Abandoned by Magnificent 7, Hong Kong Becomes Increasingly Disconnected From Western World

As the 7 most influential global tech companies gradually abandon Hong Kong, it is expected to become isolated.
Abandoned by Magnificent 7, Hong Kong Becomes Increasingly Disconnected From Western World
The HKTDC International ICT Expo was held at the Hong Kong Convention and Exhibition Centre on April 12, 2023. Sung Pi-lung/The Epoch Times
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Hong Kong was once a bridge for American capital to enter China under the “one country, two systems” policy. However, in recent years, as U.S. tech companies have stopped launching new products in Hong Kong, it has become increasingly disconnected from the Western world.

In response to the continuous rise in the stock prices of U.S. tech giants, the U.S. investment community has coined a new term, “Magnificent 7,” consisting of Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL, Google’s parent company), Nvidia (NVDA), Amazon (AMZN), Meta Platforms (META, Facebook’s parent company), and Tesla (TSLA).
The total market value of these seven stocks is close to $13 trillion, whereas the total market value of the Hong Kong stock market is only about $3.88 trillion. The entire Hong Kong stock market is only about two of these tech giants’ market capitalizations, indicating their significant financial and technological influence.

In the past, American tech giants were keen to come to Hong Kong, primarily in preparation for entering China. In 2011, Apple listed Hong Kong as one of the first release locations for the iPhone 4s in the Greater China region and opened its flagship store in the city. In 2014, Facebook opened an office in Hong Kong after making its platform available to Hongkongers since 2006.

However, with deteriorating U.S.-China relations over the past three years, Hong Kong has become closer to Beijing. On July 14, 2020, former U.S. President Donald Trump revoked Hong Kong’s special tariff status and special economic treatment. Subsequently, the Biden administration’s technology and chip bans for China included Hong Kong, leading U.S. companies to move out of the special administrative region.

One well-known example is the chip company Nvidia, whose stock prices surged due to the production of AI chips. Nonetheless, since the U.S. government’s initial version of the AI chip ban in October 2022, which prohibited major companies like Nvidia from supplying high-end AI chips such as A100 and H100 to Chinese customers, Nvidia introduced the low-end A800 chips specifically for the Chinese market.

In October 2023, the U.S. government tackled the loopholes in the restrictions, banning low-end chips. Even the gaming graphics card RTX4090 is banned from being supplied to China.

In March, the White House further modified export restrictions, banning the export of laptops with high-end chips to China. The ban includes Hong Kong and Macau, making Hong Kong unable to be the bagman anymore.

In early 2023, Taiwan’s Economic Daily News reported that semiconductor technology giants Nvidia and AMD had moved their finished goods warehouses from Hong Kong to Taiwan.

Magnificent 7 Abandons Hong Kong

Other than Nvidia, the other six of the “Magnificent 7” are not optimistic about the Hong Kong market as well, partially because the city’s local regulations prevented the formal launch of the most popular AI concept in the past two years: large language models (LLMs).

Bard and Gemini, launched by Google, are available in over 150 countries, not including Hong Kong and China.

Microsoft’s OpenAI-supported free LLM, Bing, does not explicitly prohibit Hong Kong users from using it, but some users in Hong Kong have been blocked by Microsoft, and Bing’s image search function is not available to Hong Kong users.

OpenAI, which collaborates with Microsoft, launched its product ChatGPT in November 2022. OpenAI decided not to make it available to Hong Kong in May 2023, a stance that continues to this day.

Meta’s WhatsApp and Threads have been removed from mainland China. The company’s Meta AI is only available to users in the United States and 13 other countries. If Meta follows the practices of other AI companies, it will very likely not offer services in Hong Kong.

Apple still regards Hong Kong as the first release location for the iPhone, but starting with the iPhone 14, which features built-in satellite emergency services, Hong Kong is treated the same as China, with versions sold there not equipped with satellite connectivity. The subsequent iPhone 15 follows suit. At the request of Beijing, Apple removed WhatsApp and Threads from its app store in mainland China on April 19.
Apple's new iPhone 11 phones are displayed at the Apple Store in IFC, Central district, Hong Kong, on Oct. 10, 2019. (Athit Perawongmetha/Reuters)
Apple's new iPhone 11 phones are displayed at the Apple Store in IFC, Central district, Hong Kong, on Oct. 10, 2019. Athit Perawongmetha/Reuters

Amazon does not operate its electronic commerce and e-book business, Kindle, in Hong Kong. In 2004, Amazon officially entered the Chinese market with the acquisition of Joyo.com for $75 million, but Amazon.cn and its Kindle e-book ceased operations in 2019 and 2023 respectively.

Elon Musk, the CEO of Tesla, which has a factory in China, has not restricted the operation of new products in Hong Kong and China. However, another unlisted company under his control, the satellite network provider Starlink, has no plans to operate in China and Hong Kong and will expand its network to Singapore this year.

The financial industry in Hong Kong is shrinking, with nearly 200 Hong Kong bankers being laid off in the past year, and the amount raised through IPOs in Hong Kong has fallen to the tenth globally.

One strategy to overcome the current predicament is to develop technology. Nevertheless, many countries are strengthening their investment in technology, leaving Hong Kong without an advantage.

Based on a report from the European Union (EU), the EU’s total research and development (R&D) expenditure to GDP ratio is 2.24 percent, compared to the 3.46 percent of the United States, 3.34 percent of Japan, and 2.41 percent of China, while the R&D expenditure to GDP ratio of Hong Kong was only 1.07 percent in late 2023.

Hong Kong’s innovation and technology sector was lagging behind to begin with. With lower R&D expenditure compared to other countries, the chance of it catching up seems dim. As the seven most influential global tech companies gradually abandon Hong Kong, it is expected to become increasingly disconnected from the Western world.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.