Li Ka-shing’s ParknShop imports more goods from mainland China as Hongkongers flock to Shenzhen for cheaper goods

The supermarket chain is trying ‘to save Hong Kong people the trouble of travelling long distances,’ says CK Hutchison chair
Some 200,000 Hongkongers cross the northwest border on shopping expeditions every weekend, according to an estimate by the city’s chief executive

Retailing

Cheryl Arcibal

Published: 7:31pm, 23 May 2024

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The ParknShop supermarket chain is importing more products from mainland China in response to the changing spending habits of Hongkongers who have taken to travelling to Shenzhen and other nearby mainland Chinese cities where they can shop and dine at cheaper prices, according to the chairman of CK Hutchison.

It comes at a time of slowing retail sales in Hong Kong. They fell 7 per cent in March from a year ago, marking the first decline since the border with mainland China reopened post-Covid in 2023, according to data cited by JLL.

Sales in the supermarket segment dropped 3.4 per cent in the period, the property consultancy added.

“The changes in Hong Kong people’s consumption patterns have brought considerable challenges to Hong Kong’s retail businesses,” said Victor Li Tzar-kuoi during CK Hutchison’s annual general meeting on Thursday. “Our colleagues in the retail division are actively responding by adjusting the product mix of stores.”

CK Hutchison, one of the flagship companies of Hong Kong tycoon Li Ka-shing, owns the grocery chain, which has 250 outlets in Hong Kong and Macau, as well as other supermarkets such as Taste and Fusion under the AS Watson Group, the world’s largest health and beauty retailer.

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ParknShop is trying “to source products from around the world and the mainland and offer discounts so as to save Hong Kong people the trouble of travelling long distances while getting good value for money right here in Hong Kong,” Li said.

In 2023, the segment of AS Watson that includes ParknShop saw revenue plummet 15 per cent, making it the weakest of all the geographical subcategories, according to CK Hutchison’s latest annual report. That compared to an increase in turnover of 23 per cent in its Eastern Europe division, at the other end of the scale.

With half-price bargains on many goods and services available in the nearby mainland cities of Shenzhen, Guangzhou, Zhuhai and Zhongshan, 200,000 Hongkongers typically cross the northwest border on shopping expeditions every weekend, according to an estimate by Chief Executive John Lee Ka-chiu.

In Shenzhen, Hongkongers made more than 35 million digital transactions worth about 8.6 billion yuan (US$1.19 billion) in 2023, an increase of 70 per cent from the previous year, according to data tracked by Cushman & Wakefield.

Adding to the woes of Hong Kong’s retailers, US supermarket chain Sam’s Club is planning to launch online shopping and delivery services in Hong Kong. The development sparked a warning from economist Simon Lee Siu-po, an honorary fellow at the Chinese University of Hong Kong’s Asia-Pacific Institute of Business, that the American retailer’s plans were likely to deal a severe blow to the city’s supermarket chains and online shopping platform HKTVmall.

Meanwhile, Li said CK Hutchison would work with the government and the industry “to find a path for the development of Hong Kong’s container terminals”, noting that throughput is still declining. Li had proposed the construction of housing above the ports.

“Whether the container terminals’ land use should be changed is a major issue and beyond our control,” he said. “These are decisions that should be made by the government.”