Over the past year, there has been a lot of interruption to the Hong Kong market, from the political riots ongoing from March last year, to the recent outbreak of the novel coronavirus. We reached out to some major Australian suppliers who export to this region, to gain some insight into how these global events have impacted business. Through understanding how this disruption has altered the market, there is more opportunity to strategize and minimise impact to trade.
The political protests taking place in Hong Kong have been long, violent and extremely disruptive to the city. What started as an opposition to a controversial extradition bill, has resulted in a fight to keep Hong Kong’s sovereignty and social and political freedom. The economic consequences of this conflict in both the short and long term are significant.
On top of this, the recent outbreak of Coronavirus globally has not only disrupted the Chinese economy, but the Hong Kong market has been affected as well. Fear of the virus has impacted people in affected areas visiting shops, restaurants, cafes and supermarkets. The timing of this health crisis, being around the Lunar New Year, has exasperated these commercial losses, as this is usually an extremely busy time of year for businesses. International retailers have also closed operations in China affecting the purchase of particular products, including coffee shop chain, Starbucks. The movement of goods and workers is becoming more and more restricted as the situation becomes more serious, with overseas airlines stopping flights to China and Hong Kong.
Surprisingly, one multinational Australian food manufacturer, reports that the riots and the outbreak of Coronavirus, and the subsequent restrictions on movement of people has actually “led to a short term increase in sales” of their long shelf-life product lines. This could be due to the reluctance of customers to regularly enter public spaces such as supermarkets, preferring to buy products which have a longer shelf life. However, as movement of goods becomes more restricted, the ability to restock shelves and deliver to customers in regions outside of where stock is located will become more difficult. If orders shipping to China or Hong Kong are blocked this would also certainly have a negative impact on the availability of products and therefore sales.
However, not all businesses have been this fortunate. An Australian SME manufacturing functional health food had achieved an extraordinary level of success since entering the Hong Kong market five years ago, but reports that sales plummeted soon after the riots started in June 2019. They believe that during this time it became “too hard for consumers to travel around due to streets being blocked with protesters, subways being unsafe and tear gas being thrown through shop windows’ ‘, which subsequently left consumers opting to stay at home. An Australian manufacturer of breakfast-cereals has disclosed that their business experienced challenges with disruption to the market in Hong Kong, with changes to order phasing and any new listings being put on hold.
With a change in market, adjustments in strategy is essential for businesses. One company we spoke to has halted all of their above-the-line marketing campaigns. As Hong Kong remains a high priority market for this business, they are supporting their in-market distributor who is currently meeting with buyers to discuss changes to strategy and campaigns. With people choosing to stay home as much as possible and the ensuing drop in sales, another supplier has been developing marketing solutions that are based more online rather than in-store.
Hopefully, you’ve found this article useful to gain some insight into the changing landscape of the Hong Kong market. As always, if you’ve got any questions or want to discuss export opportunities for your company, feel free to drop us a line here at Export Connect – we always love to hear from you.