The Mainland Cities of the Greater Bay Area (5): The Advantages of Hong Kong’s Retail Sector

Large numbers of mainlanders go shopping in Hong Kong, and many people from the nine mainland cities in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) are regular visitors to Hong Kong. In a survey conducted by the Hong Kong Trade Development Council ¹, 71% of respondents from the nine mainland GBA cities said that on average they had visited Hong Kong twice in the past year. The survey found that they regard Hong Kong as not only a shopping haven but also the most international city in the GBA. Skincare products/cosmetics, clothing and footwear, and jewellery are the items they most like to buy in Hong Kong. The respondents said that the biggest advantages of Hong Kong’s retail sector are a wide choice of brands, a great diversity of product categories, genuine product guarantees, and access to latest trends. When it comes to purchasing services rather than goods, the majority of respondents who had visited Hong Kong enjoyed eating at featured restaurants and attended concerts and/or plays there, while art exhibitions and beauty services were also popular. Consumers from the nine mainland GBA cities regard Hong Kong as a cosmopolitan city where they can access the latest and most fashionable products and services. Internationalisation is the greatest advantage that Hong Kong’s goods and services consumer market enjoys.

Consumers in the nine mainland GBA cities rate Hong Kong highly for its degree of internationalisation and convenience. 51% of respondents in the survey regarded Hong Kong as the most international city in the GBA, far higher than the 22% who opted for Shenzhen or the 19% who chose Guangzhou. 56% of respondents labelled Hong Kong the GBA’s shopping haven, again surpassing the numbers for Guangzhou (18%), Shenzhen (12%) and Macao (12%).

Hong Kong is an international business centre and a large number of tourists and expatriate workers are located there. This means that brands which establish a foothold in Hong Kong can build their brand image and reach large numbers of potential consumers from the mainland and the rest of the Asia-Pacific from there. In view of this, many international brands have opened shops or flagship stores in the territory. Shopping malls in Hong Kong are modern in design and transportation in commercial districts is convenient, giving consumers easy access and a pleasant environment to shop in. During one of the survey’s consumer focus group discussions, a participant said: “The commercial districts in Hong Kong are very busy, the streets are bustling with people and there are plenty of shops, so whenever I visit Hong Kong I have a strong desire to go shopping.”

Attractive to High-income Consumers

71% of respondents in the survey said they had visited Hong Kong, with the proportions of those from Guangzhou (82%), Shenzhen (85%), Dongguan (81%) and Zhuhai (77%) being higher than those from the other surveyed cities. Travelling from these four cities to Hong Kong takes less time than it does from the others. However, easy access is not the only factor determining the likelihood of travel to Hong Kong. Those respondents with higher incomes were also much more likely to have made the journey. 90% of people with a monthly household income of over Rmb40,000 have visited Hong Kong.

Age also has an influence, though it is a much less important factor than income level. Among the different age groups of respondents to the survey, those aged 36-40 were the most likely to have visited Hong Kong, with 75% of them saying they had done so. Gender, however, does not appear to make a difference to the propensity to travel to Hong Kong - the percentages of male and female respondents who had visited the SAR were broadly similar.

Overall, then, it appears that income and access to convenient transport links are the main factors impacting the likelihood of people from other GBA cities visiting Hong Kong. When the planned “one-hour living circle” connecting the cities of the GBA is completed, with the addition in the near future of infrastructure facilities such as the Shenzhen-Zhongshan Bridge, it is likely that the enhanced transport access will attract even more visitors to Hong Kong.

The survey found that respondents’ income level was a major factor determining the frequency of visits to Hong Kong and projected spending. The average number of visits to Hong Kong in the past year among all respondents was 2.04 and the projected per capita spending on their next visit to the territory (including lodging but excluding transport fees to and from Hong Kong) was Rmb9,415.

However, respondents with a monthly household income of over Rmb25,000 visited Hong Kong more frequently and the amount they intended to spend was significantly higher. For instance, respondents with a monthly household income of Rmb25,000-39,999 visited Hong Kong 2.23 times in the past year on average. Respondents with a monthly household income of more than Rmb40,000 estimated that their per capita spending on their next trip to Hong Kong would be Rmb19,875.

