A prime office tower in Central that has recently lost a few foreign tenants serves as a snapshot of how mainland Chinese firms have chipped away at the diversity of Hong Kong’s economy over the past two decades.

Two International Finance Centre was once regarded as a hub for multinational companies. When completed in 2003, it had only a smattering of mainland Chinese firms.

But then the need for mainland firms to establish an outpost in Hong Kong grew, to pursue China’s drive to internationalize its renminbi and to make purchases overseas, and through the years, firms from across the boundary have taken over much of the prime office space, reshuffling the balance in the 88-story tower.

In its early days, close to 70% of the tenants were international companies, including Lehmen Brothers, insurer AIG and corporates from Europe, Japan and Southeast Asia. Only two were mainland firms.

Now, 35 mainland tenants account for 43% of the 81 occupants of the prime harbor-front building, almost on a par with the current take-up rate by foreign players, Apple Daily has found.

Some major tenants moved out last year. Banking groups UBS and BNP Paribas, and financial service providers State Street Corporation and Nomura Holdings left amid the COVID-19 pandemic and uncertainty over Beijing’s repression in Hong Kong. Most of the units were then leased by mainland Chinese companies.

Meanwhile, Hong Kong companies are also in retreat. Just three are left, compared with about 10 in 2003. The ones still sticking around are the MTR Corporation, Henderson Land Development and the Hong Kong Monetary Authority, the city’s de facto central bank.

According to an economics scholar, the mainland takeover began about a decade ago, when Beijing positioned Hong Kong as a springboard for Chinese firms to develop its global businesses.

Many mainland firms moved in shortly after the 2008 financial crisis, which devastated foreign companies and caused them to shift out, said Kevin Tsui, an associate professor in economics at Clemson University. Mainland enterprises were also encouraged under the leadership of Chinese President Xi Jinping to speed up replacing foreign and Hong Kong companies in the city, Tsui said.

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