Beijing’s top official overseeing Hong Kong affairs, Zhang Xioaming, denounced the anti-government protests on August 7, at a gathering of more than 500 pro-Beijing politicians and businessmen in Shenzhen. He labelled the protests as having the “obvious characteristics” of a colour revolution.

Escalating Action by Militant Demonstrators

Neither Zhang’s comments, nor high-profile paramilitary videos, showing the People’s Liberation Army (“PLA”) and People’s Armed Police (“PAP”) practising the suppression of riots, have deterred protesters. Rather, unauthorised demonstrations have escalated significantly.

Many of these unsanctioned events have resulted in violence, including the occasional use of petrol bombs, and sporadic attacks on police buildings and police married quarters.

Consequently, the Police have stiffened their response. A change in leadership at the top of the force has seen a retired deputy commissioner take on the “special duties role” – a post directly focused on containing the civil unrest.

On 10 and 11 August, violent demonstrations occurred at numerous locations across Hong Kong, orchestrated by smaller groups, moving swiftly and organised via social media. Some of these demonstrations were especially violent, particularly those in the Tsim Sha Tsui, Kwai Chung and Mei Foo Sun Chuen districts.

The police response was very robust. Violent clashes between police and demonstrators occurred, including inside Mass Transit Railway (“MTR”) stations; of note was the use of CS smoke within a MTR station under somewhat contentious circumstances.

The police are adopting new tactics, both in terms of dispersing illegal gatherings and, more significantly, in making many more arrests. They have used large scale infiltration or “decoy” operations to pose as demonstrators, and to support arrests; but this tactic has further enraged the already irate front-line demonstrators.

Of additional economic significance, in the afternoon of 12 August, demonstrators forced the closure of Hong Kong airport, other than for flight arrivals already in the air. Both the arrival and departure halls were flooded by demonstrators, who also blocked the approach roads to the terminal, causing traffic chaos.

Official Response and Public Opinion

The Hong Kong government’s policy is simply to “sit on their hands”, and to hide behind the police force. This approach leaves police officers to absorb the pent-up frustration and ire for extended periods of time. This strategy has left the police in an invidious situation, dealing with what is, essentially, a political problem.

The government appears to believe that the protesters’ intemperance, and continuing violence by hard core activists, will result in a change of public mood, and will sway public sentiment against the movement as a whole.

Initial indicators do suggest that such a swing is occurring, but more gradually than perhaps the authorities had anticipated.

Opposition to the government, and, most particularly the police, is strong in the activist camp, but not so across wider society. Many ordinary Hong Kong people are extremely fearful, and angry – not only with the Carrie Lam administration, but also with the protest movement. Parents of frontline students are also realising that riot charges lead to serious jail sentences, and a ruined future for their children.

The democratic movement is potentially at risk. Many people see a symbiotic relationship between the main protest movement, hard core violent activists and the pan-democrats. The ability to turn out a large crowd at the Airport following clashes on Sunday is seen as demonstrating this inter-relationship.

In particular, the absence of criticism of demonstrator violence may work against the pan-democrats in forthcoming local elections – contrary to the general belief that the protests will boost returns. At the very least, the democratic movement could face blame for the unrest, justified or otherwise, when the dust settles.

A final concern relates to the involvement of Triad Societies. Speculation is rife about who is orchestrating the public involvement of Triad figures, but what is clear is that their involvement will only pose challenges to Hong Kong’s governance in the longer term.

Likely Outcomes and Key Dates

No early resolution to the unrest seems likely, not least given the absence of any visible dialogue aimed at alleviating tensions.

Some media and/or social media coverage of the militant demonstrators’ exploits has led many of them to the erroneous belief that they can defeat both the Hong Kong Government and the mainland authorities. They will likely be sorely disappointed.

An extended campaign, over the next two months may continue, but with a reduction in the numbers of protestors in September, as students return to university. The protesters’ tactics, though, may change as the numbers of demonstrators falls; the use of flash crowds, and increasing violence, can be anticipated.

The Central Government is unlikely to permit the current instability to extend as far as the 70^th anniversary celebrations on 1 October 2019. This date may be a “drop dead” deadline.

In addition, the government’s failure to maintain security at the airport will not escape the People’s Republic of China (“PRC”) authorities’ attention, and raises the longer term odds of a direct intervention by PRC resources. This risk is heightened, but remains an unlikely outcome in the shorter term.

