After the government’s relentless effort to
stamp out the virus, there were no local infections, bars began ordering kegs
of his lager again, and money was coming in. “You saw the silver lining,” said
Lam, 34.
That changed this month when omicron started
spreading, and officials returned to the trusted zero-COVID playbook that Hong
Kong shares with mainland China. Restaurants were forced to shut down by 6 pm
Small animals were culled. Flights from eight countries were suspended. Imports
came to a standstill.
Hong Kong is chasing the same dogged virus
strategy as China, hoping this will strengthen ties to Beijing and allow it to
declare victory over COVID-19. But in the process, a place once known as
“Asia’s World City” has cut itself off from the outside world, crushing an
economy reliant on international trade at a time when the global supply chain
is already deeply strained.
Now, local businesses that held on through
several outbreaks are trembling as their high-flying metropolitan hub
transforms into what feels more like another isolated Chinese city.
Hong Kong has reported around 300 cases of
omicron, most detected from overseas visitors during their quarantine. In
recent days, however, local infections have jumped and emerged from unexpected
origins, putting health officials on edge. In all, it has recorded 13,096 virus
cases and 213 deaths since the start of the pandemic.
These low numbers have been too much for
Beijing’s zero-tolerance line, a seeming prerequisite for Hong Kong to reopen
its border with China — a top priority for local officials who are under
pressure to make the former British colony more like the mainland.
The fallout for local business has been
staggering. Economists at Wall Street banks have lowered their estimates of the
city’s economic growth for the year. Fitch, the ratings agency, warned that the
ban on foreign travel would severely threaten Hong Kong’s economic future.
In the days after the city announced its
latest virus measures, several small businesses, including a rotisserie chicken
chain, a popular wine bar, a craft beer shop and a gastro pub, said they would
close. Lam said he is determined that H.K. Lovecraft, his brewery, is not next.
“I’ve tried to hold out as long as possible,”
he said, “but we are losing money.”
Just a few years ago when he was studying to
become a brewmaster in Germany, Lam had much bigger dreams: “I wanted to have
something that belongs to Hong Kong, that is locally made,” he said.
He returned to the city and, with his own
money, built a brewery with special equipment shipped from Germany. If he had
known what was to come, he might have waited, he said. “It seems like it’s not
getting any better, and there have been times when I have been pondering how we
should proceed.”
Even before the latest round of virus measures
in Hong Kong, the cost of shipping malts and hops had become a challenge for
many brewers. When the pandemic put pressure on the global supply chain, prices
soared.
Ships stuffed with raw materials remain stuck
at sea. There are more delivery trucks than there are drivers.
Ian Jebbitt, who started a Hong Kong brewery
called Gweilo Beer in 2015 with his wife and a friend, said before the pandemic
he used to pay around 2,000 euros for a container of hops. “I just agreed to
pay 15,500 euros,” he said, or more than $17,500.
The rising costs of goods, rent and labour, as
well as the lockdown measures, have made Hong Kong one of the hardest markets
in which to operate, said Jebbitt, who has expanded his business to other
markets, including Britain and Australia. “I am surprised there haven’t been
more casualties.”
The Hong Kong Association of Freight
Forwarding and Logistics said the city’s 21-day quarantine and the effort to
stamp out omicron have created a deficit of aircrew that will most likely cause
prices to go up by 30% to 40% in the coming weeks.
Carrie Lam, the city’s chief executive, has
acknowledged the problem and warned that the cost will be felt by everyone. “We
almost have no goods entering via cargo flight,” she said last week.
Motorino, a popular pizzeria with two
locations in the city, is running out of tomato sauce.
A pallet of the sauce left Naples, Italy,
several months ago but has been delayed four times, said Syed Asim Hussain,
co-founder of Black Sheep Restaurants, the group that owns Motorino and 28
other restaurants.
The number of diners is dwindling, too.
When he calculated his daily revenue across
all restaurants after the new pandemic restrictions were announced, Hussain
said it was less than what one of his restaurants brought in at lunchtime just
a month ago.
In the background, Hong Kong is still
navigating the aftermath of the 2019 pro-democracy protests that divided the
city and his 1,000 employees.
At Carbone, another one of Hussain’s Italian
restaurants, December was punctuated by farewell dinners for people leaving the
city, rather than raucous holiday parties. “No one in business school teaches
you how to deal with two black swan events like this,” he said.
Another obstacle to relaxing COVID-19
restrictions is the city’s vaccination rate, which is low compared with many
developed countries. Only 70% of residents are fully vaccinated, with many
saying they are suspicious of the government.
The estimated loss for the current virus
measures, which are expected to last for several more weeks, is at least $1.2
billion over a four-week period, according to Tommy Cheung, a legislative
councillor who represents the catering sector in Hong Kong.
“This isn’t going away like SARS,” he said,
referring to severe acute respiratory syndrome, which devastated Hong Kong in
2003 and helped shape the city’s response to COVID-19. “This is one tunnel
where I don’t see the light at the end. All these restaurants that ask me to their
ribbon cutting, I keep saying that, ‘You guys are too damn brave.’ ”
Carrie Lam last week announced a $500 million
pandemic relief fund for restaurants, retailers and travel agencies, but many
businesses say it won’t be enough.
Rob Cooper, who owns four restaurants under
the Enoteca Group, said he received four rounds of government support between
November 2020 and May 2021 but managed to break even in this year only because
of generous landlords and some savings.
Now that fewer chefs and other restaurant
workers are willing to move to Hong Kong and brave the quarantine, he is unsure
he will be able to survive another outbreak under the zero-COVID policy.
“We’ll never open up,” Cooper said. “The next
variant is around the corner. That’s just science, isn’t it? How do you open up
an economy if everything is imported? The rest of the world is riddled with
omicron.”
For Hussain, a fifth-generation Hong Konger,
losing the small mom and pop restaurants, diners and outdoor eateries that make
his home so vibrant will irrevocably change the city.
“The old-timers assure me that we are going to
be OK. But I worry as a restaurateur, as an entrepreneur,” he said. “I worry
about the soul of the city.”
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