If buildings could talk, one of Hong Kong’s most prestigious office blocks would provide eloquent testimony to the future of business in the SAR.

Thanks to the work of Apple Daily reporters, it is possible to reflect the future through the lens of the prestigious Two IFC Building that opened for business in 2003. Back then 70 per cent of the tenants were overseas-based companies, now their number has shrunk to 43 percent, with tenancies largely replaced by Mainland companies.

Originally 10 Hong Kong companies were also IFC occupants but that number has dwindled to just three, two of which are largely financed by the taxpayer – the Mass Transit Railway and the Monetary Authority.

The very obvious shift in balance towards Mainland companies is vividly seen here and it is equally obvious next door at the stock exchange and in certain other key sectors of commerce, not least property development and the media where local dominance has shrunk as companies from across the border have moved in.

There is another reason why the twinkling towers of IFC Two might also resonate with the business community because it was from the Four Season’s Hotel, which is embedded in the building, that leading Mainland businessman Xiao Jiunhua was seized and bundled back across the border in 2017.

The fact that he then disappeared from view, his business empire was dismantled and that there was no visible judicial process accompanying his seizure, served as a sharp reminder of the dangers of doing business in an environment where rule of law is subordinate to the power of the state.

Xiao’s abduction also came into play when Carrie Lam, Hong Kong’s Chief Executive in Name Only (CENO), tried to push her ill-fated extradition law through the legislature, triggering the most widespread upsurge of protest Hong Kong has ever seen.

Thus the changing fortunes of a landmark building in the heart of Hong Kong’s financial district provides a telling illustration of how the business terrain has changed and will change even more profoundly.

The cheerleaders for the dictatorship remorselessly repeat the mantra that Hong Kong will continue to thrive as an international business center regardless of crackdowns on political dissent, suppression of freedom of expression and the rollout of witch hunts for anyone who disagrees.

Like all cheerleaders for authoritarian government they are utterly certain that their cynicism and contempt for liberty is widely shared, especially in the world of business. They say, in precisely these terms, that businesses will not allow anything to detract from the objective of money making and that protestations of concern over human and political rights will quickly fade to be replaced by the lure of cash.

The cynics may well have a point but what they fail to understand is that much of what they consider the irrelevant trappings of a free society are in fact integral to the conduct of international commerce. Business needs to be governed by a set of laws impartially enforced by independent judges. They need a free flow of information to keep on top of developments and they simply do not feel comfortable operating in circumstances where people fear the knock on the door in the early hours of the morning.

What this means in practise is that international companies will continue conducting business in markets where money is to be made even if they are highly problematic but they will ring-fence these operations and most certainly not establish any kind of regional or global centre in jurisdictions where the rule of law does not prevail and where the rulers are not subject to a process of accountability through the ballot box.

This is why all the glitzy offices set up by international companies in Shanghai, and indeed other places in the Mainland, are solely focused on China business. They do not dare put international operations there.

Hong Kong’s advantage was that it was a place where proximity to the Chinese market could be achieved but where a different set of rules applied.

This has now been placed in question and companies are marching with their feet. Why pay the exorbitant rents of IFC Two to house offices that solely focus on China business when these functions could be undertaken at considerably less cost on the Mainland itself or, at a push, in a smaller suite of offices somewhere outside Hong Kong’s financial center.

Inevitably the place of these big international corporations will be taken by Mainland companies and as they spread their wings. The distinction between Hong Kong and other Mainland cities will cease to matter.

Hong Kong will, of course, struggle on, but it will be shadow of its former self-confident self. Maybe this is indeed Beijing’s plan.

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