SINGAPORE -- Hong Kong's reputation as a business hub has soured after three months of anti-government protests, but 75% of companies surveyed have not moved operations out of the Chinese-ruled city.
The American Chamber of Commerce in Singapore revealed on Thursday that its survey showed 72% of respondents had not shifted capital out of Hong Kong. But for those planning a move elsewhere, Singapore was the top destination.
Over Aug. 21 to Aug. 29, AmCham surveyed 120 top company executives across industries on their views on the ongoing political turmoil in Hong Kong. Most of the poll participants were representatives of companies that had offices in the Chinese territory.
While most are staying put, 80% of respondents said the unrest has affected their decision to invest in the city while 67% believe the protests have tarnished Hong Kong's reputation as a safe base for regional businesses.
AmCham said the findings suggest that the city is unlikely to attract new companies to set up base in Hong Kong.
The unrest has already dampened the city's tourism sector. Hong Kong visitor arrivals plunged nearly 40% in the 12 months to August, Finance Secretary Paul Chan said on Monday. He added that the image of Hong Kong as a safe city and a hub for trade, aviation and finance had been severely damaged.
On Monday, hundreds of uniformed school students formed human chains in districts across Hong Kong in support of anti-government protesters after another weekend of clashes, reflecting widespread unhappiness with the city's leadership.
For companies already established in Hong Kong, there are few preparations that they can take to deal with long-term unrest, said Abhineet Kaul, senior director of public sector and government at consultancy firm, Frost and Sullivan.
Kaul said prolonged unrest will hurt companies across sectors: "For business-to-consumer businesses, such as retail, food and beverage, they are unable to even open, which causes lost revenue. It leads to lower productivity and loss of business due to the inability to conduct business meetings."
In the survey, 91% of respondents who had plans to relocate pointed to Singapore as the alternative. More than half of poll participants believed that the city-state will benefit economically from the ongoing protests.
Companies won't take relocation lightly, said PwC Singapore Tax Partner Allison Cheung. She said that companies will have to see sustained impact on their workforce, their location of operation and their equipment before they will take the decision to move.
"The wish or the decision to relocate will be much more deferred until such time that there is a very prominent impact to businesses," Cheung said, adding that since many companies in Hong Kong are present in other countries, events there alone may not cause business to grind to a halt.
Kurt Wee, president of the Association of Small and Medium Enterprises in Singapore which represents over 11,000 companies, had a different view.
"It is a very grave concern for businesses that need the rule of law to be in place," Wee said. "This thing about the loss of peace and security is a major concern for us."
Wee added that companies would think twice about investing in Hong Kong and employing locals, many of whom are protesters agitating for political change.
"There's been a lot of inquiries about businesses wanting to locate in Singapore," Wee said. "Businesses that are now looking to purchase commercial and industrial assets in Singapore -- from China, from Hong Kong."