Is Hong Kong losing its allure as a launching pad for foreign brands looking to tap into the Chinese market?
The decision by Gap to set up shops in Shanghai and Beijing in 2010 before making its debut in Hong Kong last week certainly seems to suggest that some foreign businesses have no qualms about bypassing Hong Kong and taking a more direct route into the mainland’s estimated $2,100bn retail market.
There are obvious reasons why brands would jump straight into the mainland. Apart from the sheer size of the market, mainland China’s top cities increasingly offer high-quality shopping centres and department stores where western brands feel at home.
Meanwhile, the cost of doing business in Hong Kong could be prohibitive. Retail rent is now the second-highest in the world and fast-approaching levels charged on Fifth Avenue [Source].