2024 European Business Sentiment Report
European Chamber of Hong Kong | 2024 European Business Sentiment Report
Analyst: Anders Petterson
Pages : 400 +
This report showcases the voice of the European community in Hong Kong. Its foundation are the responses to 2024 survey on Business Sentiment in Hong Kong. The survey’s results were analysed and visualized in collaboration with our partner, Phrasia. Phrasia provides advanced LLM based signal intelligence services. Quantitative, text-based answers to our survey were analysed to produce quantified values and visual data maps. Our collaborative report analyses the survey results and showcases current and forward-looking sentiments about the business landscape in Hong Kong.
We will begin the report with an overview of the composition of the survey’s respondents and responses. Most responses included what made Hong Kong attractive, regardless of the survey question. This suggest that Hong Kong’s positive aspects may still be top of mind for many in the business community. We identified four areas that make Hong Kong attractive and explain them in the first half of this report.
Following that, we explored drivers underlying current and future views about Hong Kong. Using Phrasia’s narrative map visual, we analysed clusters of opinions. At the high level, we identified three relative clusters of opinions about Hong Kong. These are general opinions. At a more granular level, we identified specific drivers of opinions and analysed them by behavioural category, as well as by industry. This constitutes the later part of the report.
Given the visual and interactive nature of the narrative maps and graphs included in this report, we encourage our readers to toggle with the interactive figures below. The narrative map, for example, can be viewed at different levels of detail, revealing different emergent clusters of sentiments.
Response Overview
Our survey link was publicised through The European Chamber of Commerce’s newsletter. It remained open for participation between July 2024 and October 2024.
Number of Respondents and Responses
A total of 100 respondents completed our twelve-question survey. The survey contained five mandatory multiple-choice questions and six non-mandatory open-text questions. For each open-text question the responder chose to answer, they were asked to enter a minimum of five words. We received 548 responses from the optional open-text survey, coming from 100 (respondents).
Response Composition by Respondents’ Length of Stay in Hong Kong
The vast majority of responses came from people who have stayed in Hong Kong for over five years:
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85% of responses came from those who stayed over five years.
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13% from those who stayed under five years.
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2% did not specify their length of stay.
Response Composition by Respondents’ Industries
Nearly a third of responses came from people in the Finance industry.
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27% of responses came from those working in Finance.
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12% from those working in Technology.
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7% from those in Retail.
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4% from those in Hospitality.
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3% from those in Healthcare.
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3% from those in Education.
Response Composition by Respondent’ Employer
Nearly four out of every ten responses came from those who were employed at European Companies.
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39% of responses came from those employed by European companies.
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14% from those employed by Company headquartered outside Europe or Hong Kong.
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11% from those employed by Hong Kong based companies.
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11% from those self-employed
Response Competition by Cultural Background
More than two in three of all responses came from those who identified as European.
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71% of responses came from those who identified as European.
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16% from those who identified as non-European.
What makes Hong Kong Attractive?
Respondents expressed a notable number of “likes” about Hong Kong and seemed eager to share their positive expressions. Of the six survey questions, only one specifically asked a “like” question (“What do you like about living in Hong Kong?”). However, when analysing responses across all questions, “like” responses accounted for one of five of the total response content.
By calculating the total excess share of “like responses, we find that “likes” contributed to an additional 17% beyond the combined average share of responses from the other five questions. In other words, excess share of “like” responses represented was equivalent to the entire share typically attributed to one average question!
Four clusters emerged from responses to the “like” question. We will dive into each.Of the four categories, the top one were responses about liking that Hong Kong “Had it all”, it made of up nearly four in every ten responses.
39%
of responses highlighted Hong Kong “Has it all.”: Vibe and Quality.
36%
emphasised Ease and Efficiency
15%
focused on Business Dynamism
10%
noted Hong Kong as a Comfort Zone: Safety and Reliability
Main Worries or Concerns
The 2024 European Business Sentiment Report is supported by narrative analytics from Phrasia. The views expressed by our members and stakeholders—in their own words—offer valuable insight into the business landscape. Deep-learning-based Narrative Analytics quantifies themes, patterns, and experiential drivers within the open-text responses to our business sentiment survey.
How are People and Companies Looking Ahead?
Putting likes and concerns aside, we asked open-ended questions to get a forward-looking view:
What are your thoughts about the outlook for the city for the next 5 years?
Question 1
To the best of your knowledge, what are the plans of your company/employer regarding its’ physical presence, resource investment, and headcount in Hong Kong?
Question 2
How crucial is the strategic location of your headquarters?
Question 3
How are you preparing for the next 5-10 years in the city?
Question 4
346 of the resulting open-text responses were categorized via Narrative Analytics, forming a “narrative map”.
Why are we using this methodology?
