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Hong Kong authorities go all out to attract more family offices, but can it compete with Singapore?

Fearing Singapore is gaining the upper hand to attract family offices, Hong Kong has gone on the offensive to better sell the Special Administrative Region to the world’s wealthiest investors. But Hong Kong faces a big challenge in its efforts.

Singapore’s adept efforts to be a global hub for family offices has paid off. As Family Capital reported in February, 229 businesses in the city-state registered as family offices in 2020. 

No doubt promoted by Singapore’s success in this respect, Hong Kong’s director-general of InvestHK, Christopher Phillips, has just penned a comment on family offices for the SAR’s main English language newspaper, the South China Morning Post.

Entitled “Why Hong Kong is the ideal global hub for family offices”, Phillips lays out the SAR’s stall for family offices. His comment talks about why Hong Kong is attractive for family offices, like a great financial services sector, talented labour force, big investment opportunities, etc, etc, etc…

In the past, Hong Kong’s laissez-faire attitudes towards business meant the government and connected groups didn’t have to do much to attract capital, especially when it came to capital connected to its buoyant financial sector. Money flowed in with little effort, and everyone was happy.

But competition from Singapore, particularly in its efforts to become Asia-Pacific’s biggest hub for family office and related activity, has led Hong Kong authorities to fight back. InvestHK appointed a dedicated individual in charge of family offices last April, and local government officials are making plenty of positive noises about the sector. 

Of course, Hong Kong has a thriving family office sector, buoyed by local multi-millionaires and billionaires setting them up over the last thirty years. That has been added to by mainland China real estate and tech billionaires setting up family offices in the previous 20 years in the SAR. Also, as countless wealth surveys show, Hong Kong has one of the biggest concentrations of very rich people in the world. So there’s no shortage of demand for expertise in the family office world. 

But can the sector grow meaningfully in the years ahead? One area that must be irksome to a few in the financial sector in the SAR is China’s growing dominance in political and legal matters. If that dominance means Hong Kong’s rule of law is comprised, then international capital will think twice before parking their assets in the SAR. 

The recent toughening of Hong Kong’s national security law with the possibility of extraterritorial jurisdiction over all non-Chinese citizens through China’s legal system isn’t reassuring investors outside of China. 

So far, there’s minimal indication established family office operations are leaving the SAR, or setting up branches in other jurisdictions. But a sobering insight into the family office ecosystem in mainland China was recently provided by an article about the lack of family offices in Beijing, despite the city having one of the biggest concentrations of billionaires in the world. 

On the whole, China doesn’t like its wealthy citizens to set up family offices and gain too much independent power through them. And as China’s grip on Hong Kong increases, that attitude it could negatively affect the SAR’s well-established family office sector. 

Singapore is no doubt watching carefully. 

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