“Since [the bay area] has a huge size in terms of [gross domestic product] … many Japanese businessmen believe that there’s a huge opportunity for them,” Okada said. “That is why they are still here.”

The bay area is Beijing’s ambitious plan to integrate Hong Kong, Macau and nine southern mainland Chinese cities into an economic powerhouse. The combined GDP of the region reached 13 trillion yuan (US$1.2 trillion) in 2022, according to the Constitutional and Mainland Affairs Bureau.

Okada said Hong Kong would make a “great base” for Japanese companies doing business in the bay area, noting that a number of firms in industries such as logistics and healthcare were already operating in cities in the region, later noting how Japanese firm Yusen Logistics was taking part in the Hong Kong International Airport Logistics Park Initiative in Dongguan.

He also highlighted that Hong Kong and Japan shared similar experiences with ageing societies and that the fight against climate change presented new business opportunities.

“We can offer a lot of things to Hong Kong,” Okada said. “I think these are good opportunities in front of us.”

Hong Kong Japanese restaurants lose patrons as they jet to the country on holiday

Japanese companies have faced heightened pressure to relocate out of the city in recent years.

According to a biannual survey co-conducted by the consulate, 46.8 per cent of Japanese companies were “ordered or urged to consider” by their headquarters to scale down their Hong Kong operations in the first half of this year, down from 50 per cent in the second half of 2022, but up from 42.9 per cent in the second half of 2021.

The same 2023 survey also showed that 45.2 per cent of respondents were concerned about the Beijing-imposed national security law, with about two-thirds saying it had put pressure on securing talent.

Hong Kong commerce chief says 186 companies have set up shop in city in 5 months

The number of Japanese nationals living in Hong Kong has declined by about 5 per cent since 2019 to 22,930, according to data from the country’s foreign ministry.

The drop coincides with a wider talent exodus in Hong Kong. The city lost 210,000 workers between early 2019 and the end of 2022.

But Okada said he felt the departure of Japanese talent was “hitting the bottom”, noting the population had only declined by 1 per cent this year, while pointing out that more Japanese businesses were entering the Hong Kong market despite concerns over the security law and the talent exodus.

According to the latest data, the number of Japanese companies with regional headquarters or offices in Hong Kong rebounded to 1,403 this year, the second highest tally on record since the 1,413 reported in 2019.

“I think the pressure has actually already mitigated, gradually, so I think I can be more optimistic about the future,” Okada said. “We are still keeping our presence in Hong Kong.”

But while business confidence may be returning, the same cannot be said for tourism. Only 250,213 Japanese tourists came to Hong Kong in the first 10 months of the year – a far cry from the more than 1 million who visited over the same period in 2018.

Although Okada acknowledged high prices in Hong Kong could discourage tourists, he said the city had not been able to shake poor perceptions developed in Japan following the social unrest in 2019 and the subsequent imposition of the national security law.

“Unfortunately, the image of Hong Kong in Japan [is] really negative,” Okada said. “Many people in Japan, including business elites, almost believe that Hong Kong is already a part of [mainland] China, [that] there is no difference between Hong Kong and [mainland] China.

“For example, when I went back to Japan the other day some of my friends asked, ‘can you use the internet in Hong Kong?’ ... That is a very unexpected question, but they are serious.”

Hong Kong business chiefs confident in economic rebound, city’s finance hub status

Okada said the Hong Kong government should devote more resources to promoting the city’s “unique” characteristics, including its “great judiciary system”.

He also encouraged the government to facilitate more people-to-people exchanges, such as inviting Japanese students, scholars and think tanks to the city, as well as maintaining Hong Kong’s “free and open” system of governance.

“We need to do more to overcome the current challenges to move on to the next stage of cooperation,” Okada said. “I hope we can even deepen the great relationship between Japan and Hong Kong.”