The coronavirus fallout is shaking up the world. What legacy will it leave for Hong Kong?
In just a matter of weeks, Hong Kong people have become accustomed to shopping online, working from home, and keeping educating online. Once seen as too slow in jumping aboard the internet bandwagon, Asia’s financial hub is now standing at the forefront of a citywide online experiment.
The retail and catering sectors, which have taken the most drastic hit from the pandemic, see online services as a lifeline, while other industries, betting on a technology-focused competition in the post-pandemic era, are beefing up their online presence in no time.
Whether people like it or not, not only the tech-savvy millennial generation, but all of Hong Kong society is embracing changes, as diverse as working and commuting patterns, online schooling, and distance learning.
“Before the coronavirus outbreak, Hong Kong’s retail business had been very slow in adopting online services, due to proximity of stores, as well as very limited online offering. In fact, the city had one of the lowest online shopping penetration rates globally in 2019 — less than 5 percent,” said Imke Wouters, a partner at Oliver Wyman, a global management consulting firm.
“The pandemic has fundamentally changed this — people who’ve never shopped online have now turned to online shopping, even to buy face masks. Apart from the few existing online players, many others have begun building up an online retail offering, with travel agents getting very much involved,” Wouters said.
She believed the abrupt shift from a physical to digital approach could be an “eye-opener” for local hard-pressed retailers, and this will further impact the already struggling brick-and-mortar businesses.
As one of the city’s economic pillars, the local financial services industry is in the midst of a far-reaching online revolution.
“In the post-pandemic era, the world will become more digital and agile. The coronavirus has transformed the way we do business and how we operate. It’s a wake-up call that technology disruption is a reality that every bank needs to address at the top level,” said Amy Lo, co-head of wealth management Asia Pacific at UBS Global Wealth Management.
As the virus confined many bankers, traders and their clients to homes, Hong Kong’s financial services sector, which has long relied on personal connections, especially with the moneyed elite, is under compounded pressure from growing automation and digitalization.
Lo believes the pandemic is a big push for combining high-tech and high-touch business models to reach out to clients. It just puts a fast-forward button on the Swiss bank’s plans for digitalization, a trend that UBS has invested a great deal in to prepare itself for profound changes ahead.
In the white-collar world, workplaces have amped up options for teleworking and staggered shifts to shield themselves from infections, ushering in a new era where working remotely is part and parcel of people’s regular schedule.
“With the stay-at-home practice still in place in most of the markets worldwide, we believe working from home will continue and won’t go away,” said Lo, who is also head and chief executive of UBS Hong Kong.
Lo said that more than 90 percent of the bank’s employees in some Asia Pacific countries and regions are now working from home.
Despite the sheer power of the citywide online experiment, Fielding Chen Shiyuan, Hong Kong-based senior vice-president and economist at China Construction Bank (Asia), believes it’s hard to say that the traces of many of the changes ignited will be here to stay after the virus is gone.
“For years, Hong Kong has the dubious honor of being too slow getting itself online and the internet industry off the ground. The reasons for this have been repeated over and over — the small-home market that makes the business stumble along the way without a scale advantage, as well as the deep-rooted mercantilism that leaves its mark on a lack of local talents,” Chen said.
The changes that move in line with the big trends are likely to continue, but those that don’t necessarily fit in with the city’s reality may only be a flash in the pan, he stressed.
“I think many of the changes happening here belong to the latter category,” he added.
Though some companies may have effective work-from-home policies and technologies at hand to ensure employees’ productivity and mobility while meeting the relevant regulatory requirements, Chen said there’s no shortage of people in the densely populated city known for its cramped and small living spaces — not equipped with the conditions of working at home.
Such reality, together with Hong Kong’s efficient public transport system and relatively short commuting time, may make the working-from-home practice a temporary expedient made necessary by a public health emergency, he said.
On the contrary, the shift to online shopping, teleconference, digital banking has been sped up and may stand as a vivid example of how new businesses will gain a foothold in the city, he said.
“To be sure, the Hong Kong market, by and large, is no different from the past. It’s still an isolated, small market — a harsh fact that remains unchanged and continues to inherently hinder the developing of the local internet industry,” Chen said.
“A new breed of home-grown internet-related businesses may emerge and thrive amid the coronavirus crisis. But most of them will eventually migrate with their feet to look for greener pastures in other broader markets.”
The pandemic has indeed forced the local government, entrepreneurs and residents to taking a sober, hard look at the disruptive power of the online revolution. This may foster a much-awaited shift in mindset.
“In the end, personal willingness is important, but it doesn’t have the final say. Whether the ‘legacy’ will last long will be driven by capital and the market,” Chen said.
HONG KONG NEWS