Demonstrators gather near the central government offices in the business district of Admiralty in Hong Kong, China, on Monday, Sept. 29, 2014. Chan Kin-man, a leader of the Occupy Central with Love and Peace protest group, said the protest movement is now waiting for the government to respond to demands such as fully-free elections and the resignation of Hong Kong Chief Executive Leung Chun-ying, the city’s top official. Photographer: Lam Yik Fei/Bloomberg
Demonstrators gather near the central government offices in the business district of Admiralty in Hong Kong, China, on Monday, Sept. 29, 2014. Chan Kin-man, a leader of the Occupy Central with Love and Peace protest group, said the protest movement is now waiting for the government to respond to demands such as fully-free elections and the resignation of Hong Kong Chief Executive Leung Chun-ying, the city’s top official. Photographer: Lam Yik Fei/Bloomberg
A pro-democracy protester covers his face in plastic wrap to protect against pepper spray in the event that it is used as they stand off with local police. Photo: AP
A pro-democracy protester covers his face in plastic wrap to protect against pepper spray in the event that it is used as they stand off with local police. Photo: AP

WHAT is worse for big business in Hong Kong: street protests, or the tear gas fired to disperse the protesters?

That is the uncomfortable question now confronting Hong Kong’s button-down business community, which has co-existed relatively peacefully with the city’s Communist Party overlords since the handover to Chinese rule in 1997.

For 30 years, nobody – other than perhaps China’s growing middle-class – has benefited more from China’s economic rise than Hong Kong. Uniquely positioned both geographically and politically as a bridge between the mainland and the developed world, Hong Kong’s leaders and business people have learned the value of not rocking the boat and – when necessary – throwing in with those who promise continued good times.

Few groups appreciate stability quite as much as the Big Four audit firms (Deloitte, PwC, EY and KPMG), all of which covet the business of the state-owned Chinese companies that have long favoured Hong Kong’s equity markets for public listings.

The multinationals proved as much on June 27, when they jointly published a letter calling upon Occupy Central – the pro-democracy movement that is partly behind the current protests in central Hong Kong – to stand down. The warning was specific, prescient and written in language intended to appeal to Hong Kong’s commercially minded citizens.

“If Occupy Central happens, commercial institutions such as banks, exchanges and the stock market will inevitably be affected. We are worried that multinational corporations and investors will consider relocating their headquarters from Hong Kong or even withdrawing their businesses,” they wrote.

Two days after Hong Kong students began an unofficial occupation of central Hong Kong on Sunday, the first part of the warning has come true. Markets are down, while banks and other business are closed. In the unlikely event that the protests are allowed to continue for several more days, the damage to the local economy could become substantial.

But would that be enough to convince multinational companies, investors, and audit firms to leave Hong Kong?

Needless to say, it’s the rare multinational that has not operated in a challenging political environment somewhere in the world. For now, the protests are an inconvenience, but they are surely not enough to force a major Western company – or even a Chinese state-owned company – to seek a new headquarters, especially in an age when most employees can probably operate from home indefinitely.

Hong Kong’s political and financial advantages are too great to be overshadowed by barricaded subway stops and college students blocking downtown arteries. But the same cannot be said of a city that responds to peaceful student protests with tear gas.

No doubt, plenty of Hong Kong business people would like nothing more than to see the students cleared from central Hong Kong immediately, no matter the means. However, there are also plenty of moderate Hong Kong bankers, accountants and lawyers who are horrified to see that the authorities’ first instinct was to respond with violence.

Indeed, Hong Kong’s handling of the protests does not only reflect an authoritarian state of mind that seems out of place in what has traditionally been one of Asia’s most tolerant cities. It also suggests a government that lacks the competence to do what other world cities do regularly: peacefully manage a student protest.

If Hong Kong’s business community hopes to preserve what is unique about their city, it can no longer remain silent about how the local authorities and the Chinese government have chosen to manage dissent there.

Rather, they need to be just as vocal about the negative consequences of assaulting unarmed students as they have been about threats to shut down the central business district. It’s time for them to reaffirm how a world-class business city should behave under duress.

The Chinese government will not appreciate the warning, but it is guaranteed to listen. page 23

Adam Minter is a Bloomberg View columnist.