FedEx Corp, one of the three biggest express parcel shipping companies along with UPS and DHL, reportedly is moving its Asia-Pacific regional headquarters from Hong Kong to Singapore to achieve “greater speed and agility.”
Kawal Preet, regional president of FedEx Express, will be relocated to Singapore, Bloomberg reported, citing an unnamed staff member; some other Hong Kong-based executives will move to Singapore in September.
The American courier said in an emailed statement cited by Bloomberg that it can connect its Asia Pacific, Middle East, and Africa (AMEA) operations in Singapore with greater speed and agility. It said fewer than 15% of its positions in Hong Kong will move to Singapore while it will retain a “significant” presence and leadership roles in the special administrative region.
The company said some roles that don’t need to be situated in the headquarters city will shift to Malaysia or India to save costs.
Commentators said some foreign companies leave Hong Kong because they are not sure whether they will be targeted one day by China’s national security probes or by the United States’ secondary sanctions, given that the Sino-US political tensions are rising.
“The relocation of FedEx’s regional headquarters deals a blow to Hong Kong, which always highlights its status as an international logistics hub,” Chau Sze-tat, a Hong Kong political commentator, says in his YouTube channel. “The company moves its senior executives to Singapore, showing that it sees a decline in Hong Kong’s value as a regional logistic hub.”
“When foreign firms were leaving Hong Kong in the past three years, the government could still blame the pandemic for their departures,” Chau says. “But if they are still leaving the city after all Covid rules have ended, it shows that Hong Kong’s long-term business environment has deteriorated. Some foreign firms are worried about the National Security Law.”
He says the fact that FedEx was probed by the Chinese government in 2019 for holding back Huawei Technologies’s parcels may be a factor in the US courier’s relocation of its regional headquarters.
On May 27, 2019, Huawei said it was reviewing its relationship with FedEx after the American courier inexplicably diverted two parcels destined for Huawei offices in China to the US and also attempted to reroute two others. On the following day, FedEx apologized for mishandling Huawei’s parcels and said it had not received any external pressure demanding transhipment.
Early in the following month, June 2019, the Chinese government said it was investigating FedEx in response to the issue Huawei had raised about misrouted parcels. A little later, in late July, it said FedEx might have held back more than 100 packages that were being sent to Huawei.
The incident was politically sensitive as it happened after Huawei Chief Financial Officer Meng Wanzhou had been arrested in Canada in December 2018 on charges of violating US sanctions. Meng was released in September 2021 after a legal settlement with the US court.
Sino-US tensions had grown after anti-extradition protests broke out in Hong Kong in June 2019. On September 12, Todd Hohn, a FedEx Express pilot and a retired US Air Force colonel, was detained at the Guangzhou Baiyun International Airport for carrying a box of air gun pellets during his departure, according to the Chinese foreign ministry. He was granted bail but placed under investigation for smuggling ammunition.
Hohn was allowed to leave Guangzhou on June 27, 2020, just days before the National Security Law was implemented by Beijing in Hong Kong on June 30.
Anthony Leung, managing director of FedEx Express Hong Kong and Macau, told HK01.com in an interview in December 2020 that he had confidence he could run the express business in Hong Kong, despite the unstable global situation.
Commenting on Hong Kong’s business environment, Leung said Hong Kong is an international financial centre with many advantages, including a prime location, zero tariff and simple customs procedures. He said FedEx would continue to keep its Asia Pacific headquarters in Hong Kong, with its senior management and supporting staff working in the city.
But in January 2021, FedEx started relocating its Hong Kong-based pilots to San Francisco, saying that its operations were affected by the Asian financial hub’s strict Covid rules. In November 2021, it said it was shutting its crew base in the city.
Although Hong Kong ended all its anti-epidemic rules in late 2022, deteriorating US-China relations continue to create operational risks to Hong Kong-based foreign companies, said some commentators.
In February of this year, the US sanctioned five Chinese firms, including one in Hong Kong, for allegedly providing services and products to the Russian military. Last month, it sanctioned 12 Chinese firms, mostly based in Shenzhen, for shipping electronic parts through Hong Kong to Russia.
Besides, Chief Executive John Lee said in January that Hong Kong will pass additional national security legislation, under the requirement of the Basic Law’s Article 23, by the end of 2024.
The current National Security Law covers offenses including secession, terrorism, subversion against the central government and collusion with foreign powers. The new legislation will target treason, sedition and theft of state secrets, as well as spying activities.
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