The outbreak of the epidemic for more than two years has hit the local retail industry hard and completely changed its ecology.
The rents of shops in tourist areas such as Tsim Sha Tsui and Causeway Bay have plummeted. In the past, foreign luxury brands, gold watches, and drugstores, which used to focus on the tourist business, have withdrawn from the prime locations.
On the contrary, several mainland domestic brands have recently bucked the market and entered the once prosperous area.
At the beginning of the month, Li Ning, a domestic sportswear brand, entered a huge duplex shop of more than 7,000 square feet on Canton Road in Tsim Sha Tsui, replacing Chow Sang Sang Gold, which was withdrawn in June. It is estimated that this shop will become Li Ning's flagship store in Hong Kong.
Last week, Duty Zero, a famous hotel duty-free shop owned by China Duty Free Group (cdf), also announced that it will go out of the airport and set up two concept stores in Central and Causeway Bay to provide "wine tasting experience".
Another news this week pointed out that the mainland mobile phone and smart ecological equipment manufacturer Xiaomi Group plans to rent a large shop on Hong Kong Island to open a flagship store.
The China Hong Kong City Mall on Canton Road, Tsim Sha Tsui used to rely on a large number of passengers from the China Ferry Terminal to achieve high consumption and considerable traffic.
(Photo by Mo Jiawen)
Chinese consumption habits change Hong Kong retail market
Domestic brands have been able to enter the original brand-name locations, largely because the epidemic has severely hit the retail market.
For example, rent data from the Valuation Office shows that the average monthly rent on Hong Kong Island has dropped from a peak of RMB 1,736 per square metre in April 2019 to RMB 1,273 in June this year, an average drop of 26.7%.
Some information even pointed out that the monthly rent of famous shops such as Canton Road, which specializes in tourist business, has dropped by as much as 50% to 70%.
With the sharp drop in rent, the price of shops that can only be rented by luxury luxury stores has finally dropped to a level where other industries can participate.
However, even after the epidemic is over, the entry of domestic brands into prime locations in Hong Kong is likely to become a new economic trend.
Since the full-scale battle between China and the United States in 2018, the consumption habits of the mainland have changed a lot, and the picture of mainland tourists visiting Hong Kong to smash famous brands in the past is likely to become a thing of the past.
China's economic growth has been slowing down in recent years, and the economic restrictions imposed by the West on China, including restrictions on technology, export of key products and financial investment in Chinese companies, have inevitably slowed down the pace of China's economic development. .
Under these conditions, China's high-end consumption habits of nouveau riche in the past are unsustainable.
Now many people and celebrities choose to wear Li Ning cards.
(Visual China)
In contrast, the number of middle-class people in the Mainland has been rising slowly in recent years.
Liu Shijin, deputy director of the Economic Committee of the National Committee of the Chinese People's Political Consultative Conference, mentioned at the National Two Sessions held in March this year that China's middle-income group has reached 400 million, and it is expected that this will double in the next 10 to 15 years.
As the new middle class of the new consumption force, the mainland is different from the small group of extremely wealthy people who focus on luxury consumption in the past. They pay more attention to the life of the product and the "value for money".
Cushman & Wakefield's "Retail Market Insights in China's New Consumption Era" released this year pointed out that the Y and Z generations in the new era are more willing to consume for personal interests and other reasons.
Because their consumption tends to be rational, high-end luxury brands that used to travel in the Mainland as their main source are likely not to return to their pre-epidemic situation.
Domestic brands go out of the country
In addition to the changing consumption habits of the new generation in mainland China, their inclination towards brands is also gradually changing.
In recent years, mainland brands have actively moved into the high-end market, shedding the stereotype that Chinese-made products are only "cheap".
In recent years, the Sino-US confrontation has further promoted the popularization of some domestic brands.
For example, the United States imposed sanctions on Xinjiang cotton last year in response to the Xinjiang issue. Some Western sportswear brands that followed the sanctions, such as Nike, were banned from buying in the mainland, while domestic brands such as Li Ning were popular.
With the United States increasingly suppressing China, the momentum of China's promotion of domestic brands will only increase unabated.
An important direction for the development of Chinese brands is to bring products out of the mainland and to the world.
Li Ning's flagship team in Canton Road, Hong Kong is a significant milestone.
It can be expected that in the future, domestic brands will successively land in Hong Kong and further pave the way for internationalization.
However, in the process of going out of domestic brands, if we can only rent shops to them, then only a few industries such as the real estate industry will ultimately benefit, which is almost the same as the situation in the previous freelance era.
So we should think about what role Hong Kong can play in addition to this.
For example, Hong Kong can join the industry chain of domestic brands more actively, bring the effect of “going out” of domestic brands to the local real economy, and can also act as an intermediary for these brands to connect with foreign countries.
These are also part of the active integration into the overall development of the country.
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