For the respondents, there are a high number of possible drivers of their decision – more than a survey designer would reasonably be expected to identify. Even if they could, a traditional survey method would involve a large number of closed questions to cover multiple bases - which would make it harder for us to get a reasonable response rate/completion rate from our members.
For the chamber, allowing open-ended responses, eliminate blind spots and survey bias, because people write what they want to write. Reviewing the open-text responses through narrative analytics allows organizations to hear the things that may be hard to identify – detecting broader patterns which are unique to this set of responses - and more clearly identifying drivers. Finally, it allows us to ask significantly fewer questions – improving the response and completion rate.
Narrative Axes:
The High-level Shape of the Conversation
Figure 1: 9 Cluster Narrative Map: The High-Level Shape of the Conversation.
The map reveals high level axes, as well as detailed clusters. None of the categories or axes are preset – they are formed based on similarities and differences in views expressed by the EuroCham community – factoring trillions of possible combinations. Said another way, the categories and axes are decided by the respondents – not by the tool or the researcher.
The high-level themes are the type of thing that we might not have known to look for. Minimising change, versus anticipating change, on the vertical axis, and regional strategy vs local pragmatism on the horizontal axis. Across all the questions above, these axes reveal different “postures” that companies and individuals are taking as they assess their plans and outlook.
The Vertical Axis:
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Minimising Change: Can We Maintain? (18.2% of responses)
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Anticipating change: Can We Adjust? (19.1%):
This axis contrasts a more defensive posture in which people or companies are trying weather the storm – mostly by focusing on internal controllables like cost - and a more dynamic, outward-looking approach in which they assess and respond to external changes. No value judgement is made – this is merely a contrast in posture. The number of responses in the top vs bottom cluster are similar – almost equally balanced between these two approaches.
The Horizontal Axis:
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Regional Strategy: Longer Term (18.5% of responses) – vs
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Local Pragmatism: Here and Now (12.7%):
This axis is relatable for those who have navigated the ‘regional vs local’ matrix within large organizations. In most companies, forward planning necessarily involves a wider strategic lens on the business within the wider region, in keeping with Hong Kong’s status as a hub. By contrast, doing business locally can involve very pragmatic considerations – particularly for businesses in the retail sector, for example. Further, Hong Kong can have a decidedly pragmatic character.
The Centre Cluster:
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Calibrating Plans/Gauging Confidence in HK with Elsewhere (31.5% of responses):
This cluster gets to the heart of the issue, which is why it is in the center – between the poles of the two axes. It shows that respondents are very actively calibrating their stance on Hong Kong – versus other geographic options.
The Detailed Narrative Themes:
What are the Specific Drivers?
Figure 2: Bar graph quantifying themes in Figure 1.
With the high-level axes detailed in Figure 1, a more detailed view emerges of themes within the survey responses. The themes correspond to those in Figure 1 — and are quantified in the Figure 2 a bar graph. Below are descriptions of the above 9 narrative clusters, all of which occur in context of the high level axes noted above – from the largest to the smallest
Stability Seeking:
This cluster reflects a defensive posture – for the most part focused on managing the costs and other controllables in order to weather the storm. Some respondents in this cluster take a cautiously adaptive approach as they navigate an uncertain environment – while some are relatively passive, merely hoping for the best. Action planning is cautious, spanning minimal changes to operations for some, and methodically planned contingencies for others. With that said, nobody in this group is not jumping to conclusions. The concept of a "new normal" is frequently mentioned, with businesses adjusting costs and operations to remain profitable despite reduced activity.
Contingency Planning:
A significant number of respondents are considering relocating to other regions. While some plan to remain for a few more years to fulfill educational or business commitments, many are diversifying revenues, saving money, or moving capital – in order to maintain flexibility if and when a move is required. Despite challenges, some respondents remain committed to staying, citing factors like low taxes, good connectivity, and strong business ties, while others are preparing exit strategies based on personal or professional needs.
Trends by Narrative Cluster
Sentiment by Narrative Cluster:
Figure 3: Bar graph of sentiment composition(y) by narrative cluster(x)
Sentiment scoring has limitations when used in isolation. It is best used to look at relative differences rather than as a judgement overall of how positive vs negative people are. However, it does help us to assess relative sentiment by cluster. ‘Potential of mainland integration’ had the most positive sentiment, along with ‘HK importance’. The least positive are ‘contingencies/possible move’ and ‘stability seeking/trying to maintain’.
Expressive Energy by Narrative Cluster:
Figure 4:Bar graph of Expressive energy composition(y) by narrative cluster (x)
When people are emotionally involved in an issue, they tend to write more. The average word count can tell us a great deal about where the expressive energy and intensity are. In this case,” Can HK come through” and “Adjusting based on HK trajectory” have the highest expressive energy. This suggests the members taking the survey are highly vested in the path forward for Hong Kong
Trends by Narrative Cluster
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39%
of responses highlighted Hong Kong “Has it all.”: Vibe and Quality.