How Chinese e-commerce giants are reshaping Hong Kong’s retail scene

They offer significantly lower prices and better after-sales service.

Hong Kong’s retail market continues to face significant challenges, evidenced by a continued decline in retail sales. According to a Knight Frank report, in February 2025, total retail sales value dropped further by 13% YoY to HK$29.4 billion, marking the 12th consecutive month of decrease.

The decline was partly influenced by the early arrival of Lunar New Year in late January this year. However, the combined retail sales value for January and February 2025 totaled HK$64.8 billion, still reflecting a 7.8% drop compared to the same period last year.

Here’s more from Knight Frank:

Recently, the movement of Chinese e-commerce giants like JD.com and Alibaba have been reshaping Hong Kong’s retail landscape. JD.com is set to launch a JD Mall focused on home appliances, while Alibaba has opened its first store in Tsim Sha Tsui. These developments not only expand consumer choices but also pose challenges for local retailers, as online platforms offer significantly lower prices and more efficient after-sales services.

These innovative online-offline models allow e-commerce retailers to be increasingly attractive to customers, further impacting traditional brick-and-mortar stores.

On a positive note, the Hong Kong Super March events significantly boosted visitor arrivals in Hong Kong. March saw over 3.4 million visitors, a 12% YoY increase, including 960,000 overseas tourists. The Hong Kong Sevens attracted a record audience of 140,000, while Art Basel and ComplexCon also reported strong attendance. Art Basel closed its doors with resounding success, attracting 91,000 visitors, a 21% increase YoY and ComplexCon drew 35,000 attendees, marking a 16% YoY increase. Hotel occupancy rates in prime districts approached 90%.

Besides, leasing activity in prime retail streets has gained momentum. Futu Securities International (Hong Kong) leased a 4,540-sq-ft space in Soundwill Plaza on Russell Street. The space was previously occupied by the Transformers: The Art restaurant, for HK$1.2 million per month, or an 86% decrease from 2015 levels. Despite the increased leasing activities, overall rents continue to face downward pressure due to declining retail sales.

Looking ahead, Hong Kong’s retail market is expected to see a slowdown in activity as retailers respond cautiously to global economic uncertainties and local stagnant economic growth. More landlords have begun to reduce rents to retain tenants, even for renewals – a trend that has rarely occurred in the past. This may lead to further declines in retail rents and dampen commercial real estate investment.