectiveness of the funding was not good enough. In particular, the respondents gave an average score of 2.2 out of 5, while only 8% gave a score of 4 out of 5 or above.

In the study, Frederik Gollob, chairman of EuroCham said that the low vaccination rates among elderly people highlighted the limitations of the Hong Kong vaccination strategy. "Against this backdrop, the Hong Kong government chose to follow the 'Zero COVID' or 'Dynamic Zero-COVID” strategy. This led to severe consequences for businesses and residents in the city. Hong Kong's connectivity to the entire world and connector to mainland China, which are the advantages of the city, have been almost completely disabled, he said.

EuroCham urged the government to open the city after it tightened its quarantine measures in mid-August 2021. This came as the group felt the tightened measures would otherwise undermine Hong Kong's status as an international business centre.

In an open letter, Gollob said recent concerns raised by the Hong Kong government’s health advisors around isolated cases of residents returning to the city and testing positive after a few days of coming out of the quarantine were out of proportion, and contributed again to concern within the international community, adding that Hong Kong must open itself sooner rather than later.

"This new quarantine regime could lead many in the international community to question if they want to remain indefinitely trapped in Hong Kong when the rest of the world is moving on. This concern amongst the international business community could pose, undoubtedly, a growing threat to Hong Kong’s status as an international business centre," he said.

(Photo courtesy:123rf)

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