Options for a Response by the Central Authorities

Any direct intervention by the central government would not necessarily involve the PLA directly. The mainland government has many other tools at their disposal, both covert and overt.

Overt resources include the People’s Armed Police (“PAP”), and related agencies. Covert action could take many forms, so as “to guard against a colour revolution” or against “intervention by foreign forces”. Certainly, the United Front movement is active at grassroots level, mobilising Pro-Beijing forces.

However, the Hong Kong government’s policy of “waiting it out”, and subsequently issuing a policy address in October, to address grievances is not a viable option. Not taking any action amounts to a decision in itself.

In the long term, only a political solution, or an ugly and costly crackdown, will bring an end to this current predicament. For now, though, neither the PRC Central Government nor the embattled local government of Carrie Lam Cheng Yuet-ngor have shown any appetite for concessions.

Police Must Hold the Line

This escalating “events-driven scenario” continues to place a huge burden on the shoulders of the Hong Kong Police.

The Police must continue to “hold the line”, and do seem now to be fully committed to a much harder response, with the full support of the Central Government. This support is important, because many police officers have little respect for the Lam administration, who they fear would discard them, if it were politically expedient. Even so, the Police must act impartially, notwithstanding many officers’ fury, in a toxic climate. Ensuring Police discipline under such difficult circumstances will be a challenge.

Similarly, the Police must be seen to suppress Triad activity. These organisations thrive on chaos, and the Hong Kong authorities are now paying a heavy price for failing to act against them since 1997.

Additional Threats to Business

The threats in our previous brief (number 5) remain in force, although political factors have now become much more elevated.

In the current climate, foreign registered businesses may come under scrutiny, for no immediately apparent reason.

Some Cathay Pacific Airways staff members have angered Beijing with personal political comments, and the airline has been subject to an unusual level of compliance by PRC authorities in response. Staff have had their phones examined on mainland flights.

Companies should take care to display a neutral stance, and encourage staff not to conduct political activities in the workplace.

Companies should also guard against knee-jerk reactions, such as the taking out of full-page advertisements to distance themselves from Police actions near or inside malls, as some companies have done. Businesses should seek to remain neutral if long term damage is to be avoided.

A specific concern for retailers is that Hong Kong’s malls sit above, or adjacent to, the railway stations used by demonstrators to attend rallies. Malls have thus become not only arenas for contest between police and protesters, but also targets themselves.

A further risk is that, in the event of a full-fledged crackdown, that foreign governments sanction Hong Kong or Chinese officials, or that the US alters the trade framework operative under its US-Hong Kong Policy Act. Such actions would materially affect business operations.

What to Do Now

As the protests continue, SVA recommends that companies evaluate and monitor their risk profile closely – especially those around pre-announced demonstration areas.

In the immediate term, planners should focus on:

• Safety of staff, and their families;
• Protection of plant and property;
• Possible denial of access to business premises, owing to demonstrations or arson;
• Business disruption – reaction and key priorities;
• Making plans for offsite operations for key assets;
• Evaluation of security plans at business events, shows and meetings, especially those around malls, major government buildings, and exhibition centres;
• Planning for an airport closure;
• Contingency planning in the event of PRC overt intervention;
• Developing first aid capabilities – such as capabilities for dealing with CS smoke affecting staff, or its introduction into building air-conditioned systems; and
• Establishing a roll call capability for all staff in the event of unforeseen events.

These measures should continue to take into account of rising volatility and violence, and may last for weeks to come.

Businesses must also take account of political tensions. Factions are starting to demand that businesses take sides, or to attribute political motives to commercial decisions and to ill-considered statements.

Close monitoring of social media accounts is especially important, as an unwary, or malicious employee can cause significant damage. Companies should also re-examine advertising campaigns, in Hong Kong and China, to ensure that no innocent mistakes provoke ire.

Retaining Crisis Response Services

SVA has a dedicated crisis management team which, for our retained clients, stands ready to assist companies during crisis situations. Retained clients pay an annual fee for a 24 hour response capability.

SVA is based in Hong Kong and is the only firm with the local and senior expertise drawn from Intelligence, Operations and research functions of the former Royal Hong Police Force.

Leaving planning too late is a decision in itself.