Almost every corner of Hong Kong was once filled with booming commercial prosperity, ultimately earning the city the coveted crown as Asia’s financial hub. Its international financial resources and services flourished for years, attracting swarms of expats and tourists all year round. The Hong Kong Monetary Authority unveiled that in 2021, the financial sector alone accounted for 21.3% of the city’s Gross Domestic Product. The industry was booming and its future was even more promising.
Unfortunately, Hong Kong’s stringent Covid-19 measures brought its long financial reign to an abrupt halt. Streets grew quiet, businesses went astray, and numbers kept dropping. Hong Kong’s crown tipped and Singapore swooped in as Asia’s new financial centre.
Nonetheless, with Hong Kong’s first post-pandemic annual increase of 6.4% in 2021, there were high hopes for not just a rapid recovery, but further hopes for an advancement in its financial hub status.
A Recap of Golden Week
One of the most anticipated periods for the city’s economic comeback was the “Golden Week”, which is a week-long holiday combination of National Day and Mid-Autumn Festival spanning from September 29 to October 4, 2023.
On September 29, Chief Executive John Lee declared that he “expects hundreds of thousands” of people to watch the fireworks on National Day.
Simultaneously, authorities predicted a surge in commercial sales revolving around mainland tourists. The Travel Industry Authority had planned to “deploy additional manpower” to step up their inspections of retail stores in tourist hotspots, while Lee ensured that businesses were “also preparing to host the visitors.”
There was indeed an increase in foot traffic across the border, with a staggering number of 1.1 million mainland Chinese tourists visiting the city during Golden Week. Since it was the first post-pandemic celebration of National Day and Mid-Autumn Festival, the city saw record-breaking numbers in several tourist destinations. On National Day, the Hong Kong Space Museum set a new record of 11,000 visitors in a single day while the Hong Kong Museum of Art also hit a record high of over 19,200 attendees in a single day since reopening in 2019.
“Not sure from the business side but it was super crowded everywhere,” said Afrah Bathiudeen, a university student who lives at the heart of Tsim Sha Tsui, “Prices seemed the same, but shops were packed, the number of shoppers must have been at an all time high.”
With her windows facing one of the district’s main malls, iSquare, the 20-year-old resident witnessed the increasing number of tourists first-hand. She noted that Tsim Sha Tsui was crammed “at all times” and “street food vendors were packed.”
The Downside of Golden Week
Although many set foot in Hong Kong, very few actually did the shopping.
JLL, a real estate services firm, conducted a survey among 10 retail stores and reported a 30% spike in foot traffic during the public holiday. The sales, however, remained stagnant as retail stores generated numbers typically seen on a “normal weekend”.
Chairperson of the Hong Kong Retail Management Association Annie Yau told RTHK that the overall sales made by tourists had risen by 10% to 20%. These numbers, however, still fall behind those of 2018.
“It could be two possibilities, with the first one being that the unit sold did not increase,” said Dr. Mengzhou Zhuang, a marketing professor at the University of Hong Kong. “This means that even local people prefer to not buy things in Hong Kong.”
Not only do Hong Kong people refrain from splurging in the city but they have also been fleeing during holidays. While there was a mass influx of Mainland tourists, immigration data reveals that there was a net outflow of people in the city, with 1.4 million Hong Kong residents departing during the same period.
“I guess for Hong Kongers ourselves, Hong Kong was not that enjoyable during that week – overcrowded and hyper touristic,” Bathiudeen remarked, “So I myself have a lot of friends who went out of Hong Kong to Taiwan, Macao, and Shenzhen during those days to have a good time.”
The second possibility that Dr. Zhuang mentioned, is that the retail revenue during Golden Week did not increase. He explained that the increment in the number of customers coupled with stifled revenue means each customer “tends to spend less.”
“It could be that people nowadays are buying things [that are] worth the money,” Dr. Zhuang added, “It might be related to the shopping pattern changes in mainland travellers.”
Why Are Numbers Falling Below Expectations?
Consumption behaviours in tourists have been dramatically evolving, leading to the emergence of “traveling with performances”. According to China Briefing, this concept entails how concerts, music festivals, and rich cultural heritages play a “pivotal” role in the tourism industry.
In other words, more people are investing in experiences rather than tangible items. This explains the record-breaking number of museum and carnival visitors in Hong Kong during Golden Week.
Money, or lack thereof, is the main problem for a lot of the younger Mainland travellers.
“The whole economic trend is not performing well, especially since the US interest rates keep going up,” Dr. Zhuang said. “Some people might not be optimistic about their future so they adopt a more conservative type of spending pattern.”
Dr. Zhuang defines “optimistic” shopping as “spending aggressively” on expensive things, including luxury cars and real properties. Whereas a “conservative” shopping pattern means avoiding luxurious purchases.
In recent years, the mainland has been battling with its youth unemployment crisis and the uprising trend of “lying flat.” Known as “Tang Ping (躺平)” in Chinese, “lying flat” made headlines back in 2021 due to its mass movement of rejecting societal expectations and simply “do nothing”. The term was coined in Chinese social media in retaliation against the mounting societal pressures on the youth, particularly the rise in living costs and unemployment.
The financial conditions of the younger mainland generation forces them into a lifestyle of frugality, limiting their ability to indulge in conspicuous consumption. Instead, they are more inclined to invest in smaller and more affordable purchases.
“I could tell [Golden Week promotions] were attracting tourists to some extent,” Bathiudeen said. “But I wasn’t sure if it was the right kind of tourists.”
She noticed that most of the mainland tourists were making “low-price purchases” during that period. “I wasn’t too confident about Hong Kong’s future business prospects because of this,” she concluded.
Mostly stemming from “altruism”, another shift in shopping behaviours Dr. Zhuang noticed is the amplified support for local brands and products.
He explained that Hong Kong sustained its attractiveness to mainland shoppers by having tax-free foreign products. However, with the “intensified relationship” between China and the West, China has been providing Chinese alternatives to global brands on a more affordable and convenient scale.
With Apple, there is Huawei. With Tesla, there is BYD. With Amazon, there is Taobao. The Chinese customer base has grown accustomed to its domestic producers.
“Nowadays in [the] mainland, people tend to like domestic brands of cars, computers, cellphones,” Dr. Zhuang pointed out. “Hong Kong is gradually losing its attractiveness to mainland travellers.”
The City’s Persistence
The decreasing number of sales has not faltered the city’s determination to reignite its economic flame. From Disneyland’s Halloween theme to the Haunted Kong Festival 2023, authorities continue to leverage upcoming festivals to pump out various shopping schemes and promotions.
The most emphasised campaign, “Night Vibes Hong Kong”, has been put under the limelight recently. It aims to consolidate the city’s night life by putting up multiple businesses once the sun sets.
The Chief Executive insisted that the event shall stay until early next year, as he believed that it can “develop a new culture for people to enjoy their night activities more.”
“More people will mean more business and more consumption, which will be good for the overall economic development,” Lee said.
Featured image: HKSAR Press Release.