Hong Kong is losing its appeal to multinational companies because of its buffeting by political upheaval, Beijing’s crackdown and the COVID-19 pandemic, according to the Wall Street Journal.

International firms such as Timberland owner VF Corp, Japanese videogame maker Sony Interactive Entertainment, the European luxury-goods company LVMH and the French cosmetics giant L’Oréal have either partly or fully relocated their staff out of Hong Kong, the newspaper reported on Monday.

Frederik Gollob, chairman of the European Chamber of Commerce in Hong Kong, said many businesses are “for the first time” having the discussion of whether to remain in the city.

A members’ survey conducted by the American Chamber of Commerce in Hong Kong last month found that 42% of the 325 respondents were considering or planning to leave the city, citing unease over the national security law and pessimism about Hong Kong’s future.

In response, Hong Kong’s commerce chief Edward Yau said foreign firms were “grateful” that the national security law brought an end to the city’s political instability. The number of overseas companies using Hong Kong as a regional headquarters has remained steady, he said, citing a government survey.

However, government data also showed dozens of international companies moving out of Hong Kong since 2019, and more people departed the city in 2020 than in any year since the global financial crisis of 2008.

The departures have contributed to the highest rate of commercial real estate vacancies in 15 years, according to data from real estate firm Cushman & Wakefield. More than 80% of the vacant space was formerly occupied by international companies, it added.

Rob Chipman, chief executive of the relocation firm Asian Tigers Hong Kong, said moves by international executives into Hong Kong have declined by 50% since 2019, while exits have increased by 30%.

“I saw a lot of longtime Hong Kong stayers who were leaving, people like me who came out for the usual three-year stint and 30 years later are still here, loving it, married with kids, owning businesses,” Chipman told the Wall Street Journal. “So even some of those people are saying, ‘Wait a minute, something’s going on here. Maybe it’s time to leave.’”

Sandra Boch, who started a specialty fabrics and stationery business in Hong Kong 15 years ago, left the city for Singapore last November. The national security law “was a clear sign from China that they are taking control of Hong Kong now, and everything will get more controlled from that point out. We no longer felt safe,” she said.

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