Shenzhen tourists spur Hong Kong retail demand

A more lenient entry policy is benefiting tourism-related sectors.

Chinese easing of visa restrictions for Shenzhen residents visiting Hong Kong is boosting retail demand in the city, with some businesses already reporting double-digit sales growth.

“The resumption of multiple-entry visas for Shenzhen residents has breathed new life into Hong Kong's dining and retail sectors, particularly following a period of subdued activity,” Javier Calvar, group service line head at Ipsos Hong Kong, told Retail Asia.

The policy, which took effect on 1 December 2024, and other measures such as higher duty-free allowance for mainland visitors are boosting tourism, he said in an emailed reply to questions.

The more lenient entry policy is benefiting tourism-related sectors such as retail and catering, with more than 10 million residents now eligible. China earlier reinstated the multiple-entry policy from 2009, which was tightened in 2015 when Shenzhen residents were only allowed to go Hong Kong once a week.

The restriction was meant to quell anger in Hong Kong over traders making trips up to several times a day to take advantage of lower taxes by buying goods for resale in Mainland China.

The easing coincided with the Christmas and New Year holidays, boosting Hong Kong’s consumer economy. Retailers particularly those in high-traffic areas have seen an uptick in footfall from Shenzhen tourists.

Hong Kong posted 4.74 million visitor arrivals in January, a 24% increase from last year and driven by the Chinese New Year celebrations, according to the Hong Kong Tourism Board. Mainland visitors hit 3.73 million, up 25% from a year earlier.

Lucia Leung, director of research and consultancy at Knight Frank LLP, noted that despite the positive signals, the latest retail sales data showed mixed results. For instance, fast-food outlets posted a 7.2% increase in receipts in 2024, but restaurants experienced a 0.1% dip, she said, citing December data from the Census and Statistics Department.

“The effects of this scheme will necessitate an extended observation period,” she told Retail Asia.

Hong Kong retail sales fell 9.7% to $4.2b (HK$32.8b) in December from a year earlier, partly reflecting the impact of residents' increased outbound trips during the holidays, the Census and Statistics Department said in a 6 February report. Full-year sales fell 7.3% to $48.5b (HK$376.8b).

Tourism blueprint

Calvar expects a turnaround in the coming months, with mainland tourists likely to drive growth particularly for luxury brands, cosmetics, and pharmacies.

“The increased foot traffic from Shenzhen is providing a welcome boost to retailers and restaurants, many of whom had been struggling with reduced tourist numbers in the post-pandemic period,” he added.

Calvar said many visitors prioritise sightseeing over shopping, which has affected retail sales and complicates tourism’s effects on prices and supply.

Paris-based market researcher Ipsos Group S.A. in a report last year said 73% of mainland consumers would pay more for better service, compared with 58% of Hong Kong citizens. Mainland visitors, especially those from Guangdong province account for the biggest share of Hong Kong’s tourism market.

“Mainland Chinese visitors have consistently been the strong backbone of Hong Kong’s retail market and tourism sector,” Leung said. “Even though consumption and shopping patterns have changed significantly in the post-pandemic era, mainland visitors still account for 77% of the total visitors to Hong Kong.”

Calvar said declining local spending as residents travel more, a strong Hong Kong dollar that raises prices for tourists, and a shift to e-commerce is compounded by expensive retail rent and increased competition from Mainland China, where goods are often cheaper.

Leung said the luxury sector is struggling as mainland Chinese tourists prefer experiences over material goods.

Hong Kong retailers should create unique in-store experiences and enhance their e-commerce and social media presence, Calvar said. Leung, meanwhile, said they should compete in the bigger Greater Bay Area, not just in Hong Kong.

Leung said the city’s more lenient entry policy could become a tourism blueprint for other mainland cities like Beijing and Shanghai.