For Hong Kong to thrive, the private sector must rise to the challenge
The past will not deliver the future – the art and culture, hotel, restaurant and entertainment sectors must all take responsibility to identify and embrace today’s vastly different economic opportunities
Businesses in Hong Kong are hoping for a boost from visitors over mainland China’s Labour Day “golden week” holiday. But hope cannot be a substitute for action in this difficult environment, and it is up to us whether Hong Kong’s economy perishes under the fiery challenges or finds a transformative rebirth – like a phoenix rising from the ashes.
In Chinese mythology, the phoenix represents resilience, duty, propriety and virtue. Perhaps it should be the symbol of our times: Hongkongers must take more individual and collective responsibility for the city’s economic future.
The past will not deliver the future for Hong Kong and the private sector needs to take on more direct responsibility, to identify and embrace today’s vastly different economic opportunities.
The first step is to not let the economic comparisons of Hong Kong today vs pre-2019 cloud emerging evidence that points to new growth opportunities. After the triple torpedoes to Hong Kong – from the 2019 riots and the Covid-19 pandemic to the new geopolitical environment – the city has entered a new era. Let’s call this “post-2020 Hong Kong”.
Comparisons to a pre-2020 Hong Kong can be an unhelpful distortion when assessing the trajectory of the city’s new economic drivers.
Yes, retail sales growth has been muted this year and the restaurant sector has been confronted by changing tourism trends and consumer behaviour. Yet amid all this, visitor numbers have been increasing dramatically if we sensibly use the first year of the post-2020 Hong Kong era as the baseline.
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Hong Kong’s traditional dai pai dong street-food stalls fight to stay open
Hong Kong’s traditional dai pai dong street-food stalls fight to stay open
From 2020-2023, the number of visitors increased by over 852 per cent to a healthy 34 million. And if we compare the first quarter of 2024 to that of 2023, we continue to see robust growth, with visitor numbers more than doubling. Interestingly, this compares to just 17 per cent growth in the first quarter of 2019 – just before the onset of the destructive period of social unrest.
It’s worth noting that Hong Kong’s robust recovery in visitor numbers last year to 61 per cent of the pre-pandemic level in 2019 is similar to that of Singapore’s, which achieved a 71 per cent recovery but had a considerable head start on lifting pandemic control measures.
This brings us to the question of why Hong Kong’s private sector is not converting these burgeoning visitor numbers into considerable economic benefit for the city, for example, the art and culture, hotel, restaurant and entertainment sectors.
I believe the issue lies in private-sector attitudes highlighted by a recent characterisation of Hong Kong as having “structural problems”. I reject this. Yes, there have been structural changes and we have indeed entered a new era, but to see the new environment as a permanent problem belies the message that the large and growing number of visitors to Hong Kong are sending us: “We love to visit but our needs have changed.”
It also belies Hong Kong’s positive fundamentals as a global and cosmopolitan city, an international financial centre and China’s international financial hub, as well as Hong Kong’s unique advantages as a pillar city of the 86-million-strong Greater Bay Area.
I support Chief Executive John Lee Ka-chiu’s urging of the private sector to adapt to change. The private sector needs to reflect on whether its business models, which were fit for the old era, are still fit for a post-2020 Hong Kong. What I see is an overemphasis on pleading for even more government expenditure and interventions to build or buy big-event platforms and gimmicks.
While a reputation for intriguing events and attractions is helpful, the fixation on mega events offers only tactical solutions rather than a fundamental strategic repositioning of the economy to capture robust growth year after year. And the visitor numbers surely show this growth is available to the city if we are confident, imaginative, willing to change business models and, indeed, foster entirely new businesses.
Lee is right in pointing out that there has been some progress, but we have barely started. When it comes to mainland visitors, we are yet to find ways to generate value from the new and very positive trend for “experience tourism”. We can also do much more to foster new sources of tourists like the Middle East by embracing change to our restaurant and food sectors in particular.
As for the tortured topic of national security laws in Hong Kong and their impact on the city’s vibrancy, this is a red herring. The private sector needs to play more of a role in communicating this, particularly the powerful global banks and insurance companies operating in the city.
Such laws exist in almost every advanced country in an often-contentious balance between national security objectives and individual rights. Consider Australia, where the Human Rights Law Centre recently argued for 13 proposed changes to the country’s national secrecy laws which criminalise whistle-blowers and journalists in certain circumstances.
While we in Hong Kong can do little to change the focus of the external propaganda machines, we can take greater responsibility in embracing our changed but still positive economic fundamentals, and in taking action to grow value for the city and its people. It’s not time to sit around in hope but instead to act – and it’s certainly not the time to passively hope the Hong Kong government will find the answers for the private sector in this distinctly market-driven city.
Damien Green is a Hong Kong-based financial services executive and the Founder of a Hong Kong Creative Arts Social Enterprise, StudioKT
