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 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.
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.
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.
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.
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.
