Hong Kong’s Restaurants and Retailers Feel the Pain: Locals, Tourists Take Their Money Elsewhere

Hong Kong's night life loses its luster with a shift in the post-pandemic landscape. Sung Pi-Lung/The Epoch Times

The recent Easter holiday saw more shuttered storefronts in Hong Kong and fewer visitors to the once-bustling island city. More than half a million Hong Kongers have left the city since 2020’s passage of the National Security Law. In addition, Chinese policies are deliberately causing “mainlandization” and a blunting of features that made the city attractive to visitors, including vestiges of its colonial past.

Policies meant to bring visitors, residents, and consumption back to previous levels have failed to fill the gap. With five more long weekends left in 2024, it’s estimated that the city could lose as much as $750 million as consumers flock to other spending venues. Based on current trends, Hong Kong could see more than a thousand retail stores and restaurant closures by the end of the year.

Hongkongers Take Their Dollars Elsewhere

For many years, it has been common for Hong Kong residents to leave the city during long holidays. In 2019, before the COVID-19-related border closure and pre-National Security Law, some 785,000 Hong Kongers traveled elsewhere over the Easter holiday.

However, that number has been steadily increasing, with about 841,000 Hongkongers leaving the city over last year’s extended Easter holiday, and an estimated 1.6 million leaving this year.

The temporary impact of the holiday exodus aggravates an existing problem. Over half a million Hongkongers have left Hong Kong permanently since the passage of the National Security Law tightened China’s grip on the city. Tax records show 570,000 fewer tax returns issued this year compared to the 2020–21 tax year.

According to official figures, over 200,000 people have left Hong Kong using the British National Overseas Program and Canada’s Hong Kong Pathway program.

Policies such as one-way permits and the recently introduced Top Talents Pass Scheme (TTPS)—a two-year work visa program introduced in December 2022—have attempted to remedy the problem, but haven’t been able to bring residents and consumption back to previous levels.

Moreover, even for those who stay in Hong Kong, the political pressure following the National Security Law and Article 23 has reduced spending.

A May 2023 report by research and consulting firm Ipsos noted that Hongkongers were spending cautiously in part due to concerns about the city’s Chinese Communist Party (CCP) controlled administration.

An Ipsos survey found that Hong Kongers were apprehensive about the impact of current repressive policies on the local economy. The survey showed that 64 percent of residents expected inflation to rise over the next year, while “70% of Hong Kongers worry that the government and public services will do too little to help them in the years ahead.”

Mainlandization Decreases Inbound Tourists

Another factor contributing to the slumping economy is the decrease in inbound tourist numbers. Hong Kong is experiencing a significant degree of what’s termed “mainlandization,” causing Chinese tourists to lose interest in the city.

In 2024, only 370,000 people entered Hong Kong on the first day of the Easter holiday, a significant drop of 12.3 percent compared to 422,000 people in 2019.

In addition to the increasingly integrated political environment, physical storefronts in Hong Kong are seeing an influx of Chinese brands, such as Mixue Ice Cream & Tea.

Hong Kong’s iconic Jumbo Floating Restaurant is towed away in Hong Kong on June 14, 2022. Kin Cheung/AP Photo

Visiting Hong Kong was previously considered a nostalgic colonial journey. Popular destinations include “McDonald’s Lane,” the Hong Kong Island Tram, the Peak Tram, and neon signs, all of which exude a strong British colonial atmosphere.

In terms of infrastructure and skyscrapers, China’s major cities tend to have more modern updates than Hong Kong. Therefore, for Chinese tourists, Hong Kong’s attraction lies in its architectural remnants from the colonial era.

However, Hong Kong authorities have gradually dismantled these unique features, citing safety reasons for removing internationally renowned neon signs rather than repairing and maintaining them. Last year saw the removal of the giant sign outside the Leung Tim Choppers Factory, which had been a fixture for 40 years, and the two story tall neon sign from the Mido Cafe, one of Hong Kong’s oldest cafes.

A December New York Times article estimated that tens of thousands of neon signs have gone dark in the past decade.

Another characteristic of Hong Kong, the “city that never sleeps,” has changed due to the three-year pandemic lockdown. When the lockdown ended, the city’s nightlife did not return to pre-pandemic levels, despite “Night Vibes Hong Kong”—an effort to revitalize Hong Kong’s nightlife. Convenience stores that used to operate 24/7 are now closed at night, and many restaurants find it difficult to stay open past 8 p.m.

Esther (a pseudonym), a 40-something Hong Kong resident who planned an overseas trip over the long holiday, told The Epoch Times she won’t be tempted by “Night Vibes.” She seldom goes out at night now, she said. During the pandemic, she got used to cooking at home.

“[I] am deliberately acting contrary to the authorities’ Night Vibes Hong Kong. Since nothing is allowed to be said now, I’ll just practice civil disobedience,” she said, adding that during the pandemic, she had already gotten used to cooking at home, and her spending on dining out had greatly reduced.

Hong Kong’s Prices Can’t Compete

Another factor in the slump is the higher price of goods in Hong Kong, compared to those sold on the mainland.

Cost of living database Numbeo lists the cost of living in Hong Kong—excluding rent–as 69.46, much higher than China’s mega-metropolis Shenzhen, which is listed as 35.07.

Prices in various categories in Hong Kong are higher than in Shenzhen. For example, a three-course meal for two people at a mid-range restaurant costs HK$500 ($63.87) in Hong Kong, while only 200 yuan ($27.64) in Shenzhen.

Ironically, visitors to Shenzhen may find that it appears more international than Hong Kong. In an effort to boost tourism, Shenzhen has introduced consumer maps in both traditional Chinese characters and English. The Chinese tech hub now boasts American-owned warehouse stores, Costco and Sam’s Club, drawing crowds of shoppers from Hong Kong.

Epoch Times (HK) reporter Zac meets his fans at a local restaurant in Hong Kong in October 2023. Max Lin/The Epoch Times

Looking Ahead

A Radio Free Asia report in December, reporting on the noticeably weak consumer spending over the Christmas holiday, estimated that Hong Kong’s retailers lost around HK$750 million (about $75 million) in business over the two-day Christmas holiday.

Based on that assessment, with five more long weekends left in 2024, the city could lose as much as $750 million as consumers look elsewhere to spend their dollars.

Simon Wong, President of the Hong Kong Federation of Restaurants and Related Trades, told the Hong Kong Free Press this month that an estimated 200 to 300 restaurants had closed in March. If those numbers continue, over a thousand retail stores and restaurants could close by the end of the year.

The pace of U.S. interest rate cuts has been delayed again, with the latest statement from Federal Reserve officials ruling out the possibility of a rate cut in May. The Hong Kong dollar, pegged to the U.S. dollar, is expected to remain strong this year. That will have a chilling effect on visitors and encourage Hongkongers to travel elsewhere to take advantage of the exchange rate.

With the recent mass exodus from Hong Kong, low immigration to the island city, and lack of enthusiasm from Chinese tourists, Hong Kong’s restaurant and shop owners will need more than long holiday weekends to revive sales.