To restore its financial dynamism, Hong Kong must truly embrace diversity

Amid a series of setbacks, Hong Kong remains stuck in the past when it comes to cultivating foreign talent and capital from emerging markets
By establishing itself as a hub that celebrates innovation and multiculturalism, the city can attract top-tier professionals from around the globe

Kavi Harilela

Published: 9:30am, 5 May 2024

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Hong Kong stands today as a city grappling with an increasingly blurred sense of identity. On social media platforms, jibes about its status as a former international financial centre abound, amplified by a series of incidents that have cast shadows on the city’s once-alluring image.

Amid daily interactions with high-net-worth individuals from across the globe, a lingering doubt pervades the air, akin to an unresolved melody. The profound question echoing through these encounters resonates deeply. Can this vibrant financial epicentre uphold its elite talent pool and magnetism for global capital?

Hong Kong’s talent shortage has become an obstacle to attracting capital from some emerging markets, such as India or those in Southeast Asia. This is the impression I have gradually acquired in recent years.

As a third-generation Hongkonger hailing from an Indian family that has been in the city for more than a century, I have met many investors and high-net-worth individuals from Southeast Asia and other emerging markets who question Hong Kong’s status as an international financial hub. When I inquire about their reasons, they often respond with statements such as “operating costs are too high” or that “there’s a lack of community or suitable talent”. Unfortunately, they’re right in a way.

Hong Kong has a remarkably long history as being one of the world’s financial centres equipped with the rule of law. But it has been stuck in the past for too long. The financial system is used to standardise big corporations from the US, Europe or the Chinese mainland. The needs of those from emerging markets have sometimes been ignored.

As the world evolves, Hong Kong’s financial system is struggling to swiftly adapt to the intricacies of emerging markets that encompass diverse languages, cultures, religions and legal frameworks across various countries.

What newly wealthy individuals from these places primarily require are cost-effective operations and a proficient management team well-versed in industry nuances and cultural dynamics to manage their family enterprises, along with robust IT support to navigate today’s mobile-centric landscape.

Hong Kong has a remarkably long history as being one of the world’s financial centres equipped with the rule of law. But it has been stuck in the past for too long. Photo: Yik Yeung-man

A 2022 survey by PwC reveals this shift to a digital focus. About 22 per cent of high-net-worth investors said they switched advisers to improve their digital capability. Meanwhile, those aged 18 to 34 said they prioritise digital capabilities when selecting a wealth management provider, ranking quality of online and digital services as their top priority.

Yet, tech talent is an almost scarce resource in Hong Kong as 76 per cent of technology hiring managers found recruitment “very” or “quite” competitive in 2023, according to a Morgan McKinley report.

The diversification of the community is also a big concern for outside investors. Hong Kong’s population increase between 2022 and 2023 – a rebound after Covid-19’s talent outflow – was largely attributable to a net inflow of 51,700 Hong Kong residents last year but about 80 per cent of them are from mainland China via one-way permit.

Having a varied talent pool consisting of individuals from different nationalities, backgrounds and even religions is crucial for other global financial hubs to foster a vibrant atmosphere.

In 2022, Hong Kong introduced the Top Talent Pass Scheme to attract foreign talent, but the biggest beneficiaries are still mainland Chinese, which further lessens the city’s diversification. According to data provided by Hong Kong’s Immigration Department to Nikkei Asia, 52,404 out of the 55,381 people – about 95 per cent – who were granted working visas as of January under the scheme were mainland Chinese. In my experience, for most talented individuals, a diverse city helps them feel less unfamiliar, making it easier to live in.

09:34

Indians born and bred in Hong Kong explain why the city will always be home

I truly appreciate the benefits of a multicultural society and I hope we can welcome more diverse talent to build our society. For instance, at Payment Asia, a FinTech company which I work for, we began recruiting Indian tech professionals and easing their relocation to Hong Kong through the Top Talent Pass Scheme, simultaneously addressing the issue of tech talent scarcity.

As job postings reverberate across the digitised realms of Indian recruitment platforms, I witness a flood of responses with unwavering enthusiasm. A single opportunity sparks a deluge of more than 100 applications – a testament to the boundless wellspring of talent waiting to be tapped. This shows that the city continues to attract tech talent and is recognised as one of the highest-paid cities globally, albeit one of the most expensive, unfortunately.

Even though I have been a resident of this city for quite some time, I am keenly attuned to Hong Kong’s exceptional standing. It stands out as a financial hub graced with breathtaking landscapes and an electrifying vibrancy that sets it apart from the rest.

Given its distinctive attributes and rich financial heritage, Hong Kong has the potential to significantly enhance its international appeal. By drawing in talented individuals, the city can effectively attract more capital, thereby solidifying its position as a global financial powerhouse.

Times are changing, and Hong Kong has experienced a lot since 2019. To thrive in the evolving landscape, the city must focus on redefining its identity to attract a diverse pool of talent. By establishing itself as a hub that celebrates innovation and multiculturalism, Hong Kong can effectively draw in top-tier professionals from around the globe.

This influx of diverse talent will not only enhance Hong Kong’s vibrancy but also serve as a magnet for capital investment, solidifying its position as a dynamic and attractive destination for growth and prosperity.

Kavi Harilela is the business director of Payment Asia