Hong Kong consumers in 2020: A look into the future

Opinion | 15 Sep 2010

Hong Kong had one of the world's lowest

Daphne Kasriel-
Alexander fertility rates of just one child per woman in
2009, according to Euromonitor International
Consumer Trends
data. Hong Kong's ageing population and its
Consultant
potential impact on the economy in the future
is a significant issue of concern, both for residents and policymakers. By 2020, over
17% of the population will be 65 years old or older. Hong Kong's low fertility rate and
high life expectancy will present extreme pressure on providing for senior citizens who
are no longer in the workforce. Although immigration is likely to cushion the negative
effect of Hong Kong's ageing population, many policymakers see it as potentially only
one part of a greater solution. With rising house prices and work pressures coupled
with a burgeoning waistline, what will Hong Kong consumers be like in 2020?

HONG KONG CONSUMERS TODAY

Life is not a bed of roses

If you think you've got it tough - you have. That is the view of life in Hong Kong,
revealed by a poll conducted in early 2010 by Xinhuanews, an online news portal.
Among minuses in the quality of life seen for white-collar workers are the competitive
working environment and people struggling to make ends meet, sacrificing health and
even love. "Working overtime is a catchword of Hong Kong people," the news website
says, and "very few people have the luxury to shop during the day. The streets are
usually packed with tourists." Many workers do not have time to watch television, nor
is there time to seek romance resulting in a drop in the number of marriages and a
higher rate of divorce. According to a survey conducted by the Hong Kong United
Youth Association in March, about 70% of university students in Hong Kong say they
would be willing to work on the Chinese mainland after graduation. Of this group, 22%
would "very much" like to find a job on the mainland. "The job market in Hong Kong has
become increasingly competitive, leading a growing number of its university students
to look towards mainland cities like Shanghai and Beijing for opportunities," said Adrian
Yip, managing vice chairman of the association.

Annual gross income in Hong Kong: 2005- 2009

US$ billion
Source: Euromonitor International from national statistics
Note: Conversion to US$ based on current terms using year-on-year exchange rates

It's going to be tougher than ever

Hong Kong consumers are bracing themselves for higher prices for food due to
widespread flooding on the mainland and an appreciating yuan. "Floods and droughts

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on the mainland in recent months significantly reduced the supply of livestock," said
Hong Kong Livestock Industry Association chairman Kwok Sze-hing. "Coupled with the
high yuan exchange rate, prices could rise by up to 40% by the end of the year."
Eateries are also feeling the pinch and passing on the costs to consumers. "We're
under pressure to push up prices because commodities like oil, salt and sugar have
been costing more in recent months," said Simon Wong Ka-wo, chairman of the Hong
Kong Federation of Restaurants and Related Trades. Li Kui-wai, associate professor of
economics and finance at the City University of Hong Kong expects inflation in Hong
Kong to reach 3% by the end of the year.

Playground of choice for mainland tourists

Hong Kong is the first choice of many Chinese mainland residents when they travel
abroad, according to the Beijing office of the Hong Kong Tourism Board (HKTB). More
than 90% of over 8,000 netizens on the Chinese mainland surveyed late last year said
Hong Kong is the very place they hope to visit the most. Many respondents said they
were impressed by Hong Kong as a "shopping paradise". Becky Ip, director of HKTB's
Beijing office, said: "I am really proud of Hong Kong being chosen as the mainlanders'
dream tourism destination. We will launch more tourism programmes and provide quality
services to mainland tourists." Mainland Chinese consumers are especially attracted to
the wider selection of luxury goods in Hong Kong and the fact that Hong Kong has no
sales tax, unlike mainland China. Luxury goods can be 10%-20% cheaper than they are
on the mainland.

EMERGING HONG KONG CONSUMER TRENDS

Will I ever own a home?

Hong Kong made international headlines in August when local developer Henderson
Land announced that a five-bedroom luxury apartment in the affluent Mid-Levels
district had sold for HK$71,280 (US$9,197) per square foot, setting a new world record
amid the global financial crisis. The price has taken the city by surprise, with potential
buyers and industry players worried the skyrocketing luxury housing market, driven by
wealthy mainland Chinese, will create a bubble in the low and mid-end housing
markets. Yan, a young doctor, said that the rising cost of housing is squeezing the
middle class - the traditional backbone of the city's economy - out of the real estate
market in downtown Hong Kong. "I am a doctor and my boyfriend is a barrister, yet we
can't afford an apartment," she said. "As middle-class citizens, we do not ask for any
favours from the government. But the property market has been fuelled by 'hot' money
from China. How can we afford a mortgage down payment now?" she added
indignantly.

