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Hong Kong shoppers head to China for lower prices amid stagnating local economy

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Globalvoices.org 

Local businesses hurt as many Hongkongers prefer spending money elsewhere

Originally published on Global Voices

Travellers are heading north to China from West Kowloon station. Image: Kyle Lam / Hong Kong Free Press. Used with permission.

Drawn by lower prices, diverse choices and better services, Hong Kong consumers are increasingly making trips across the border to China to spend their money in cities like Shenzhen, reversing a longtime trend of mainland Chinese shoppers flocking to Hong Kong. 

Hong Kong’s border with mainland China reopened at the start of 2023 after three years of strict COVID-related restrictions that limited travel. That year, about 53 million departures by land from Hong Kong to Shenzhen were recorded, which is significant for a city of only 7 million people. Visitors travel to Shenzhen for shopping, eating, and entertainment, which are often cheaper than in Hong Kong, a city known for its exorbitant cost of living.

People aren’t just after the low prices — for some, the wide variety of regional Chinese cuisines is the main appeal. On Facebook, there are many groups sharing dining tips in the Greater Bay Area, a megalopolis encompassing cities near the Pearl River Delta, including Hong Kong, Macau, Shenzhen, Zhuhai, Zhongshan, Guangzhou, etc. For example, a Shenzhen cuisine and fun group has more than 220,000 members, and another group featuring restaurants in Zhuhai and Zhongshan City has 39,000 members.

Others head north because they are fed up with Hong Kong’s hectic lifestyle that comes along with poor services, such as restricted dine-in time and poor manners:

Cost, however, is the driving force behind the trend. Apart from differences in the cost of living between Hong Kong and the mainland, visitors are also fueled by the strong local currency, which is pegged to the US dollar. Currently, one HKD is equal to 0.13 USD and 0.93 RMB.  

Bulk US warehouse stores like Sam’s Club and Costco, which do not have any stores in Hong Kong due to the expensive rent, have become major stopover destinations for Hong Kong's weekend cross-border travellers:

Many Hongkongers, particularly supporters of the pro-democracy camp, used to have a strong local identity and advocate for local consumption. Since Hong Kong became legally integrated with mainland China with the enactment of the National Security Law in 2022 and Article 23 earlier this year, very few still adhere to the localist view.

Meanwhile, local businesses struggle. On weekends and public holidays, hordes leave the city to spend their money in mainland China. Yet, visitor arrivals in Hong Kong remain well below pre-pandemic levels: In June this year, 3.13 million were recorded, compared to 5.14 million in June 2019.

Many local businesses, already hard-hit by pandemic regulations, are struggling to stay afloat. Shuttered shops dot the city’s streets, with for-rent posters dominating the windows.

In order to boost tourism and rescue Hong Kong’s floundering economy, the government has initiated campaign after campaign, from the post-pandemic “Hello Hong Kong” drive, to the “Night Vibes Hong Kong”, which aimed to “boost [the city’s] night-time economy”, to the more recent “Let’s Go The Extra Mile”, which encourages citizens to be more courteous and “smile more” at visitors in a bid to overcome Hongkongers’ gruff reputation.

The government has also set aside over HKD 1.09 billion (around USD 139 million) to “strengthen tourism development” through events like monthly fireworks and drone shows. However, these efforts have had little effect, as pointed out by Ngan Po-kong, the former Executive Finance Editor of i-Cable News:

過去大半年，無論香港政府如何扭盡六壬，搞甚麼夜繽紛、派機票、向中國大陸大開中門，仍然無補於事。
外來人不來港旅遊消費，香港人假日不是去台灣、日本，就是北上消費。

For the past half year, despite the Hong Kong government’s efforts in launching the Night Vibes campaign, giving away free plane tickets, and opening the border with mainland China, the situation hasn’t improved at all. 

Foreigners no longer come to Hong Kong, and during holidays, Hongkongers either visit Taiwan, Japan, or head north to shop. 

A number of countries, including the US, Canada, Australia, the UK and Taiwan, have issued travel warnings to Hong Kong after the city passed Article 23, the domestic security law, earlier in March this year. As the law targets the so-called foreign operators in Hong Kong and sanctions critical and political expressions on social media, books and products, such as t-shirts, travellers are advised to pay attention to the potential legal risks they would face when entering the Chinese city.

As efforts to lure foreign tourists fizzle, lawmakers from the Liberal Party even proposed levying a “departure tax” on outbound Hong Kong residents to deal with the government’s budget deficit. John Lee, the city’s Chief Executive, avoided directly addressing the proposal when questioned by a reporter, instead saying that the integration and interchange between Hong Kong and the Greater Bay Area was encouraged. The integration of Hong Kong into the Greater Bay Area of mainland China is a national principle that overshadows local interest.

Regardless of the government’s official line, it’s certain that Hong Kong needs big changes in order to regain some of its former lustre in the eyes of both locals and tourists. How these changes will play out, though, remains to be seen.

Written by Chloe Sze