Among the nine mainland GBA cities, respondents in Shenzhen visited Hong Kong the most. The average number of trips they took in the past year was 2.4, while the frequencies of visits by respondents in the other cities were broadly similar. In terms of the projected per capita spending on their next visit to Hong Kong, there was no marked difference between respondents across all nine cities. The frequency of visits to Hong Kong and projected spending of respondents of different genders and age groups also showed no significant difference.

Shopping a Primary Activity

The respondents’ most common consumption activity during their visits to Hong Kong was shopping, with 88% citing it as an activity they had participated in. Skincare products/cosmetics/perfumes were the type of product most frequently bought , with 66% of respondents saying that they had bought these items in Hong Kong. It is worth noting that although this was a more popular purchasing item among female respondents, with 82% of them buying such products in the territory, the proportion of their male counterparts doing so was also quite high, at 52%. During one of the consumer focus group discussions, a female participant said: “There are more skincare product brands and product types available in Hong Kong, which is why whenever I visit Hong Kong, buying skincare products is a must-do activitiy.”

More than half of the respondents had bought clothing and footwear (61%) and watches and jewellery (51%) in Hong Kong. 55% of those with a monthly household income of under Rmb8,000 had bought such products, only nine percentage points lower than the number of those with a monthly household income of Rmb25,000-39,999 who had done so (64%).

Among respondents who had visited Hong Kong, 43% had bought food products during their trip. This was more common among older respondents. Half of those in the 41-45 age group had bought food products while visiting Hong Kong, while only 39% of those aged 26-30 had done so. 36% had purchased personal electronic products in Hong Kong and 31% had bought wine/spirits. Hong Kong’s bespoke products found particular favour with high-income earners, with 37% of respondents with a monthly household income of Rmb40,000 and above having bought them, a share considerably higher than the overall average of 24%. Hong Kong companies selling bespoke products should therefore target high-income consumers from the nine mainland cities in the GBA.

Unique and Trendy Products

According to the survey, the respondents reckoned that the strongest advantages of Hong Kong’s retail sector were the availability of a wide choice of brands (a factor picked out by 65% of those asked), a great diversity of product categories (60%), genuine product guarantees (56%), and access to latest trends (54%). In other words, consumers in the nine mainland GBA cities generally felt they could buy unique and trendy genuine products in Hong Kong. As most international brands have a presence in Hong Kong, GBA consumers found that it was easier for them to find trendy products that could express their lifestyle and personal taste.

Although currently import tariffs on a wide range of consumer goods have been lowered in mainland China, certain products such as wine still enjoy a duty-free advantage in Hong Kong. 50% of respondents who had visited Hong Kong pointed out that the presence of duty-free goods was an advantage enjoyed by the territory’s retail sector. One focus group participant said: “Since wine is duty-free in Hong Kong, the same bottle of wine which has a price tag of over Rmb5,000 in Guangzhou only costs HK$3,000 in Hong Kong. That’s why whenever I visit Hong Kong I always buy wine.”

Catering and Cultural Sectors

As well as shopping in Hong Kong, visitors from the nine mainland GBA cities also enjoy various services in the territory. 49% of respondents indicated that good food was a primary motive for visiting Hong Kong, while 46% of them came to Hong Kong to take part in recreational and leisure activities. Dining in featured restaurants was favoured by 44% of respondents. The share of young respondents dining at featured restaurants in Hong Kong was higher, with 48% of those in the 26-30 age group saying they had done so, compared to just 42% of their counterparts in the 41-45 age group.

38% said they came to Hong Kong to attend concerts/plays, while 28% cited visiting art exhibitions. The share of respondents in the 26-30 age group visiting art exhibitions was higher than the overall percentage, at 31%. One focus group participant said: “I like to go to Hong Kong to attend concerts. Both the atmosphere at the venue and the stage production are excellent.” A large number of female consumers were attracted to beauty services in Hong Kong, with 43% of them saying that they had used beauty services in the territory. A female focus group participant commented: “The services of chain-operated branded beauty parlours in Hong Kong are good. Each beautician has a standardised set of skills.”

