Uncertainty has businesses delaying plans, European chamber's leader says
Updated: 2019-11-28 07:16
By Edith Lu in Hong Kong(HK Edition)
Violence in Hong Kong in the past several months, including the occupation of streets and the damage to public transportation, has created a lot of uncertainty and fear among foreign companies. The chairman of the European Chamber of Commerce in Hong Kong said some of them are delaying their respective plans in the city.
As Hong Kong is about to enter its sixth consecutive month of turmoil, certain international investors are not sure how the situation in the city will develop, so they are taking a wait-and-see attitude, David De Rosa said in an interview with China Daily.
De Rosa deals with international commercial disputes and advises foreign investors in their cross-border commercial arrangements and transactions. He has been focusing on promoting European businesses and trade relations with Hong Kong.
De Rosa said he has found that there has been a reduction in inquiries about cross-border business recently but not a significant one, and the number of new companies setting up operations in Hong Kong is decreasing.
Many European businesses in Hong Kong are fashion brands from the retail sector, according to De Rosa. Retail sales have long been a key economic pillar in the city. But the industry has been hard-hit by social unrest. Some retailers have been downsizing or are considering downsizing their operations as some of their locations cater to tourists who have stopped coming to Hong Kong during the ongoing turmoil, De Rosa said.
Italian fashion label Prada announced in August it would end the lease of its flagship at Causeway Bay when its seven-year lease expires in June 2020. The landlord then offered to cut the monthly rent of HK$9 million ($1.15 million) by 44 percent for the next tenant.
"At the end of the day, everything is about dollars and cents," De Rosa said. "If the company is not able to make enough money to sustain its opening at a certain location, it may consider restructuring."
He said that the rent level in prime retail locations is still very high. With fewer and fewer tourists coming to Hong Kong and buying goods, companies may be forced to rethink their business models.
"But as soon as the situation is clear and everything is back to normal, tourists will come back gradually. It is the key for Hong Kong's economy to win back tourists," he said.
De Rosa also said that international investors have not yet lost faith in Hong Kong. He has not seen any European companies close operation and leave Hong Kong, nor has he heard of any capital outflow. Indeed, he learned that one large European company decided to relocate its headquarters from Europe to Hong Kong.
"The city has been going through many crises, including the 1998 Asian financial crisis, the 2003 SARS (severe acute respiratory syndrome) epidemic and the 2008 global financial tsunami. It has been proved that Hong Kong's economy has resilience and strength," De Rosa said.
He said he believes that Hong Kong's economy will come back even stronger than before if a resolution is reached soon.
(HK Edition 11/28/2019 page4)