Companies Using Hong Kong as Asian Headquarters Should Rethink: Commerce Secretary

July 2, 2020 Updated: July 2, 2020

Companies who are using Hong Kong as their headquarters in Asia should check if this is still a wise decision, Commerce Secretary Wilbur Ross said.

“I believe that there’s a good chance that all companies who have used Hong Kong as their headquarters for Asia will begin to rethink whether the new rules, the new relationship between Hong Kong and mainland China, whether those rules let Hong Kong be as favorable a place to have headquarters as it used to be,” Ross said Wednesday during an interview with FOX Business‘ Maria Bartiromo.

He said that the business environment in Hong Kong is fundamentally changed.

“It used to be Hong Kong is a very very special place, it had the rule of law, it had very good telecommunication systems, it was very well located, and people were pretty well guaranteed freedom,” he said. “As you change that, you are changing the fundamental attractiveness as a place for people to do business.”

Ross’s remarks came after the Hong Kong police made the first two arrests under the controversial national security law imposed by the Chinese regime.

The behaviors of the Hong Kong police violated human rights and grossly, he said.

“It’s also a gross violation of the original treaty under which they turned Hong Kong over from the British to the Chinese,” he added.

However, the American Chamber of Commerce in Hong Kong spokesperson Queenie Tsui said in a statement that the chamber “remain committed to Hong Kong as a home base for international business”  in a response to the new draconian law.

“It will take time for the business community to digest details of the law, but we hope it will not impact the dynamism and benefits of this great city, which continues to serve as an important gateway between East and West,” she said.

Days before the passing of the new national security law, the U.S. Commerce Department suspended regulations providing preferential treatment to Hong Kong on June 29. Exports subject to the Export Administration Regulations (EAR) to Hong Kong can no longer enjoy export license exceptions.

According to the Bureau of Industry and Security (BIS) in the Commerce Department, products regulated by EAR include nuclear materials facilities and equipment, materials chemicals microorganisms and toxins, sensors and lasers, and some other products.

The commerce secretary explained that the June 29 decision is based on the changing relationship between China mainland and Hong Kong.

“That’s why we’re doing away with Hong Kong’s special status, in terms of our trade relations,” he said. “China has made Hong Kong no longer a special haven … If it’s not special to the Chinese, it shouldn’t be special to us.”

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