Hong Kong retailers are leading a new path without mainland Chinese tourists

HONG KONG: Three years of democracy protests followed by a pandemic devastated Hong Kong retailers who had grown accustomed to depending on money from mainland Chinese tourists.

In a city that once boasted some of the highest commercial rents in the world, the market has collapsed.

But a border town seized the opportunity to develop its local economy.

Sheung Shui is the first city of the main land border crossing and once flourished as a place where duty-free goods could be purchased for resale in mainland China – a process known as parallel trade.

“The impression people have of Sheung Shui is that of parallel traders and mainland China,” said Eugene Chan, 22, who has lived in the neighborhood since childhood.

Chan recalled the sidewalks flooded with people filling their luggage with cosmetics, formula or household products to meet huge demand across the border.

But all of that disappeared following huge rallies for democracy followed by border closures linked to the pandemic.

In January 2019, just before the protests began, arrivals from the mainland hit a record 5.5 million, a remarkable figure considering Hong Kong’s population is 7.5 million.

Two years later, that number fell below 3,000.

“This is a huge loss of demand,” Simon Smith, senior director of research and consulting at Savills, told AFP.

“This wave of spending on the continent, particularly focused on luxury goods, watches, jewelry, designer goods, has really taken rents to new heights.”

Hong Kong’s popular shopping districts used to boast of “golden streets” where store rents were more expensive than those on Fifth Avenue in New York City.

Now, Smith said, prime location store rents have undergone a “substantial correction” and are down to 2003 levels, down more than 75% from record highs in 2013.

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