Friday, February 24, 2023

[East Asian Forum] Hong Kong risks an irreversible tech brain drain

Hong Kong risks an irreversible tech brain drain

Author: Charles Mok, Hong Kong

Hong Kong’s latest census data paints a grim picture of the territory’s demographic trends. In 2022, Hong Kong recorded its highest net population loss and lowest birth rate since 1991, pushing the median age from 31.6 to 46.3 over this 30 year period.

A view of Hong Kong's skyline, Hong Kong, China, 13 July 2021 (Photo: Reuters/Tyrone Siu).

Another census report on employment and job vacancies paints an even grimmer picture. Comparing data from September 2022 with January 2022, the number of jobs in the information and communications and financing and insurance sectors declined by 2.9 per cent and 3.2 per cent respectively. But at the same time, the number of job vacancies in these two sectors jumped by a whopping 31.9 per cent and 19.1 per cent respectively.

Although government officials reject any talk of a ‘brain drain’, the reality is that of the 142,000 Hongkongers who have applied for the United Kingdom’s British National (Overseas) visa scheme so far, 38,600 are under 1832,600 areaged 35 to 44 and 27,800 were aged 45 to 54. On 31 January 2022, the two year anniversary of the visa scheme, the United Kingdom’s Home Office announced that the country had welcomed 144,500 immigrants from Hong Kong.

The vast majority of emigrating Hongkongers are highly educated, with 37.3 per cent holding undergraduate degrees and 32.2 per cent holding masters degrees according to a recent survey. Other countries, such as Australia and Canada, are also attracting a smaller but significant number of Hong Kong’s young and educated top earners.

It is no coincidence that this mass exodus comes amid the July 2020 enactment of the National Security Law. Disillusioned with the end of Hong Kong’s autonomy, electoral democracy and rule of law, Hongkongers with the means to do so have voted with their feet — especially parents who are worried about a new nationalist school curriculum.

Hong Kong’s tech sector provides few reasons for homegrown talent to remain. The government has struggled over the last two decades to develop its tech strategy — publishing blueprint after blueprint, but consistently failing to train or attract local and outside talent or build up Hong Kong’s appeal for global or mainland Chinese tech firms.

Despite the sector consistently falling short of finding talent to fill local jobs, the government still urges citizens to head to mainland China to seek opportunities. But despite such efforts, in a recent survey 79 per cent of respondents said that they were not interested in working or living in mainland China.

Instead of supporting the struggling local tech sector, the government has made things worse. A subsidiary of the China Aerospace Science and Industry Corporation has garnered over HK$1.6 billion (US$220 million) worth of government contracts, undercutting local information technology services firms in favour of mainland state-owned players.

Government tech policies favour spending billions on mega-infrastructure projects. Decades in the making, the Hong Kong–Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop cost over HK$52.5 billion (US$6.7 billion) just for its planning and the construction of the first eight buildings. It will not be operational until late 2024.

Hong Kong has followed other Asian economies such as Singapore in trying to lure elite talent, setting up an ‘online service window for high-income earners or graduates from the world’s top 100 universities. The government claims that within a week of its launch, it received 2600 applications, approved 1400 of those and aims to land 35,000 of these workers over the next three years.

But what Hong Kong needs the most are the mid-level engineers and managers it has lost rather than elites. In the recent Expat City Ranking 2022, Hong Kong ranked 46th out of 50 cities — it is where expats are unhappiest, scoring among the lowest in quality of life and dead last in political stability. Hong Kong’s attractiveness is now limited to workers from mainland China, where the unemployment rate for young people, including university graduates, is as high as 20 per cent.

Even Hong Kong’s role as one of Asia’s leading telecommunications and internet hubs may be a thing of the past. Since 2020, US authorities have suspended any approval for new undersea cable connections to Hong Kong, stifling growth in internet capacity. Hong Kong-based Chinese tech firms now frequently find themselves on US sanction lists. On the other hand, legislative proposals underway will put further legal burdens and liabilities on global tech platforms, especially for matters related to national security.

The inconvenient truth is that the only way to stop Hong Kong’s talent exodus and set its technology sector policy on the right track is to reverse its political course. Government bureaucrats who are politically loyal but lack a strong vision and competency must be replaced.

But this will not happen. Hong Kong thrived on its differentiation from China, but its current political, economic and social integration has made it just like China. China no longer believes it needs Hong Kong’s golden eggs and merely wants to prevent it from being a political thorn in its side.

Published by East Asian Forum, Feb 23. 2023


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