Hong Kong businesses test waters in Hainan, China’s shopping mecca, aiming to seize on post-Covid consumption boom
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Ken Wong, director of All Time Healthy, a Hong Kong-based health supplement producer and retailer, is busy preparing to register a new company in May or June in China’s southernmost province and holiday destination, often compared to Hawaii.
“We hope to do some trading [via the new entity]” to attract bulk purchasers, distributors and wholesalers, Wong said, adding that he is betting that more favourable tariff policies on the island will help boost sales to the broader mainland market.
Around 35 companies and more than 50 brands exhibited their products – foods, health supplements, fashion, jewellery, watches and personal-care products – last week at the annual China International Consumer Products Expo in Hainan, many of them for the first time.
“Hong Kong is now gradually paying more attention to the whole domestic consumer market, with many companies switching to creating their own brands and doing marketing by themselves,” said Peter Wong, Southern China regional director at the Hong Kong Trade Development Council. He added that firms from the city are also comparing Hainan and the Greater Bay Area as they plot their next expansion plans.
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“We are trying to develop the mainland market this year, and we are optimistic about the domestic market,” said Aaron Sze, business development manager at the start-up, based in Kowloon. “We want to seize every opportunity to showcase our products.”
Hong Kong companies have contributed 76 per cent of Hainan’s total foreign investment since 2018 when Beijing announced its plan of building the province into a free-trade island, according to official data. Some 2,026 Hong Kong companies were created in Hainan during the same period, representing 42.4 per cent of the total number of international firms.
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As Beijing strives to boost domestic consumption to support economic growth this year, companies see reconnecting with consumers and gaining market share in the mainland market as vital, especially amid fiercer competition.
“It’s our first time to the expo, and we’d like to increase our exposure,” said Jane Ng, sales and marketing officer at On Kee Dry Seafood. “After all we were shut [out of the mainland market] for three years, and we had barely been in touch with clients. It’s also a way of surveying the market.”
All Time Healthy’s Wong, On Kee’s Ng and Omnicare’s Sze said they witnessed better-than-expected sentiment among participants at the expo and shoppers in Hainan, with strong purchasing power in evidence although consumer consumption in China is expected to take time to fully recover to pre-pandemic levels.
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Hainan is trying to offer its strengths as a unique free-trade port, especially its favourable tariffs and proximity to both mainland China and Southeast Asia, two of the fastest-growing consumer markets in the world, said Huang Cui, deputy director general of the Hainan Provincial Bureau of International Economic Development.
“Some industries are more suitable to come to Hainan, such as those in manufacturing,” said Huang, referring to the island’s cheap and plentiful land supply. “Hainan also needs Hong Kong’s talent and strengths in sectors such as services and logistics.”