Tokyo is on a charm offensive, hoping to lure Hong Kong firms spooked by protests and a controversial National Security Law imposed by China. However, the city is proving a tough sell.
“I want to make Tokyo Asia’s No. 1 financial city,” Tokyo Governor Yuriko Koike said last month, as the Japanese capital opened an information center in Hong Kong for international businesses considering a move.
Tokyo’s courtship comes with some concrete promises, including temporary offices for firms that want to try out life in Japan.
Photo: AFP
There are also a number of more theoretical incentives being floated, including tax breaks, streamlined bureaucracy and even a special economic zone like Shenzhen, China’s “Silicon Valley.”
In some ways, Japan might seem an obvious alternative for businesses looking to leave Hong Kong: It is the world’s third-largest economy, home to the Tokyo Stock Exchange, and already houses outposts of numerous financial institutions and international firms.
However, there are some serious stumbling blocks and competitors that experts say mean Tokyo’s hopes for regional financial dominance might be little more than a pipe dream.
For a start, Japan’s income taxes are sky high, comparatively, topping out at 45 percent against Singapore’s 22 percent and Hong Kong’s 17 percent.
Low English fluency levels are also a chronic handicap, as is the country’s comparatively sluggish adoption of digital technology.
Trade on Tokyo’s stock markets was halted for an entire day last month because of a “hardware failure” — a glitch seen as unlikely to boost confidence and bring new traders flocking.
European Business Council in Japan president Michael Mroczek said that there were high hopes for Japanese Prime Minister Yoshihide Suga’s digitization and deregulation push.
However, “there’s also a lot of skepticism because there haven’t been a lot of changes” over the past few years when similar initiatives have been proposed, he added.
Japan’s particularly strict approach to border controls during the COVID-19 pandemic — when foreign residents were for months not allowed to return even as Japanese citizens did — has been seen by some as discrimination and could also be off-putting for tentative transplants, Mroczek said.
Tokyo is not the only city in the Asia-Pacific region that seeks to take advantage of a potential Hong Kong exodus.
Australia has announced new visa opportunities for Hong Kong students and entrepreneurs, and officials have said that they would be “very proactive” in encouraging businesses to relocate.
While the Singaporean government officially only says that it seeks a “stable, calm and prosperous” Hong Kong, it is probably the most obvious alternative for firms, IHS Markit chief economist for Asia-Pacific Rajiv Biswas said.
“Most international financial services firms may already have a large presence in Singapore, and therefore may prefer to expand their existing operations in Singapore rather than finding another new location,” Biswas said.
However, there are still questions about whether an exodus from Hong Kong is really on the cards, whichever regional city stands to gain.
“I wouldn’t expect big firms to announce that they are pulling out of Hong Kong completely,” Capital Economics Ltd chief Asia economist Mark Williams said. “It’s more likely that firms will just gradually reduce their headcount in Hong Kong and increase it elsewhere.”
Since 2014, the Hong Kong stock exchange has been directly connected to Shanghai’s, allowing companies based in the territory to invest in companies listed in mainland China more easily. Hong Kong’s proximity to Shenzhen is another important plus for some businesses.
“Wait and see is the general attitude,” one foreign employee at a major Western bank in Hong Kong said on condition of anonymity, adding that he personally was not yet thinking about relocating.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary
RSS