Five minutes to Shenzhen: Can Hong Kong win back its shoppers?

(Edited and refined by Candice Chan, with the assistance of AI translation.)

The new Huanggang Port linking Hong Kong and Shenzhen officially opened at 6.30 am on 12 October. The day before its opening, the Hong Kong and Shenzhen governments held a grand joint ceremony on the Shenzhen side of the border, pledging to deploy sufficient personnel and maintain close coordination through a joint command centre to ensure safe and smooth operations at the checkpoint.

Hong Kong and Shenzhen currently have eight land border crossings. Yet for Hong Kong residents who frequently travel to and from mainland China, the opening of the new Huanggang Port marks a milestone in the integration of the two cities. For years, one of the biggest frustrations for Hong Kong residents heading north to Shenzhen to dine and shop has been the hassle of crossing the border. Take Lo Wu, the oldest border crossing. Its connection to the East Rail Line makes it convenient, but its facilities are ageing and space is limited. On public holidays, Hong Kong residents taking the East Rail Line to Lo Wu often find themselves packed shoulder to shoulder in the departure hall, barely able to move.

After finally clearing Hong Kong immigration and crossing the bridge, they face yet another round of queuing for immigration and security checks on the Shenzhen side. The security screening area there is just as cramped, with travellers jostling against one another when crowds build up. The experience is particularly taxing for elderly passengers laden with bags and other belongings. Spending an inordinate amount of time crossing the border at Lo Wu has become an all-too-familiar experience for Hong Kong residents.

By contrast, the new Huanggang Port is spacious, with Hong Kong and Shenzhen immigration and customs facilities housed in the same building. The new checkpoint is expected to slash clearance times, allowing travellers to cross the border within five minutes. For Hong Kong residents heading north, this could mean an end to the overcrowding and long queues, making travel between the two cities more convenient.

Pressure on Hong Kong’s industries

However, things may not be so simple for Hong Kong’s retail, food and beverage (F&B) and hotel industries. For residents of the New Territories and even parts of Hong Kong Island and Kowloon, if crossing the border takes just five minutes instead of half an hour at the checkpoint that operates around the clock, heading to Shenzhen for dinner could soon be little different from going to Causeway Bay or Mong Kok. This would put considerable pressure on Hong Kong’s F&B industry.

The sector is already struggling. In the second quarter of this year, total restaurant receipts amounted to approximately HK$27.2 billion (US$3.47 billion), an increase of just 0.4% year-on-year. After adjusting for inflation, however, receipts actually fell by 0.4% in real terms. The reality is that Hong Kong restaurants are no longer just competing with the eatery next door — their biggest rival in recent years has been Shenzhen’s dining scene.

Offering a wide variety of restaurants, lower prices and good service, Shenzhen has drawn growing numbers of Hong Kong diners across the border in recent years. With the opening of the new Huanggang Port, it is easy to imagine even more Hong Kong residents heading to Shenzhen for dinner after work, and Hong Kong restaurants will be among the first to feel the squeeze.

Why should Hong Kongers shop locally?

The retail sector is facing a similar situation. Hong Kong’s retail market has been recovering this year, with total retail sales reaching approximately HK$32.1 billion in August, up 5.6% year-on-year and marking the 16th consecutive month of growth. The opening of the new Huanggang Port will not immediately send Hong Kong’s retail sector into a slump, but the nature of competition has fundamentally changed.

In the past, Hong Kong retailers only had to think about how to attract local shoppers. Now, they face a more pressing question: why should Hong Kong residents shop locally when they can get to Shenzhen via the new Huanggang Port in just 30 minutes? That is the real challenge posed by the new crossing.

The hotel industry is the third sector likely to feel the impact. The new Huanggang Port will make travel between Hong Kong and Shenzhen easier for residents of both cities, while making day trips to Hong Kong for mainland Chinese visitors more convenient. In the past, mainland tourists attending an evening concert in Hong Kong might have opted to stay overnight rather than face the hassle of crossing the border late at night. But with the new checkpoint open 24 hours a day and clearance taking only a few minutes, many may now choose to return to Shenzhen in the early hours of the morning. Likewise, families visiting Hong Kong for shopping and sightseeing may see little reason to book a hotel room if getting home is easy enough.

Nonetheless, just as Hong Kong residents can cross into Shenzhen in five minutes, Shenzhen residents can make the journey south just as quickly. This raises a question for Hong Kong’s government and society: does the city still have enough to offer to persuade Shenzhen residents to cross the border and spend their money in Hong Kong?

How can Hong Kong compete?

For decades, Hong Kong’s retail and tourism industries enjoyed advantages stemming from the differences between Hong Kong and Shenzhen’s economic and regulatory systems. With a wider selection of foreign goods than mainland China and lower taxes, many Hong Kong businesses could get by without making much effort to innovate. Those days are gone. Shenzhen has rapidly raised the standard of its restaurants, entertainment and services, all while offering lower prices.

Hong Kong cannot hope to compete on price alone. Instead, it needs to play to strengths that are difficult to replicate on the mainland, particularly its distinctive urban character and unique blend of Eastern and Western cultures.

Seen in this light, the new Huanggang Port is not the cause of Hong Kong’s retail and F&B woes; it is simply honing in on existing problems. Concerns that the new crossing will further divert consumer spending away from Hong Kong are not without merit. But Hong Kong cannot wish for border crossings to remain inconvenient simply to keep local spending from flowing north.

The broader push towards integration within the Guangdong-Hong Kong-Macau Greater Bay Area is not going away. As new transport infrastructure, including the Northern Link Spur Line, comes on stream, Hong Kong and Shenzhen will only become more closely connected.

The question Hong Kong businesses should be asking, then, is not how to stop residents from spending money in Shenzhen, but why they are so keen to do so in the first place. If Hong Kong’s retail, F&B and tourism industries cannot come up with a convincing answer, it will only be a matter of time before another border crossing or railway line draws consumers away.

Meanwhile, if Hong Kong can rediscover what makes it special, the hundreds of thousands of people expected to pass through the new Huanggang Port each day could become a valuable source of new customers.

Ultimately, whether closer transport links prove to be an opportunity or a threat depends less on the border crossing itself than on Hong Kong’s ability to remain attractive and competitive.

This article was first published in Lianhe Zaobao as “深港口岸融合是机遇还是威胁？”.

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