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.
ENERGY ISSUES: The TSIA urged the government to increase natural gas and helium reserves to reduce the impact of the Middle East war on semiconductor supply stability Chip testing and packaging service provider ASE Technology Holding Co (日月光投控) yesterday said it planned to invest more than NT$100 billion (US$3.15 billion) in building a new advanced chip testing facility in Kaohsiung to keep up with customer demand driven by the artificial intelligence (AI) boom. That would be included in the company’s capital expenditure budget next year, ASE said. There is also room to raise this year’s capital spending budget from a record-high US$7 billion estimated three months ago, it added. ASE would have six factories under construction this year, another record-breaking number, ASE chief operating officer Tien Wu
The EU and US are nearing an agreement to coordinate on producing and securing critical minerals, part of a push to break reliance on Chinese supplies. The potential deal would create incentives, such as minimum prices, that could advantage non-Chinese suppliers, according to a draft of an “action plan” seen by Bloomberg. The EU and US would also cooperate on standards, investments and joint projects, as well as coordinate on any supply disruptions by countries like China. The two sides are additionally seeking other “like-minded partners” to join a multicountry accord to help create these new critical mineral supply chains, which feed into
For weeks now, the global tech industry has been waiting for a major artificial intelligence (AI) launch from DeepSeek (深度求索), seen as a benchmark for China’s progress in the fast-moving field. More than a year has passed since the start-up put Chinese AI on the map in early last year with a low-cost chatbot that performed at a similar level to US rivals. However, despite reports and rumors about its imminent release, DeepSeek’s next-generation “V4” model is nowhere in sight. Speculation is also swirling over the geopolitical implications of which computer chips were chosen to train and power the new
Intel Corp is joining Elon Musk’s long-shot effort to develop semiconductors for Tesla Inc, Space Exploration Technologies Corp and xAI, marking a surprising twist in the chipmaker’s comeback bid. Intel would help the Terafab project “refactor” the technology in a chip factory, the company said on Tuesday in a post on X, Musk’s social media platform. That is a stage in the development process that typically helps make chips more powerful or reliable. The chipmaker’s shares jumped 4.2 percent to US$52.91 in New York trading on Tuesday. The Terafab project is a grand plan by Musk to eventually manufacture his own chips for
RSS