The Hong Kong government has rolled out yet another campaign to stimulate consumption, focusing this time on the night economy. It is unclear where this idea came from, but officials have once again failed to address the structural issues of the city’s tourism industry and economy.
After three years of Covid-19 restrictions, Hong Kong is no longer a city that never sleeps: there are fewer people on the streets, and more restaurants and shops close early. The “
Night Vibes Hong Kong” campaign includes activities such as fireworks, night markets, evening transport fare subsidies and
shopping perks, aiming to repair the damage. To most residents and tourists, the ideas are old-fashioned. When it comes to reviving the economy, the government is aiming at the wrong target.
While Hong Kong’s private final consumption expenditure has recovered in recent months, it only reached 99 per cent of pre-pandemic levels in the second quarter of this year, lower than the average of 107 per cent in Asian economies. The subdued night economy is only a symptom of a bigger problem, and it is about the lack of demand, not cyclically but structurally. There are three main challenges: a lack of competitiveness, changed consumer preferences, and shifting corporate strategies.
As an unintended but long-lasting consequence of Covid-19 policies, the development of Hong Kong’s consumption and tourism-related sectors has stalled. Meanwhile, regional peers are moving on and investing for the future. Hong Kong’s declining competitiveness and worsening cost-price ratio have made it less attractive to tourists, even as Hongkongers spend elsewhere in a post-pandemic wave of “
revenge travel”.
The emergence of social media platforms such as
Xiaohongshu has allowed Hongkongers to get to know travel spots in other Chinese cities. The Greater Bay Area integration has benefited Shenzhen more than Hong Kong thus far, as more people travel to Shenzhen at the weekend than vice versa, encouraged by the streamlining of cross-border payments and transport, and
lower prices on the mainland.
While it is unfair to blame the tourism sector for not investing when survival was the priority, the Hong Kong government and businesses appear unprepared for
changed consumer preferences and spending habits. Tourists no longer seek a shopping-centric experience. With the well-developed e-commerce landscape and an increased pursuit of high-quality experiences, shopping has become merely one of many tourist activities.
