One of HSBC's lion statues stands outside their Hong Kong headquarters, in the Central district of Hong Kong on Aug. 4, 2019.LAUREL CHOR/AFP/Getty Images
Part of Hong Kong’s allure is the city is all about business.
Embracing commerce turned an unremarkable fishing port into a global financial centre. Against that backdrop, it’s no surprise the city’s two major homegrown banks – HSBC Holdings PLC and Standard Chartered PLC – endorsed new security laws imposed by China last week, ending a tradition of neutrality on Hong Kong politics.
Canadian corporate clients who look to HSBC because of its deep roots in China (Standard Chartered exited the Canadian market in the 1990s) wouldn’t want the bank to play this any other way.
HSBC shifted its headquarters to London in 1993, but it became the world’s seventh largest bank, and the seventh largest in Canada, in large part by facilitating Asian trade. A list of HSBC’s major Canadian clients reveals names such as Sun Life Financial and Bombardier – companies that clearly value the bank for those China ties.
Like HSBC, Sun Life and Bombardier have ventures in China that rely on partnerships with local entities and the goodwill of the Chinese government. At Sun Life, that’s a joint-venture insurance operation that increased sales by 48 per cent in 2019 by tapping 13,400 agents in the country. For Bombardier, expansion in China includes 13 rail manufacturing and maintenance ventures, and an aviation unit that has supplied a third of China’s business jets.
If HSBC weren’t doing business with these companies in China, rest assured that rivals such as Bank of Montreal or Royal Bank of Canada would be thrilled to serve them from long-established offices in Beijing.
HSBC’s explanation of its Hong Kong policy this week rings true for any Canadian company with significant operations in China. It said in a statement: “We respect and support laws and regulations that will enable Hong Kong to recover and rebuild the economy and, at the same time, maintain the principal of ‘one country, two systems.’ ”
The bank made this statement after its Hong Kong branches and ATMs were repeatedly vandalized in protests that started last year. And two iconic lion sculptures that have marked HSBC’s Asia headquarters since 1935 were spray-painted and set on fire.
To back up the message, HSBC’s chief executive in Asia, Peter Wong, showed up on social media signing a petition that supported the new rules. Two trading houses – Swire and Jardine Matheson – that also trace their roots to Hong Kong’s early days as a British colony also came out in support of Beijing’s policies.
Again, it all comes down to business. Faced with similar choices, Canadian CEOs have consistently put the potential profits that come from strong ties to China’s economy ahead of concerns with the government’s human-rights record.
In the 31 years since the Tiananmen Square massacre, any Canadian company with global ambitions has launched a strategy for breaking into the Chinese market. Canada Goose sells 20 per cent of its parkas in the country, while Clearwater Seafoods sells a quarter of its lobster and shellfish to Chinese diners.
HSBC is far and away the largest foreign-based bank in Canada. The operation here is run out of Vancouver, and the bank has $107-billion in assets in this country, along with 130 branches and 5,000 domestic employees.
Last week, incoming HSBC Canada chief executive Linda Seymour, who the bank announced last week will take the top job on Sept. 1, said: “Our vast international network means we offer something unique and powerful to Canadian individuals and companies with international aspirations.“
While global corporate clients may value its international ties, most Canadian customers embrace its former marketing slogan that portrayed HSBC as “The world’s local bank.” (That catchy tagline was dropped in 2016, when HSBC scaled back international operations. The slogan these days is “Together we thrive.”)
The bank is a significant commercial lender in Canada – recent high-profile projects including financing a $718-million privatized highway in Nova Scotia. HSBC will continue making those local loans and doing international deals while navigating Asia’s shifting politics, a balancing act the bank has pulled off since it was founded 155 years ago.
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