Why Are Chinese Tech Companies Expanding into Hong Kong?
Image credit, Yunji
A delivery robot stops as a lift door opens in the lobby of a Hong Kong hotel, and a guest steps out. The robot waits before entering again.
This appears straightforward but is actually quite complex. In a busy hotel with an international network, the robot must accurately understand the building’s layout to navigate effectively. Yet the fast pace of the hotel never slows it down.
People frequently walk by, and the lift must arrive at the correct floor and find the appropriate room.
The company behind this robot, Yunji, is a technology firm based in mainland China, viewing Hong Kong as an opportunity for business expansion.
“We want to succeed with our product in Hong Kong and then aim to expand into international markets,” said Vice President Xi Yunpeng.
Fear of ‘Chinese Risk’
Hong Kong plays a crucial role for Chinese tech companies by providing a platform to raise capital, test products with foreign clients, and build credibility for international expansion.
This is vital as the US and European nations have become increasingly cautious towards Chinese firms. Critics express concerns about ‘Chinese risk,’ fearing government espionage and extensive Chinese dominance in technology sectors.
With restricted access from mainland China, tech companies find it difficult to tap into international markets for capital, customers, and trust. Thus, they seek to establish themselves first in Hong Kong.
Last year, the number of Chinese companies listed on the Hong Kong Stock Exchange rose by 153% from 30 to 76 in 2024, according to a report by PricewaterhouseCoopers.
Hong Kong’s ‘Invest Hong Kong’ initiative to promote investment in the Special Administrative Region reported an increase in the number of Chinese firms establishing or expanding there.
Image credit, Yunji
Eurasia Group political advisor Xiang Lu states that Chinese tech companies prioritize Hong Kong for listing due to geopolitical challenges.
“Today, Hong Kong offers the best hope to attract global investors and establish itself as a relatively independent player beyond mainland China’s borders,” she said.
Wendy Chang of the Germany-based think tank Market Institute for China Studies describes Hong Kong as a strategic shield connecting Chinese companies to the external world.
China’s Priorities
Beijing is focusing on increasing technological self-reliance, with a strong emphasis on Hong Kong.
Reducing dependence on foreign hardware and software is now central to China’s economic policy, especially in artificial intelligence and semiconductors.
The 15th Five-Year Plan treats technology not only as an economic priority but also as a strategic one in view of tensions with the United States.
Image credit, AFP via Getty Images
Paul Triolo, a partner at global consulting firm DGA in Washington, says Hong Kong’s strategic importance has grown.
Alessia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis, states that Hong Kong helps mainland Chinese companies meet international standards and builds trust with global investors and clients.
For Yunji, this means certifying that their robots can operate internationally according to global standards. Serving hotels, hospitals, and factories, the company was listed in Hong Kong in October 2023 to expand its capital base beyond the mainland.
Chinese AI software company MiningLamp Technology also began operations in Hong Kong that month. Founder Wu Minghui describes Hong Kong as a “data compliance transfer station,” where mainland firms test cross-border data flows and regulatory compliance before entering other markets.
Remaining Risks
Even if mainland companies succeed in Hong Kong, they may still face challenges abroad.
The US and European governments have tightened national security reviews on Chinese investments and technology to ensure data access and critical infrastructure protection. Countries like the US and UK have imposed restrictions on Chinese telecom suppliers.
Western nations express broad concerns regarding the governance and transparency of Chinese companies.
Meanwhile, Hong Kong is less attractive to international companies and investors than before. After pro-democracy protests in 2019, security laws have been strictly enforced.
Many activists, opposition leaders, and journalists have been arrested or imprisoned under security or other laws.
Officials in Beijing and Hong Kong say these measures were necessary to restore stability and order, but critics argue they have curtailed political freedoms.
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