Hong Kong firms rethink global operations amid Middle East turmoil

Hong Kong entrepreneurs with operations in the Middle East are recalibrating their global footprints to hedge against mounting geopolitical instability and losses resulting from the widening conflict in Iran.The shift in business strategy followed the outbreak of the US-Israel war with Iran last week, prompting firms to draw up contingency plans by pivoting to Europe or Southeast Asia to de-risk their portfolios and ensure supply chain continuity.The war escalated with Iran’s retaliation, heightening tensions across the region. Several Middle Eastern countries sustained damage from missile and drone strikes, with some reporting casualties as key embassies, economic engines and passageways closed, while tens of thousands of flights were cancelled.“Our business is seriously affected by the war due to uncertainty over when shipments of our goods will resume,” Martin Zhu, CEO and co-founder of start-up i2Cool, said.Zhu’s company, set up at the Hong Kong Science Park, focuses mainly on electricity-free cooling technology for buildings through special paints and has expanded its business in different Middle East countries including the United Arab Emirates (UAE).He noted that one-third of his company’s revenue came from the Middle East, where the war in Iran had halted shipments, leaving some goods stranded in mainland China.