Chinese opt for trendy McDonald’s over Hermes in blow to Hong Kong tourism

HONG KONG – Mainland Chinese visitors to Hong Kong used to flaunt Hermes handbags in shopping malls for social media photos. These days, the most popular kind of post is of a tourist holding a McDonald’s takeaway bag on a quiet street in the city’s Mid-Levels district named MacDonnell Road.

Hong Kong is welcoming a new kind of post-pandemic Chinese tourist, who instead of splurging on luxury items now opts for more low-key activities.

Getting their cues from influencers on Xiaohongshu, an Instagram-like app, many take selfies on streets with quirky names or dense residential complexes, while others pose outside a police station that has been prominently featured in classic Hong Kong movies.

The changes in travel habits, brought on by a younger generation of social media users, come as the Chinese economy weakens, with younger people in particular adjusting their consumption patterns as youth unemployment remains high. Consumers across the country travelled and spent less than expected during the recent Golden Week holiday.

“Most of my time in Hong Kong now is for taking photos by following the footsteps of influencers on Xiaohongshu,” said Mr Mike Guo, a tourist from Beijing, after taking pictures beside a road sign in the Kennedy Town neighbourhood. The area has attracted many Chinese tourists because of its proximity to the sea and trendy coffee shops.

That is hurting Hong Kong’s hopes of turning to mainland Chinese tourists to prop up its sluggish economy. Before Covid-19, the tourism industry contributed about 3.6 per cent of Hong Kong’s gross domestic product and employed about 232,700 people, accounting for about 6 per cent of employment, according to the government.

During Golden Week in 2023, retail sales in the city were similar to those of a regular weekend in Hong Kong, even though shops saw an increase of 20 per cent to 30 per cent in foot traffic, said Mr Oliver Tong, head of retail in Hong Kong at JLL. The pessimism is even extending to the next Chinese New Year holiday, he added. 

The sale value of luxury goods, including jewellery and watches, was HK$5.2 billion (S$910 million) in August, according to the Census and Statistics Department, a 31 per cent fall from the same period in 2018 before large-scale political protests and Covid-19 hit the city.

The retail and services industries further suffered as Hong Kong residents leaving the city outnumbered tourists coming from the mainland. There were a total of 1.5 million departures, while the number of travellers from the mainland stood at about 970,000, according to data from the Immigration Department. 

Another major factor taking the sheen off Hong Kong is the strength of the dollar-pegged local currency, with the offshore Chinese renminbi weakening almost 5 per cent against the Hong Kong dollar since the beginning of the year. The two currencies are now close to parity.

“Very few people come to Hong Kong for shopping because it is not very cheap under the current exchange rate,” said Mr Guo, who used to fly to Hong Kong once a month for shopping and buying insurance, but now thinks there is no big price difference between Beijing and Hong Kong for luxury goods.

And while Hong Kong used to be the undisputed shopping destination of China, the city is now facing fierce competition from Hainan province. The tax-free tropical island in the country’s south is emerging as the hottest destination for luxury shopping, with global brands increasing their presence there. Last week, LVMH’s duty-free unit DFS Group announced that it would build a mega mall there, the company’s first in mainland China.

“Nowadays, I buy luxury products only in Sanya, Hainan, because I can get a better deal there,” said Ms Shi Jiaxing, who was visiting Hong Kong for the first time from Guangzhou, a city just one hour away by high-speed train. Ms Shi spent the afternoon taking pictures with her friends near a harbour-front coffee shop in Kennedy Town.

The changing behaviour of Hong Kong’s biggest group of visitors is a wake-up call to its tourism industry, which has been criticised in recent years for its complacency and slowness to evolve beyond promoting consumption-led attractions.

For example, the government recently launched a campaign to promote Hong Kong’s nightlife by setting up night markets selling local snacks and souvenirs, which attracted more locals than tourists. 

Mr Paul Chan, co-founder of Walk in Hong Kong, a company offering walking tours, believes that the tourism industry should take the opportunity to change. Beyond shopping malls and restaurants, the city has distinctive cultural offerings like its old neighbourhoods and more rural areas, he said.

“We urgently need to diversify our image to let the rest of the world know that we have much more to offer,” said Mr Chan. BLOOMBERG