Hong Kong and the New Security Law: Impacts on Mobility

Overview

On June 30, 2020 Beijing, China introduced a new security law for Hong Kong that will have a notable impact on mobility, from talent management to data security. The law criminalizes certain activities carried out by Hong Kong residents and non-permanent residents. People "from outside [Hong Kong]... who are not permanent residents of Hong Kong" are also subject to the new law. Punishments range from three-year sentences to a maximum of life in prison. Below, we’ll explore what the new security law consists of and considerations for companies that are doing business in the Hong Kong administrative region.

What does the Hong Kong security law consist of?

The Law of the People's Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region  identifies four broad areas of criminal behavior:

• Secession (breaking away from the country)
• Subversion (undermining the power or authority of the central government)
• Terrorism (using violence or intimidation against people)
• Collusion with foreign or external forces

However, within the 4 broad categories, there are 66 articles (particular activities) that are identified as criminal behavior. The categorization of the activity is what has brought the most focus for those considering relocation to Hong Kong. For example, damage to a public transport facility may now be considered as a terrorist act under the law.  It is not the intent of this blog to draw conclusions as to whether the law and identified actions are properly categorized but, rather, to make the reader aware of the potential impact on Hong Kong expats and companies/office locations in the current political climate and the increased control exercised by Beijing over activities in Hong Kong.    

While it is primarily individuals that could be held accountable for adhering to the new law, companies may also be impacted by fines if the company is found guilty of any offenses. Other provisions of the law state that authorities and courts in Beijing – not in Hong Kong – will have authority over how the law is interpreted and applied.  Of important note is that some trials will be heard behind closed doors. As Tam Yiu-chung, Hong Kong's sole delegate in the Standing Committee of the National People's Congress, told the Nikkei Asian Review, "There is no exception for people or businesses in the city.”

How is Hong Kong’s current climate impacting mobility?

The geo-political and social climate in Hong Kong has had significant impacts on mobility, both from a corporate and employee perspective. A few of these considerations are explored below.

Corporate Data Protection

As identified in the survey results below (see Workforce Management), Hong Kong’s new security law has raised a concern for companies with physical locations in the administrative region. Under the new law, authorities can require information from companies (including personal data), search properties, restrict or prohibit travel, freeze or confiscate assets, and intercept communications without a court order. Because of this, many businesses are assessing their ability to control data security – and how this may impact their clients’ willingness to continue partnering/doing business together.

If anyone within a company is suspected of breaking the law, the individual, the individual’s employer, and anyone the individual socializes or works with, is at risk of their data being collected under the new legislation. As a result, companies that are heavily dependent on data such as technology-based companies, consulting firms, non-governmental organizations, banks, and pharmaceutical companies should pay particular attention to the scope of potential government access to employee and company information.

Talent Assessment and Education: Duty of Care

The language used in the Hong Kong security law is vague and, therefore, when assessing new talent for relocation to Hong Kong, it will be necessary to understand the current climate in the region, identify what actions could give rise to violations of the law, and assess the risks associated with  those activities under the new law. In addition to engaging in activities that may be deemed violations of the law, candidates and companies should be cautioned that associating with anyone that is engaging in alleged violations could also put them at risk of being charged as a result of that association. Candidate assessment should consider employee readiness to live and work in Hong Kong (along with that of an accompanying spouse, partner, and/or family) as both the particular activities that could give rise to violations and the interpretation of the law are being developed, debated, and clarified.

Additionally, it will be important for various business functions and departments to agree on methods and language used to guide candidates as they consider employment in the area. Consultation from the organization’s legal department is advisable when developing the guidelines and narrative that will be used. Consistent and responsible guidance will be key to ensuring that the narrative used by global office locations with their employees will be the same as that which is being used locally in Hong Kong.  

And finally, the security law applies to all persons in Hong Kong, whether they are permanent residents, expats, or visitors. While expats living in Hong Kong will need guidance regarding behaviors that may be questionable under the new law, they will also need to understand that visiting family or friends will also be subject to following new actionable guidelines; again, as the laws are vaguely defined, employees and their visitors should be guided toward caution.

Workforce Management

A survey conducted by the Hong Kong Japanese Chamber of Commerce & Industry revealed that 32.7% of respondents stated they were "greatly concerned" about the new law; another 48.7% said they are "concerned" and 36.7% said they would reconsider or downsize their operations and withdraw from the Asian financial hub. Though the combined 81.4% of respondents to the poll fear a negative impact on their business, nearly 60% don’t know how the law could affect their operations.

In light of data protection concerns and situational impacts on the ability to attract talent to the area in the foreseeable future, some companies may choose to relocate their Hong Kong-based offices. There are other cases in which companies choose to remain but have employees who wish to relocate. In both cases, businesses will need to reassess their talent requirements, existing skill sets, any gaps created by the changes, and where and how to best source new employees and redistribute existing talent.

Once stakeholders make a decision on the approach that will be best for the business, mobility can play a proactive role regarding the assessment of talent and organizational needs – and/or consult on potential new geographies being considered. New location choices may include Singapore, Australia, or Taiwan. Additionally, several countries have offered new or fast-tracked opportunities for citizenship to Hong Kong citizens, such as the United Kingdom and Australia, in response to its new security law. If companies are interested in considering new locations, these new cities and citizenship opportunities should be considered along with an assessment of available mobile talent and how each country’s immigration policies, tax structures, and laws would align with organizational goals.  

The Importance of Engagement

The geo-political and social climate in Hong Kong has been fluid for many years and will likely continue to be as events unfold in the future. Therefore, it will be important for companies to stay informed about changes – legal, social, and political – to best serve the needs of their organizational objectives and employee needs and safety.

The most effective planning regarding matters in Hong Kong will come from targeted solutions. The best way to determine which areas to target and evaluate will require communication with employees to gauge their comfort levels and potential needs – and with business units to determine any impacts to the company and which avenues to pursue, if any, should changes be needed. Working closely with tax, immigration, and mobility partners can be of great help to companies, by leveraging the area-specific knowledge they already have regarding Hong Kong and mobility-related issues resulting from the security law. These partnerships can also maximize solutions by utilizing processes, operations, and suppliers that are already in place to implement any agreed-upon courses of action. Stakeholders may wish to read our Playbook for Mobility Management During Crises and Disasters for more information on population assessments, how to determine real-time responses to immediate employee needs, and maintaining a nimble approach during such rapidly-changing events that are occurring in Hong Kong at this time.

Policy Counseling

Whether companies decide to maintain a presence in Hong Kong or relocate employees and/or office locations to another business hub, conducting a policy review and working closely with mobility providers will be key during this rapidly evolving time. Whatever the decision, company stakeholders will need to examine tax, compensation, incentives and, in the case of large numbers of employees and/or office spaces, group-move governance. As each of these considerations is complex and the successful integration of each will be key, working closely with a relocation provider is recommended to maximize efforts and obtain the desired result.

For more information about how SIRVA can assist your company with a mobility policy review and/or implement effective employee relocations, group moves, and/or your company’s commercial inter-country commercial move, please contact us at concierge@sirva.com. 

Contributors:

Robert Vale | Vice President, Global Account Management

Lisa Marie DeSanto | Manager, Content Marketing

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