Hong Kong and luxury shopping are no longer synonymous

Hong Kong tourist numbers are yet to recover to anywhere near pre-pandemic levels, with many visitors who would have previously come for the shopping now finding alternative destinations more attractive. 

Why it matters

Once a go-to location for mainland Chinese consumers looking for bargains on luxury brands, Hong Kong is feeling the fallout of the pandemic and earlier pro-democracy protests, which together have resulted in store closures. At the same time, many of those same consumers are now browsing online and buying at home. 

Luxury companies are responding accordingly. Bloomberg reports that LVMH is relocating regional headquarters of some brands to Shanghai and intends to focus more investment on major mainland cities.

Takeaways

• LVMH sources indicate Hong Kong is recovering much more slowly than mainland China, where luxury spending is expected to double from pre-Covid levels.
• Hong Kong faces shopping competition: domestic alternatives include the duty-free island of Hainan, where sales have tripled between 2019 to 2021 (and where luxury brands will be able to operate their own duty-free stores within a couple of years, rather than having to rely on partnerships with local players). Macau, meanwhile, is positioning itself as more than just a gambling destination. 
• Hong Kong politicians understand there is a need to diversify beyond shopping and to offer more experiential options. Current tourism promotion efforts include giving away free plane tickets, which is unlikely to attract luxury shoppers. 

Sourced from Bloomberg, South China Morning Post