Hong Kong faces brain drain as talent flees ‘zero COVID’ controls

Hong Kong, China – When Francis Lee returned to the United Kingdom with his wife this week after a two-year stint at a top investment bank in Hong Kong, the portfolio manager felt sad to leave the city behind. But Lee’s sadness was far outweighed by his sense of relief.

“If the COVID policy wasn’t so harsh we would still be there, it’s the only reason I started looking for another job back in London,” Lee told Al Jazeera. “With all the unknowns about mass testing and quarantine facilities in Hong Kong, it’s anxiety-inducing. Without a roadmap, without any kind of timeline, you just don’t know how long it’s going to go on for.”

Lee is far from alone in voting with his feet after more than two years of strict pandemic policies in the international financial hub. While the world outside China has pivoted to living with the virus, Hong Kong has held onto some of the strictest social distancing rules and border restrictions on earth.

The Chinese territory’s “dynamic zero COVID” strategy, implemented to align with mainland China, has battered the city’s cosmopolitan image as “Asia’s World City” and set in motion an exodus of foreign businesses and talent.

When Hong Kong was hit by its fifth and deadliest wave at the start of the year, driven by the Omicron coronavirus variant, authorities implemented a tightly-enforced two-person gathering limit, dining curfews, bar and gym closures, and a return to remote learning at schools. The measures came on top of strict travel restrictions in place to various degrees since March 2020, including flight bans for “at risk” countries and up to 21 days of mandatory hotel quarantine for incoming arrivals.

“I felt like I just didn’t want to lose another six, nine, 12 months more of having to think about quarantine, washouts, policy flip-flopping and being sent to government quarantine and whatnot,” said Lee.

Residents head for the exit

Hong Kong has seen a net outflow of almost 157,000 residents since the beginning of the year, according to immigration data. In a survey released by the European Chamber of Commerce in March, almost half of the European companies that responded said they were considering leaving. That same month, the Hong Kong Chamber of Commerce warned the city was facing an exodus of educated workers on a scale not seen since the run-up to the city’s transfer from British to Chinese sovereignty.

In the face of growing restlessness from the business community, Hong Kong Chief Executive Carrie Lam last month announced a relaxation of some measures from April 1, including lifting a ban on flights from nine countries and reducing quarantine for arrivals from abroad to seven days. Still, the city’s pandemic policies remain out of step with the global trend towards reopening and far stricter than peers such as New York, London and Singapore.

On Wednesday, Lam admitted for the first time that the strict COVID policies were affecting the city’s competitiveness.

“It’s an unarguable fact that we have a brain drain and some senior management of some corporates have left Hong Kong,” she said.

Hong Kong nightlife tycoon Allan Zeman, who has been long known as a supporter of the government, admitted times have been tough.

“Obviously, every person you lose is a brain gone,” he told Al Jazeera. “No one is comfortable with having people leave.”

Zeman, who recently appealed to Lam to relax the international borders, welcomed the recent changes.

“We’ve got to open up Hong Kong. It’s great to worry about health, which is very, very important. But on the other hand, we also need an economic life as we are an international financial centre, and there’s many companies in Hong Kong.”

Zeman, who moved to Hong Kong from Canada in the mid-1970s, said he has witnessed the city bounce back from waves of emigration before.

“I’ve seen this happen many times – when Hong Kong returned to China in 1997 and then in 2003 with SARS. There are different periods when people get nervous and leave. Some don’t come back but others do.’’

Gary Ng, a senior economist at Natixis in Hong Kong, said the city could lose out to regional rivals and expressed concern that the changes may be permanent if the government does not further loosen restrictions.

“One can argue the current trend is temporary, and it is certain that some talent may flow back to Hong Kong,” Ng told Al Jazeera. “However, free flows of capital and people are the core advantages of Hong Kong, which is the foundation of the current business ecosystems. The relatively slower opening pace may have given a chance for competitors to catch up.”

The city’s pandemic limbo has forced employers to offer better deals to retain and attract talent.

John Klopfer, a labour economist at the University of Hong Kong, said the city currently has a surplus of vacancies, “which is tough for employers but great for workers. Employers have to do more to compete”.

“Now that job openings are back to pre-pandemic levels, workers have more options and employers have to do more to stand out – whether that’s salary, benefits, or work conditions,” Klopfer told Al Jazeera.

Daniel Kirk, associate director at recruitment consultancy Oliver James, said his company is the busiest it has ever been, taking on 20 to 30 percent more work in recent months.

“We’ve had our best performing March and one of our best ever quarters as a company in Hong Kong,” Kirk told Al Jazeera.

Kirk said this time of year usually sees a lot of turnover, as employees often change roles after taking their bonuses, but the higher volumes of vacancies are also due to emigration.

However, Kirk said the changes are not all doom and gloom.

“Insurance firms are losing some talent overseas, but they’re also bringing in a lot of talent back too,” he said. “It works both ways. Expats are going because they can’t travel and life is somewhat restricted here, but at the same time, there are Hong Kongers abroad who want to return and be closer to their families.”

Kirk estimates that about 20 percent of his talent pool is from mainland China.

“What we have seen a lot of, and where I’ve had a lot of success, is identifying Hong Kongers and mainland Chinese overseas or other Asian nationalities wanting to get closer to home.”

‘Open for business’

Zeman also notes an influx of interest from across the border.

“There’s a lot of mainland Chinese companies that have now set up offices in Hong Kong. And there’s a lot of people, especially very qualified people, coming from the mainland.”​​

Despite this, Zeman is confident the Hong Kong authorities want to retain the city’s international character.

“Once we reopen, the government will probably launch some kind of campaign that Hong Kong is back again and open for business.”

For professionals like Lee, the portfolio manager, any such PR campaign will be too late.

“Not being able to travel for work was tough and it got to a point where I felt like it was stunting my career growth,” he said. “There’s only so much you can do in terms of building relationships over Zoom.”