Tech companies are already beginning an exodus of Hong Kong – just weeks after Beijing enacted a prohibitive security law in the region.
Small firms have already moved data—and in some cases staff—offshore, to protect from sweeping powers now afforded to Chinese state security, active June 30. Others are making contingency plans to leave Hong Kong altogether. Experts see them as bellwethers for the wider industry, with key players like Facebook, Google and Twitter waiting on the effects of the law before making decisions about relocation.
On July 6 Facebook announced it would not comply with data requests from Hong Kong’s government – including those regarding WhatsApp. LinkedIn, Zoom and Telegram followed Facebook’s decision soon after.
The law makes crimes of secession, subversion, terrorism and collusion with foreign forces punishable by a maximum sentence of life in jail. Companies are also liable. Police are able to request that companies delete or ring-fence data deemed harmful to national security, with fines and prison sentences for noncompliance.
That pits many tech companies directly against authorities, at a time when US-China relations and COVID-19 has already made doing business extremely difficult. The American Chamber of Commerce in Hong Kong recently revealed that around half its members plan to leave the region, while Korean-Japanese web giant Naver has also announced it is moving data to Singapore.
This week Hong Kong appeared to embrace its position as a Chinese gateway—and mitigate its coming exodus—with the creation of the Hang Seng TECH Index, an exchange which will track the region’s largest 30 firms. It is expected to debut next week.
But little Hong Kong’s Beijing-affiliated government can do will overshadow its new status as a satrap of China. Pro-democracy protests have been crushed violently in recent months, prompting the US and EU to consider recalibrating their relationship with China.
Scrapping internet freedoms that have existed as a hangover of British rule of Hong Kong, will ensure the region cannot remain an attractive proposition for data-heavy tech giants.