Hong Kong retailers should invest in China, e-commerce to drive growth, experts say

As retail sales return to growth after two years of continuous decline, there are two things Hong Kong’s merchants and brands should be doing to keep that momentum going, say industry experts.

The first is to break out of their comfort zone of ‘physical retail’ and the second is to expand into mainland China.

“2016 was the most difficult year in the Hong Kong retail and consumer products sector in the last decade,” Michael Cheng, PwC Asia-Pacific and Hong Kong/China retail and consumer leader, told journalists on Wednesday.

He cited Hong Kong’s tightening of the multiple-entry visa scheme last year and the Chinese government’s anti-corruption drive as the main reasons for the slump in the number of mainland tourists spending money in Hong Kong since 2014.

Cheng said Hong Kong’s retail industry should reduce its heavy reliance on mainland visitors, and should instead attempt to attract more global and local customers to boost the market.

“If Hong Kong retailers want to grow, they need to do something more, leave their comfort zone and go into e-commerce, invest in China,” Cheng said, pointing out that the city’s merchants still heavily rely on physical retail.