Hong Kong is struggling to recover from the COVID pandemic, which saw many expatriates leave after a three-year shutdown, and tourist numbers dwindle. Jacky Yu is one of the shop owners making the difficult decision to close down their stores.

Hong Kong Island

Hong Kong is facing significant economic challenges as it attempts to recover from the impact of the COVID-19 pandemic. The city, known for its vibrant street life and tourist attractions, has seen a downturn in activity, with many shops closing their doors for good. Shop owner Jacky Yu has decided to shutter his Japanese gift shop in Mong Kok, opting to move his business online after 12 years in operation. The decision comes amid a struggling local economy, with reduced customer foot traffic attributed to a combination of factors including emigration, locals shopping in mainland China, and a decrease in tourism.

Mong Kok, once a bustling shopping hub, has been particularly hard hit. The district's decline reflects broader issues faced by Hong Kong, including a diminishing number of tourists and changing shopping habits. Yu expressed deep sadness over the closure of his store, noting the lack of financial viability as the main reason for his decision. The situation is a testament to the harsh economic conditions gripping the city. 

The downturn has led to a startling increase in business closures, with over 20,000 companies deregistering in the first quarter of 2024 alone, marking a 70% increase from the previous year. This trend persists despite the arrival of the Golden Week holiday, a period traditionally associated with a surge in shopping and entertainment activities. In response, city leaders, including John Lee, have emphasized the need for businesses to adapt to changing circumstances, suggesting that the economic landscape is evolving.

Tourism has suffered a significant blow, with the number of mainland Chinese tourists visiting Hong Kong dropping nearly 39% in 2023 compared to 2019, pre-pandemic levels. Similarly, spending by these tourists has seen a sharp decline, negatively impacting retail and service sectors. The reopening of the border with China has not resulted in the anticipated economic boost, with sales in some businesses halving again post-pandemic.

These challenges are compounded by the behavior of Hong Kong residents, who are increasingly opting to travel to Shenzhen in the Greater Bay Area for shopping and entertainment, drawn by lower prices and superior services. This shift in consumer behavior is viewed by experts like Vera Yun, a lecturer in economics at the University of Hong Kong, as part of a larger trend towards economic integration with the Greater Bay Area. However, this trend also makes Hong Kong less attractive to tourists, exacerbating the city's economic difficulties.



Hong Kong shops shut amid post pandemic downturn

Jackie Yu is closing his Japanese gift shop in Hong Kong after 12 years. He has made the difficult decision to move it online. The store is located in the city's shopping district of Mong Kok, a once-bustling hub packed with stores, street food and tourists. But now parts of the area are struggling to stay afloat. It's due to a combination of customers emigrating, locals heading across the border to shop in China, or travelling to Japan to benefit from a weak yen and dwindling tourist numbers. I almost want to cry when I talk about it, because I've been doing this business for a long time, and I'm really reluctant to let it go. But there's no choice. The overall economic situation has forced me to do this, because if I don't close the shop, I simply don't have the money to pay the rent. Hong Kong has been struggling to recover since the global health crisis Edmund Wong, an accountancy sector lawmaker, told the city's legislature on April 19 that more than 20,000 companies had deregistered in the first quarter of 2024, up more than 70 percent from the same period last year. Even with Golden Week holiday starting on Wednesday, a traditionally busy time for shopping and entertainment, many businesses are not optimistic. But on Tuesday, the city's leader John Lee played down concerns about businesses closing. The world is always changing, and different industries will need to adapt. So there will be operators who are not so successful, but newcomers are getting into the market. The number of mainland Chinese tourists in Hong Kong has plunged. After the city reopened its border with China last year post-pandemic, the Tourism Board recorded a nearly 39 percent drop in mainland visitors in 2023, compared with 2019 before the global health crisis. Spending by same-day mainland tourists dropped from an average of about $281 per person in 2019 to about $174 four years later. Since the pandemic passed and the border reopened, our business has actually been worse than during the pandemic, decreasing by another half in terms of sales. At the same time, Hong Kong residents are also deserting local shops. They are increasingly traveling across the border to Shenzhen for food and entertainment, where they say prices and services are better. Vera Yun is a lecturer in economics at the University of Hong Kong. First, it's about the integration with the Greater Bay Area. More Hong Kong people now find it great and cheap to just consume in the Greater Bay Area. In return, when tourists come to Hong Kong, they will find it very expensive, the services are not that good. It's unattractive.

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