Hong Kong Losing its Luxury Lustre

A shopper emerges from Louis Vuitton in Hong Kong

Hong Kong seems to be losing its magnetism to attract mainland shoppers to come and buy luxury brands, losing out to Chinese cities like Shanghai, Chengdu, Guangzhou and even Shenzhen, which is just across the border.

The global luxury conglomerate, that has a portfolio that includes Louis Vuitton, Loewe, Berluti, Rimowa, Fendi, Christian Dior, and Givenchy to name a few, is gradually extracting itself from Hong Kong and moving the regional headquarters to Shanghai along with some of its senior executives.

Christian Dior boutique in Harbour City, TST

Since the 2019 protests till now, Hong Kong has been struggling to lure shoppers back, who used to wait patiently in queues outside these shops to snap up the latest handbag, shoes and clothes, as they didn't have much faith in the same products being genuine on the mainland. It was also a cache to be able to boast purchasing these items on a shopping spree in the city.

But after the three year-long Covid-19 pandemic, it seems like the shine of Hong Kong has gone dull and mainland tourists prefer to go elsewhere or stay closer to home to shop.

For example, duty-free sales in Hainan more than tripled to 49.5 billion yuan (US$7.2 billion) in 2021 from 2019, according to Bloomberg Intelligence. Even during last year's zero-Covid chaos, sales were still more than twice the size of pre-pandemic levels.

Even Macau is getting a slice of the luxury pie. The gambling hub's visitor arrivals have recovered to about 62 percent of 2019 levels over the recent Easter holiday, compared to 44 percent for Hong Kong -- which does not bode well for the latter city.

Shoppers lining up at Gucci in Hainan

As Hong Kong loses its significance in the luxury brand market, it could have a knock-on effect on hotels, restaurants, tourism and retail.

Chief Executive John Lee Ka-chiu needs to think of another way to revive Hong Kong's economy quick otherwise it's going to die the death of ten thousand cuts. Or this was Beijing's plan all along?