The Tsim Sha Tsui district of Hong Kong was buzzing on a Friday evening in mid-June, yet not a single customer ventured into Prince Beef Brisket and Offal Noodles in the heart of one of the city’s top tourism and shopping spots. Just next door, customers streamed into Hefu Noodle, a more stylish and spacious mainland Chinese chain with similar prices.
“They have taken away half of our business since they opened in December [last year], because their mainland owner has deep pockets for top-notch decorations,” lamented Fung, a Prince Noodles worker in her early 40s.
Hefu Noodle is one of many Chinese companies that have muscled into Hong Kong, from bubble tea and restaurant chains to purveyors of sportswear, electric vehicles, and gold. Even Alibaba, the Chinese e-commerce group, has opened a physical store in the city. These arrivals are reshaping the city’s commercial landscape, making Hong Kong appear more like a mainland metropolis.
The change on the surface has coincided with deeper political shifts, after the Chinese government imposed a national security law five years ago, tightening control over a city that once prided itself on its high degree of autonomy.
For some mainland companies, Hong Kong may now seem like just another major Chinese city to conquer. However, others still view it as a testing ground for expansion farther afield.
One example is Chinese food delivery giant Meituan, which entered Hong Kong under its overseas brand Keeta in 2023. Making its first move outside the mainland, Meituan quickly became the city’s food delivery leader, using cash-burning discounts that rivals struggled to match. Deliveroo, a British platform that had entered Hong Kong a decade ago, shuttered and left in March.
Now, Meituan is applying its experience in Hong Kong to the Middle East and Brazil.
Further evidence of the rise of Chinese brands is all over the streets of Hong Kong. Before 2022, Tesla dominated the city’s EV market, while Chinese marques were few and far between. Today, seven in ten newly registered EVs in Hong Kong are Chinese.
“In the old days, Hong Kong people would not buy Chinese cars. But now, the quality is pretty good, the price is irresistible, and the design is so fashionable,” said Eric Wong, chairman and CEO of Richburg Motors. Wong started out importing Toyotas from Japan in the 1990s but now imports MG brand cars from Shanghai government-owned SAIC Motor.
Although Chinese cars are gaining traction and the city government is promoting EV adoption with tax breaks and new infrastructure, Wong said there are limited profits to be found for Chinese automotive companies in Hong Kong, considering relatively high rents and tough price competition.
He said the main goal is brand awareness, while meeting the city’s European-level standards for safety and certification can be a step toward other overseas markets.
The influx of Chinese brands is partly a result of disruptions Hong Kong has experienced in recent years.
After the Covid-19 pandemic and the implementation of the national security law, vacancy rates in the Tsim Sha Tsui tourist zone soared. Retail sales in the city remain subdued: They declined for 14 straight months through April, although they ticked up in May. The government blames the slump on changing consumption patterns, a strong Hong Kong dollar and flows of residents traveling abroad.
At the same time, the mainland tourists Hong Kong relies on, which account for around 75% of 20 million visitors in the first five months of the year, have stopped splurging like they used to. Concerns about a slowing Chinese economy, a proliferation of international brands on the mainland, social media influencers promoting frugality and the availability of duty-free shopping in Hainan and online are all demotivating factors.
“I’m staying four days in Hong Kong, but I don’t want to spend a penny here,” said one visitor from Liaoning in her 40s, who spoke with Nikkei Asia in Tsim Sha Tsui.
“I used to buy bags and watches here, but luxury goods just aren’t cost-effective anymore, as most brands are available on the mainland. If it weren’t for business, I wouldn’t visit Hong Kong just for fun.”
Helen Mak, senior director and head of retail service at property consultancy Knight Frank, said that “over the past 20 years, mainland consumers went from having no luxury brands to now having access to a wide range of luxury brands. As a result, they no longer feel compelled to rush and buy in Hong Kong.”
Mak said that with tourists spending less and a property downturn squeezing the consumption power of Hong Kong’s middle class, some international brands are consolidating their presence in the city while others hesitate to move in.
Numbers from Invest Hong Kong, which helps overseas companies establish themselves and expand in the city, bear that out.
For the first time, mainland Chinese companies assisted by the government surpassed foreign entities in 2024. A total of 273 mainland companies entered—from technology and financial services companies to family offices, tourism businesses and consumer brands—versus 266 foreign companies. By contrast, in 2022, only 92 mainland firms set up shop, less than half the 208 from abroad.
While the conditions are deterring foreign brands, Chinese players flush with capital and hungry for growth and brand recognition see a weakened market ripe for new competitors.
Food and beverage chains, including bubble tea purveyors like Chagee, Mixue Bingcheng, Naixue, and Heytea, as well as eateries specializing in grilled or sauerkraut fish, Chinese-style skewers, and spicy rice or lamb noodles, have mushroomed in key districts such as Tsim Sha Tsui and Central, along with new shopping malls. Mainland retail names, including sportswear label Li-Ning and jeweler Laopu Gold, are also making inroads.
The cost of space, while not cheap by mainland standards, is also increasingly accessible thanks to the property woes. In Tsim Sha Tsui, Laopu Gold leased a 10,000-square-foot flagship store in the Silvercord shopping center for about HKD 1.5 million (USD 191,000) per month, according to local media. The same spot previously housed Burberry’s flagship store and commanded a peak monthly rent of HKD 6.5 million or around USD 828,000.
As the complexion of Hong Kong retail changes, so too do its demographics. Since 2022, the city has issued nearly 100,000 visas under its “Top Talent Pass Scheme” for professionals, with around 95% of them going to mainland Chinese, attracted by the city’s offer of different social provisions than the mainland, including better education and medical resources, as well as an absence of capital controls.
Anthony Cheung, a former secretary for transport and housing in the Hong Kong government, said the changes were largely to be expected. “It’s a quite natural phenomenon, because there have always been asymmetries between Hong Kong and the mainland, and until maybe the last ten years, those asymmetries more or less worked in favor of Hong Kong, although Hong Kong was a small economy,” he said.
“Looking at it purely from an economic angle, everything could be explained, because now even a city in the mainland, the GDP will be greater than Hong Kong,” said Cheung, now a professor of social sciences and policy studies at the Education University of Hong Kong. “Sociologically, there should always be this sense of local belonging. But what that means may change over time.”
For the Hong Kong government, which is increasingly working in lock-step with Beijing on security and economic matters, there is little incentive to change course, according to Gary Ng, senior economist for the Asia Pacific region at Natixis. It is “much easier” to attract Chinese chains than foreign ones, he said, and the presence of big Chinese names can also be chalked up as a “good political success.”
But Ng warned that the growing dominance of mainland brands risks eroding Hong Kong’s unique identity.
“What are the things that Hong Kong can offer that are different from China?” he asked.
For some foreign visitors, that may not matter much.
Teeda, a 35-year-old Thai visitor to Hong Kong, made a beeline for a Chagee bubble tea store in Tsim Sha Tsui in June, although it is also available in Thailand. “I think the ones in Hong Kong may be more authentic and I can get this pretty paper bag here,” she said.
As for Fung at Prince Noodles, there are more immediate concerns than Hong Kong’s distinctiveness.
“I don’t know how much longer we can sustain this,” she said of the competition with mainland Chinese chains. “We’re genuinely worried that if the losses continue, we may be forced to close down.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.