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A Quarter of Japanese Companies Consider Reducing or Withdrawing Investments from Hong Kong

Between July 2 and 9, the Consulate General of Japan in Hong Kong, the Hong Kong office of the Japan External Trade Organization (JETRO) and the Hong Kong Japanese Chamber of Commerce conducted a survey on the business environment in Hong Kong among more than 600 Japanese-owned companies and local catering companies operated by Japanese. The results showed that 56.5 percent of the respondents were “very worried” or “worried” about the implementation of the Hong Kong National Security Law. This represented an increase of 5.7 percentage points up from the previous survey in April.

When asked about the reasons for worrying about the national security law, most companies, (as high as 79.4 percent of them), expressed their worries about the “restricted information flow,” a surge of 13.8 percentage points from the last survey. 60 percent worried about “Hong Kong losing its ‘rule of law’ and ‘judicial independence,'” and 58.1 percent worried about “brain drain.” The rest of the reasons include “increased intervention from the Chinese government and a weakening of Hong Kong’s autonomy,” the “instability of Hong Kong society,” and the “ambiguous enforcement of the National Security Law.”

Although more than 60 percent of Japanese companies in Hong Kong believe “no change” in the current business environment compared to a year ago, many companies said that one year after the implementation of the national security law, some employees left Hong Kong with their children, some local distributors moved overseas, and 25.5 percent of the companies are considering reducing or withdrawing their investments from Hong Kong.

The survey also asked about the views of the those from the headquarters of Japanese companies in Hong Kong. 31.8 percent of the respondents gave a “pessimistic” answer. Many of them blamed the Japanese news reporting on Hong Kong. 46 percent of the companies said that the headquarters “urged them to reduce the size of their Hong Kong operations.”

Source: Radio Free Asia, July 267, 2021