SHANGHAI — With Hong Kong-mainland China borders reopened on Jan. 8, the Asian hub is seeing a gradual return of mainland Chinese shoppers during the Chinese New Year holiday rush.
According to official data, the former British colony welcomed more than 104,000 visitors from mainland China from Jan. 21 to 26. It’s a significant improvement compared to the past three years, but it’s still a fraction of what Hong Kong had before. Around 690,000 people crossed the broader daily during holiday seasons in 2019.
With weeklong visa process times and inbound nucleic acid testing requirements still in place, visiting Hong Kong during the holiday period remained less attractive compared to the restriction-free Macau or Hainan, China’s duty-free island.
The world’s largest gambling hub, Macau welcomed more than 71,000 visitors on Monday, the highest single-day entry record since the pandemic. Average daily visitor arrivals reached 51,000, a 217 percent jump year-over-year. More than 94 percent of the visitors over the first three days of Chinese New Year came from mainland China.
In Hainan, daily average sales exceeded 350 million renminbi, or $51.8 million, which is more than triple that of pre-pandemic levels. Sales at 12 duty-free shopping centers totaled 2.57 billion renminbi, or $380 million, during one of China’s most important holiday seasons.
Hong Kong is also facing fierce competition from fellow Asian cities like Bangkok, Tokyo, Seoul and Singapore when it comes to maintaining its status as a preferred global destination. Data showed that there was a net outflow of 395,619 people in Hong Kong between Jan. 8 and 25, with the majority of them being local residents traveling and shopping elsewhere during the period.
According to Sun Hung Kai Properties, one of the largest Hong Kong real estate developers, local shoppers still account for 90 percent of retail traffic during the holiday rush.
To boost tourism and lure in more shoppers, the local government recently released a slew of incentives, including public transport fare concession schemes, redeemable dining coupons, and even free flights.
“Consumption sentiment is improving, but the retail market has yet to recover,” Annie Yau Tse, chairman of the Hong Kong Retail Management Association, told local media recently.
Tse expects the market to significantly improve in this year’s second half when long holidays such as the Golden Week are expected to draw in more mainland China tourists. Tse also urged the government to issue another 5,000 Hong Kong dollars in consumption vouchers to stimulate the retail market.
With tourism being a key driver of the city’s economic growth, Hong Kong’s road to recovery still has a long way to go. The hospitality sector represents 3.5 percent of the city’s GDP and generated 220,000 directly related jobs pre-pandemic, according to Statista.
“There hasn’t been a sharp incline yet, but we can see the business is coming back gradually. I think the market will bounce back in the third or fourth quarter. But not as flourishing as 2018 or 2019,” said Fredrick Li, managing director of D-mop, a multibrand fashion retailer with almost 20 doors in the city.
A relatively flexible leasing market is one silver lining of Hong Kong’s sluggish retail market. According to local media reports, rent levels in key locations are down 70 percent from their peak.
According to Cushman & Wakefield, Brunello Cuccinelli signed a lease for a three-story storefront in Central in the fourth quarter of 2022.
Last December, Hong Kong retailer I.T. also made a bet and opened seven new stores at the luxury shopping mall Landmark in Central.
The shops include I.T.’s streetwear-driven multibrand store ExI.T and stand-alone stores for Ambush, Vetements, Mihara Yasuhiro and Neighborhood. An I.T. spokesperson declined an interview request, citing the lack of updated sales data.
“We’re not expecting a sudden and significant rebound, but something more sustainable. It will take time to settle and we hope to see good movement in the second quarter with momentum picking up in the second half of the year,” said Blondie Tsang, president of Lane Crawford and Joyce.
Tsang said dedicated style advisers who looked after mainland China VIP customers were able to maintain client relationships via “remote selling” despite the travel restrictions of the last three years.
“They’ve been checking in with their customers, hosting livestreaming sessions, preparing the new season’s wardrobes, furniture and home decoration to refit their Hong Kong homes they haven’t visited in this time, and gift selections for Chinese New Year,” Tsang said.
During Chinese New Year, Tsang said a gradual increase in mainland shoppers helped the fashion retailer “record a number of exceptional transactions in fashion and home and lifestyle.”
To prepare for incoming mainland China shoppers, Lane Crawford prepared exclusive gifts and “lai see,” or good luck, red envelopes, spa treatments and in-store pop-ups of brands not yet available in the mainland China market.
Aiming to bring back big spenders from mainland China, Harbour City, Hong Kong’s largest shopping mall, has prepared 50,000 welcome gifts and offered dining vouchers for shoppers who can share their travel experiences on Instagram.
Harbour City opened nearly 300 new stores in the past three years, including the largest Dior and Hermès flagships in Hong Kong, a revamped Gucci flagship, and an upgraded Bottega Veneta store. De Beers and Van Cleef & Arpels stores are set to launch in the upcoming months, according to a Harbour City spokesperson.
“We’ve seen an uptick of Chinese shoppers in the first few days of the Chinese New Year holiday. We are aiming for 10 percent to 20 percent sales growth for the year,” said Leng Yen Thean, executive director at Wharf Real Estate Investment Co., the parent company of Harbour City.
K11 Musea, New World Development’s latest retail establishment that opened at the beginning of the pandemic, also launched a generous e-voucher program. Incentives include a 2,200 Hong Kong dollar shopping voucher and an extra 2,800 Hong Kong dollars worth of e-vouchers for shoppers who spent more than 80,000 Hong Kong dollars at the mall.
“K11 is optimistic toward Hong Kong opening up its doors to worldwide tourists,” said James Tung, vice president of Travel Trade Development at K11, the museum-retail concept mall founded by Adrian Cheng.
“We are also confident that the outstanding offerings and unique experiences that we provide, combined with our partners’ efforts, will help Hong Kong return to its premier destination status,” Tung said.
The real estate developer’s “retailtainment” destination 11 Skies, located close to the Hong Kong International Airport and the Hong Kong-Zhuhai-Macao Bridge, is set to open in phases from the end of this year.
K11 expects not only international tourists but an influx of GBA, or Great Bay Area, travelers, who are only a 30-minute car ride away from the neighboring Guangdong province and Macau.
According to Lu Lu, a Beijing-based fashion influencer and former Hong Kong transplant who visited Hong Kong during the Chinese New Year, luxury retail is recovering faster than expected.
“The reservations at Hermès usually run out before noon,” Lu said. “But people are still heavily masked and it felt like Hong Kong went through a lot over the past few years.”
Jason Yao, who works in the local creative industry, observed that while there are not as many Mandarin-speaking tourists in key retail destinations as before, “Chanel and Dior having queues might be a sign of travel retail recovery, as it was not like that before Christmas.”
For Weimo Wang, who works in fashion communications and recently traveled to Hong Kong for work, the city’s cultural draw remains unparalleled.
“Newly opened cultural establishments, such as the West Kowloon Cultural District and Tai Kwun, add to the city’s charm,” Wang said.