It is worth noting that large numbers of respondents at all different income levels liked to dine at featured restaurants, attend concerts/plays, and visit art exhibitions in Hong Kong. This shows that Hong Kong’s catering sector and cultural and entertainment industry have won the approval of consumers in general across the nine mainland GBA cities. Hong Kong has a well-developed catering industry which includes not only restaurants serving cuisines from different countries but also those offering local Hong Kong-style food with unique characteristics. It has restaurants of different grades that can offer consumers various kinds of specialty foods or menus. All this has earned Hong Kong the reputation of a gourmet paradise.

The cultural and entertainment industry in Hong Kong is well developed too. There are a number of high standard performing arts and exhibition venues in Hong Kong, and its government devotes a great deal of effort to promoting international art exchanges. As a result, Hong Kong has attracted a lot of international performing arts troupes and art exhibition planners to stage performances or host exhibitions there. Hong Kong’s local performing arts sector has also built up a good reputation in the Chinese-speaking regions, and so has managed to draw in large numbers of mainland consumers to performances. Hong Kong’s catering sector and cultural sector are both rich with international and local talent and thus provide a great attraction for consumers in the nine mainland GBA cities.

Conclusion

Consumers in the nine mainland GBA cities generally consider Hong Kong an international shopping haven in the GBA. When they visit Hong Kong, they like to buy various kinds of skincare products/cosmetics, clothing and footwear, and jewellery. They also find that Hong Kong offers a wide choice of brands, a great diversity of product categories, genuine product guarantees, and access to latest trends. Consumers with higher incomes are more interested in Hong Kong’s bespoke products than those on lower incomes. Among the different types of services on offer in the SAR, consumers are more familiar and have more contact with its catering and cultural and entertainment activities. Young consumers in particular like to come to Hong Kong to dine at featured restaurants and visit art exhibitions.

In recent years, as the mainland consumer market has grown rapidly, consumers have become increasingly able to buy products from all over the world through a proliferating number of both online and offline channels. At the same time, following the lowering of import tariffs by the Chinese government, the prices of imported products on the mainland have dropped and as a result become more competitive with those in Hong Kong. As a result, Hong Kong companies targeting mainland consumers need to do more than offer products with a great diversity of styles. They need to provide consumers with the latest information on product trends and high quality services by using Hong Kong’s advantages in the free flow of information and its extensive exposure to international markets. Hong Kong’s retail and consumer services industry players wanting to sustain their attractiveness to consumers from the nine mainland GBA cities should continue to capitalise on the SAR’s advantages in internationalisation and diversification and raise the quality of services to meet the demands of GBA consumers.

¹ For background information on this consumer survey, please see Appendix.

Appendix

Survey Background

In the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area issued by the State Council in February 2019, nine cities in Guangdong province (Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing), as well as the two special administrative regions of Hong Kong and Macao, were designated to form the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), which is set to command an important strategic position in national development. Over recent years, the nine mainland GBA cities with their large population, have seen rapid economic growth and the average income of the residents is higher than the national average. This reflects the huge potential of the consumer market in the area. In light of this, the Hong Kong Trade Development Council (HKTDC) conducted a consumer market survey of the nine mainland GBA cities in order to gauge local people’s consumer sentiment, their attitude towards the consumption of different products and services, and their consumption preferences, characteristics and trends. Recommendations, based on the findings of the survey, are then made to Hong Kong companies to help them tap into the market of the nine mainland GBA cities more effectively.

Methodology

The present survey was carried out in November 2019 in the form of an online questionnaire. A total of 2,160 consumers in the nine mainland GBA cities were covered. Before conducting the questionnaire, two focus group discussions were held in the cities of Guangzhou, Shenzhen, Zhongshan and Huizhou to try to get a deeper understanding of consumers’ attitudes in the nine cities and thus provide a degree of qualitative analysis.