not a good time to move to Asia

earthwalker7's picture
Rank: Human | 14,691

often I get asked on WSO how I would advise someone try to make the move to Asia/HK/China. Simply put, at this time, I'd not recommend it.
* China growth has slowed dramatically - first from less-than-commercial government policies, and an unnatural amount of debt, and then from a trade war
* HK's own position in the world has been made partially redundant. Since 1841 the role of HK was to serve as the gateway into China - something that was exacerbated after 1949. .But now? If one wants to do business in China, one can just take a flight to Beijing or Shanghai. HK's role is now less necessary, and the city has not diversified its economy. It still is just focused on finance.
* HK is in a recession due to protests and a slowing China, and it's going to get much worse before it gets better. A year ago HK averaged 200k visitors per day. During the protests, tourism fell by more than half. Now, nearly 0 tourists (due to corona virus). Even if tourism recovers, there is a stain on HK that will take time to wash out.

And if you're a foreigner (even a Chinese one) just forget it. Why go thru the pain?

Comments (19)

Feb 19, 2020

where are you based? mainland china? singapore? HK? would love to see you do a AMA.

my main question is where do we get reliable information on china and the periphery? I've heard SCMP is good, and I know you can't trust state run media, but I worry about how legit some of the twitter people are as well. I realize that if the numbers are off, there's no reliable data sources, just some additional non-state media would be helpful.

another question is on china slowing. is it actually a decline like a recession? or, is it just growth in the 2-4% range instead of 5%+? where is the slowdown hitting them hardest?

thanks man!

Feb 19, 2020

I'm in Hong Kong. My FT job ended due to the economic slowdown due to the protests 6 months ago. It was part of layoffs across the company, and I was assured it was not performance related, but rather an effort by the company to get thru the nuclear winter, and I was one of the more high-paid people. My company was uniquely exposed to the drop in tourism traffic which fell from 200k per day to 3k per day. But the thing is, I didn't feel like I was maxing out my potential in Asia anyway. Not for years. So maybe this is the chance to move back to USA that I had been waiting. I couldn't justify it when I was employed but now....

It's really hard to know what data is reliable in China. SCMP is usually ok, as it is theoretically not state owned, but it is owned by a wealthy Chinese person, and hence may be subject to pressures. Other than that, there's some international agencies that seek to provide some data, but it's highly imperfect.

I can't tell how much China is slowing. It's significant, but we don't know the real details. I can't tell if growth rate is 5% or 2%. And it's not even mostly due to trade war. China was slowing for quite some time. The trade war however doesn't help things.

I am in HK however, which has been pushed by the protests into a bona fide recession. Maybe things will get better in a few months. Who knows. The protests are a funny thing because they are an artificially created, black swan event that has led to economic downturn. I empathize with the protesters' calls for greater say in their government. Sovereignty tho? That's crazy talk. US wouldn't allow NYC to secede if it so demanded. Overall I think most HK people sympathize with the protesters' demands but not the way in which they are seeking to achieve them (bombing subway stations and hospitals and beating up mainland Chinese people).

    • 5
Feb 19, 2020

Isn't Hong Kong a largely sovereign entity to begin with (they have a separate passport and everything)? Quite different from U.S. vs. NYC....

Most Helpful
Feb 19, 2020

HK is a special administrative district of China. It is not now nor has it ever been a sovereign entity. It was a British colony and protectorate, on a 150 year lease from China. In 1997, the lease was up, and HK was handed back to China. China smoothed the transition through the establishment of HK as a special administrative area, within China. As an official part of China since 1997, HK is supposed to be governed as "one country, two systems" for 50 years, after that it is theoretically supposed to be subsumed into China proper. HK operates under a system called the Basic Law, which was written to lay out the relationship between China and HK.

The protests are specifically in response to locals perceiving too little say in their government, and too much encroachment by mainland China into their HK freedoms.

To your point, not that the nature of a passport is a determinant of sovereignty, but the HK passport is not a sovereign passport, and it is stamped as "Hong Kong Special Administrative Region of the People's Republic of China."

