Hong Kong: Hong Kong's retail sector, once a bustling hub of consumer activity, continues to struggle in the wake of the pandemic, with analysts predicting a prolonged recovery period. Government data released on Friday revealed that retail sales in the city have dropped by 7.3 percent in the first seven months of 2024 compared to the same period in 2023, despite a significant 52.2 percent increase in visitor arrivals.
Once celebrated as a shopping paradise, particularly for mainland Chinese tourists, Hong Kong's retail industry is facing a new reality as economic concerns and changing consumer behaviours take their toll. In 2023, mainland Chinese tourists accounted for nearly 90 percent of the HK$22.16 billion ($2.84 billion) spent by same-day visitors and 67 percent of the HK$119.1 billion spent by overnight visitors. However, analysts warn that the city's golden age of retail may not return "for a long, long time."
As per reports, Christine Li, head of research for Asia-Pacific at Knight Frank, attributes the decline in spending by middle-class Chinese tourists to a combination of factors, including the economic slowdown triggered by the property downturn, a shift in consumption patterns, an increased focus on savings due to uncertain job prospects, and changing travel preferences. In 2023, while overnight tourists from the mainland spent HK$6,495 ($833) per capita—a rise of 8.4% from 2019 levels—same-day visitor spending fell by 37 percent to just HK$1,383.
Economic uncertainty on the mainland has also influenced spending habits elsewhere. Analysts pointed to the growing popularity of "zero-dollar" tours, where travellers prepay for transportation, accommodation, and meals, leaving little room for additional spending during their trips. Simon Smith, regional head of research and consultancy for Asia Pacific at Savills, noted, "They take pictures for their online accounts, but they’re not spending money. The golden era for Hong Kong’s retail market is over. That’s the reality."
Hong Kong's tourism data further illustrates the challenge. The city welcomed 34 million tourists last year, with 26.8 million coming from the mainland—a steep drop from the 55.91 million overseas arrivals in 2019, which included 43.77 million from mainland China.
Adding to the retail sector's woes, many Hong Kong residents are now opting to shop in neighbouring Shenzhen, just a 14-minute high-speed rail journey away. "It’s a third of the price in Shenzhen. You get great food, good service, and modern shopping malls," Smith added, noting that many young professionals, who were once among the city's biggest spenders, have emigrated from Hong Kong.
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