Tourists forced to shop till they drop

Mainland Chinese consumers are known to visit Hong Kong just to shop. However,
some are forced onto "long shopping marches," and one Chinese tourist recently died
of a heart attack after arguing with a tour guide when the former refused to shop. The
local authorities have been forced to step in after a video of a tour guide chiding
tourists for not buying enough started doing the rounds on the internet via YouTube,
causing uproar in China. Tour guides routinely try to persuade tourists to buy from
expensive shops, earning themselves a healthy commission in the process. During
2010, the number of complaints from Chinese tourists about Hong Kong tour guides has
grown steeply, with more than 170 complaints lodged in the first half of the year.

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Skyscrapers turning up the heat

Yip Yuk-mui, who has lived on an older estate in Tai Kok Tsui for more than 20 years,
lost more than her sea view when new high-rises went up in front - she also lost the
sea breezes that cooled her home in the summer and her electricity bill doubled as she
had to keep the air conditioner on to keep the temperature down. Yip is among about
10,000 residents of the area, many of them elderly, whose comfort levels have
plunged as the high-rises have soared. "In summer, my flat is like a fireplace," she
said, adding that the temperature in the bedroom of her flat on the Cosmopolitan
Estate could be as high as 36 degrees Celsius. Lau Pak-kei, a senior community
development officer with the Democratic Alliance for the Betterment and Progress of
Hong Kong, said he has handled about 20 similar complaints each month, especially in
summer. "People sweat and grieve about the deteriorating living environment caused
by walled buildings," Lau said, adding that open space nearby provided no shade.

HONG KONG CONSUMERS IN 2020

The ballooning waistline

Hong Kong has always been considered a foodie's paradise, and it is no surprise that
obesity will become a major issue in the decade to come. A study has found that
although Hong Kong consumers eat a healthy diet that is rich in fruit and vegetables
and low in salt and sugar, almost half of them are overweight or obese. The study
which surveyed 5,008 adults aged 20- 84 was conducted by the Centre for Food
Safety Hong Kong. Children are also being warned of obesity. In a single generation,
Hong Kong children have moved from healthy traditional diets to living on fast food and
high fat snacks. During break time, secondary school students crowd round food stalls,
buying fried chicken wings, crisps and other fatty snacks - a habit that is not likely to
change in the next decade. Dr Henrietta Ip, a paediatrician who chairs the Hong Kong
Child Health Foundation, says: "Because they are fat when they are little, they grow
up into little fat kindergarten children, become fat primary schoolchildren and this goes
on." With both parents often working full-time, the traditional Chinese diet with several
shared dishes is being swapped for fast food.

Obese people as a percentage of the general population aged 15 in Hong Kong: 2005-
2010, 2015 and 2020

US$ billion
Source: Euromonitor International from OECD/International Obesity Taskforce
Note: Data for 2010 onwards is forecast. Obesity is classified as individuals having a BMI of 30 and
above.

Properties to remain out of reach for locals

Cashed-up mainlanders snapped up almost one in five luxury flats sold in Hong Kong
last year, a sign of their growing economic might in the city. Research by the
Centaline Property Agency shows mainlanders made up 18.1% of buyers of flats worth
more than HK$12 million (US$1.6 million) each last year, compared with 11.2% in 2008.
Ricky Poon, an executive director of residential sales at consultant Colliers
International, expects mid-level residential prices to rise a further 5% to 8% over the
next 12 months, while luxury residential prices will rise a further 5% to 10%. With the
property boom set to continue, The South China Morning Post, an English-language

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daily newspaper, has been running various stories on the exorbitant cost of even the
smallest flats in Hong Kong with an editorial calling for a change in policy by the
government and more land sales.

Pollution clouds the future

Hong Kong's problem of air pollution from factories across the border and local sources
such as vehicle emissions, power plants and marine traffic may drive many businesses
and expatriates to less polluted cities in the region such as Singapore and Melbourne.
British expatriate Michael Short, who has lived in Hong Kong for 17 years and used to
love it, lamented: "I'd go across the harbour on a daily basis and gradually realised
things were getting worse. It became very depressing not to be able to see the other
side." He has since moved his business and life to Singapore. In the busy district of
Causeway Bay, Annelise Connell and Phil Heung of environmental group Clear the Air
slip on fluorescent vests and patrol the streets, confronting the drivers of vehicles
with idling engines. "You get up in the morning and the government says that pollution
is going to be high today - what a way to live!" exclaimed Annelise. There are,
however, positive signs of cross-border cooperation between Hong Kong and
Guangdong. A joint air quality monitoring mechanism has been set up and both
governments have committed themselves to reducing emissions of certain pollutants in
the next decade.

Net migration in Hong Kong: 2005- 2010 and 2020

'000
Source: Euromonitor International from national statistcal offices/UN
Note: Data for 2010 & 2020 is forecast

© Euromonitor International 2019

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