From a pure government selection and rule-of-force perspective, HK is definitely not sovereign. Already there are several garrisons of Chinese troops that live, barrack and train in HK; one barrack is in Central HK downtown, and there are two other divisions, one in Yau Ma Tei, and another in New Territories. HK voters can elect local district-level officials and city government officials, but the chief executive of HK is selected by the people from a pool of candidates pre-selected by the party in Beijing. I wouldn't say that is very soverign, but nor is it a totally undemocratic system either.

I don't meant this sarcastically or disrespectfully, but you may want to Wikipedia it. But hopefully what I shared above gets you started.

    • 6
Feb 19, 2020
earthwalker7:

I'm in Hong Kong. My FT job ended due to the economic slowdown due to the protests 6 months ago. It was part of layoffs across the company, and I was assured it was not performance related, but rather an effort by the company to get thru the nuclear winter, and I was one of the more high-paid people. My company was uniquely exposed to the drop in tourism traffic which fell from 200k per day to 3k per day. **But the thing is, I didn't feel like I was maxing out my potential in Asia anyway. Not for years. **So maybe this is the chance to move back to USA that I had been waiting. I couldn't justify it when I was employed but now....

It's really hard to know what data is reliable in China. SCMP is usually ok, as it is theoretically not state owned, but it is owned by a wealthy Chinese person, and hence may be subject to pressures. Other than that, there's some international agencies that seek to provide some data, but it's highly imperfect.

I can't tell how much China is slowing. It's significant, but we don't know the real details. I can't tell if growth rate is 5% or 2%. And it's not even mostly due to trade war. China was slowing for quite some time. The trade war however doesn't help things.

I am in HK however, which has been pushed by the protests into a bona fide recession. Maybe things will get better in a few months. Who knows. The protests are a funny thing because they are an artificially created, black swan event that has led to economic downturn. I empathize with the protesters' calls for greater say in their government. Sovereignty tho? That's crazy talk. US wouldn't allow NYC to secede if it so demanded. Overall I think most HK people sympathize with the protesters' demands but not the way in which they are seeking to achieve them (bombing subway stations and hospitals and beating up mainland Chinese people).

My response to the bolder and echoing the OP....As a fellow professional with long Asia experience this is exactly what I tell everyone that has asked me about going to Asia.

It's less technically demanding and far more network driven (Ie. Who you know).

The big leagues are in the US if one cares about that (and frankly there is a lot more to life than work). But generally speaking the best and most challenging work and corresponding people (Ie. Talent) is NOT in Asia. Lots of folks spinning wheels there (once again there is more to life than work)...

    • 3
Apr 23, 2020

South China Morning Post mimicks the name of a very famous Chinese Newspaper, Southern China Weekly Report / Nan Fang Zhou Bao in Chinese. It is not the most reliable source for information regarding China. As someone who has been in the US for 8 years, I have yet found a very reliable Western source or an English media in general that covers China very well.
FT is okay. The Economist likes to trash talk on China.
Won't rely on SCMP.

    • 1
Feb 19, 2020

Yeah, my co-worker went to Singapore for 2 weeks and then was told she couldn't come back into the office for 2 weeks to ensure she had no symptoms of the virus. A complete headache for everyone.

Feb 19, 2020

I'm more concerned about the broader economic slowdown. The virus is temporary, and not something I'm concerned about. It's a bad cold, with a low fatality rate (albeit highly contagious). That's a sideshow. The real show is the economic slowdown of china and Hong Kong.

Feb 19, 2020

Always appreciate your comments on the region

Feb 20, 2020

fun graph of the day. HK tourism down from 200k visitors/day to now less than 3k/day. Rekt. Savage. Absolutely taken down

Feb 21, 2020
earthwalker7:

fun graph of the day. HK tourism down from 200k visitors/day to now less than 3k/day. Rekt. Savage. Absolutely taken down

Taleb: day of the Turkey.

CLASSIC

Feb 21, 2020

chicken run

Feb 21, 2020

I mean if you're trading asia at the moment you'd be pretty happy.

Commodity guys moving a tonne on basis plays, hedgies playing china bonds etc.

Just gotta know where the opportunity lies.

In terms of traditional deals - largely agree, the fading is kicking in, with the Virus accelerating this (see HNA takeover).

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