Nearly half of foreign business plans to leave Hong Kong

Some companies will fully relocate within the next year

(CNN) - Foreign businesses have for decades reaped the benefits of setting up shop in Hong Kong, a historically stable, expat-friendly finance hub at the doorstep of mainland China.

But lately, as Beijing has tightened its grip on the former British colony, those firms are increasingly eyeing the exits.

Nearly half of all European businesses in Hong Kong are considering relocating in the next year, according to a new report. Companies cite the local government's extremely strict Covid-19 protocols that mirror those on the mainland.

Among the firms planning to leave, 25% said they would fully relocate out of Hong Kong in the next 12 months, while 24% plan to relocate at least partially. Only 17% of the companies said they don't have any relocation plans for the next 12 months.

The city's "zero Covid" strategy led to severe consequences for businesses and residents, the report from the European Chamber of Commerce said.

Hong Kong's "biggest advantage" - its global connectivity and proximity to mainland China "has been almost completely disabled," the Chamber said.

Hong Kong's quarantines are notorious among residents and expats. At one point, the government required most inbound travelers to self-isolate in hotel rooms, on their own dime, for three weeks, one of the world's longest isolation periods.

Although Hong Kong officials recently lifted flight bans and scaled back the city's quarantine requirements down to seven days, an exodus is already playing out.

Last week, Hong Kong Chief Executive Carrie Lam acknowledged that the protocols were eroding residents' satisfaction with the city, saying she had a "very strong feeling that people's tolerance is fading."

The European survey released Thursday tracks with a similar report from the American Chamber of Commerce in January, which found that 44% of expats and businesses are likely to leave the city, citing Covid-related restrictions.