hong kong

Paul Errington, CEO of Connaught Consultancy, reports from Hong Kong on the impact of more than 13 weeks of increasingly violent protests, amid concerns that there is no end in sight.

Originally peaceful protests have now escalated into violence with petrol bombs on the streets of Hong Kong, disruption of the Mass Transit Railway (MTR) and blocking of travelers at the international airport.

Many factions are now at play and the police have been forced to resort to ‘tear smoke’ (as they call it), rubber bullets and water cannon with blue die to track down protesters later; on occasion live bullets have been fired as warning shots.

There have now been more than 1,100 arrests and most recently two of the leaders of the democracy movement, Joshua Wong and Agnes Chow, were arrested.

Two other ‘leaders’, including Jimmy Sham, were attacked and beaten in café in separate incidents by so-called white shirts (purportedly these are paid triad gangs).

An off-duty policeman was stabbed on his way home at the end of August, while protesters in Tung Chung MTR trashed the station, breaking ticket machines, windows and CCTV’s. 

The police were slow to respond to this incident as they only have 30,000 officers to cover a wide area of unannounced and unapproved protests.

The Hong Kong government has been slow to respond and has made little or no attempt to resolve matters. The chief executive officer, Carrie Lam, is under pressure to resign, but this does not look likely to happen as she is supported by Beijing.

Damage to the Hong Kong Economy

Without a doubt the local economy is suffering; tourist trade is down with some hotels forcing staff to take annual leave, trade shows have been cancelled, while cafes and bars have seen a drastic drop in trade.

Underlying all of this is the concern that business investment and capital will be sent overseas. One of the backbones in Hong Kong is the real estate market and that is even showing signs of weakening.

In a city where Asian business travel is common place, the airport disruptions are causing businesses to rethink how they operate to get through this period.

If they are located near the main areas of demonstrations, they also need to consider staff safety as well as business continuity during the general strikes.

All businesses have to take a neutral position when it comes to opinions on the protests, otherwise future operations in Hong Kong may come under pressure from government bodies.

Companies have also come under pressure to back away from any support of the protests. Cathay Pacific was told by Beijing officials that any of their staff involved in protests were not allowed to fly into China and then demanded the resignation of the CEO, Rupert Hogg; he stepped down in August.

No end in sight

This is a major concern as we cannot see an ‘event’ that will bring this to a stop. Matters are still escalating, with neither side backing down as protesters demands have widened to cover points that will never be agreed, such as the release of all prisoners, the resignation of Carrie Lam, and, even more unachievable, greater democracy for Hong Kong.

At the start of September, Lam agreed to the full withdrawal of the Extradition Bill. The law would have applied to anyone that China believed had either broken the law or was threatening their sovereignty. So this would have included human rights activists based in Hong Kong or journalists who criticized Beijing's government, not just serious criminals as some were led to believe.

What impact will this change now have? Some believe it will embolden the protesters. They say it is too little too late but others hope this 'olive branch' may open up talks and compromise.

Mainland intervention must be the very last resort. China knows this will have massive international impact on the view of Hong Kong as a global finance hub and worries would be for a repeat of Tiananman Square.

The local business community waits with baited breath to see how this will end and what will be the long-term impact on business and family lives for the expat community, as well as the locals growing up under the increasing control being asserted by the Chinese government in Beijing, following its return to Chinese rule in 1997.

* Paul Errington is chief executive officer of Connaught Consultancy Limited, formerly Connaught Finance Investments, based in Hong Kong.