10th April 2024 – (Hong Kong) The catchphrases ring out with defiant optimism: “Staging a multitude of events to stimulate local consumption, while promoting the unique charms of Hong Kong’s diverse districts to drive the local economy and domestic tourism.” “Organising a series of thematic programs and promotional activities to leverage Hong Kong’s existing strengths in shopping and dining.” “Hosting high-level business conferences to attract international business leaders to the fragrant harbour.” “Restoring local and global confidence in Hong Kong, boosting trade and local spending while enticing overseas entrepreneurs to our shores.”

These are not the buoyant declarations of 2024’s Hong Kong, straining to rekindle its economic vigour through a relentless parade of mega-events. No, these are the echoes from over two decades ago, in 2003, when the government deployed HK$1 billion on “a full-scale program of events in Hong Kong, internationally and on the Mainland to restore Hong Kong’s reputation and rebuild economic vitality.”

That year saw Liverpool FC playing an exhibition match in the city, the Chinese national basketball team joined by NBA star Yao Ming, and the Hong Kong Tourism Board launching its “Hong Kong Welcomes U” campaign, designating “Hospitality Days” during two “Hospitality Months” to woo global industry players and media with a blitz of marquee happenings. The 2003 Forbes American CEO Conference and 2004 Forbes Global CEO Conference were also successfully secured for Hong Kong’s shores.

The mega-events were too numerous to list exhaustively, but their modern parallels are unmistakable. Art March features Art Basel and the buzz-worthy ComplexCon cultural fest; the business calendar is packed with international summits and forums while last weekend’s Hong Kong Sevens represented top-tier sporting action. And as Chief Executive John Lee previewed, April will see a cascade of major international exhibitions and conferences, from the HKTDC’s Hong Kong International Lighting Fair to the Digital Economy Summit, expected to catalyse economic activity across hospitality, dining, retail and entertainment sectors.

Hong Kong’s 2003 rebound from the depths, its economic revival, is often cited as a foundational confidence-booster for today. The Chief Executive noted that airport passenger traffic is “expected to fully recover to pre-pandemic levels by year-end”, adding “from a macro perspective, Hong Kong’s future economic development is positive, with projected GDP growth of 2.5% to 3.5%.”

Yet the mood on the street tells a vastly different tale. Citizens queue for “two-dish rice” sets and $10 meal deals; over 300,000 have joined a Facebook group chronicling shop closures, with disillusioned business owners venting despair at the local retail climate and contemplating a pivot to the mainland Chinese market. While an optimist might admire such frugal resourcefulness, the phenomena arguably reflect a struggle for basic subsistence, a bitter race to the bottom of the consumer barrel.

It’s crucial to remember that for the past two years, Hong Kong sidestepped the dramatic inflation afflicting Western economies, partly due to falling property prices easing housing costs. But since February’s budget scrapped the buyer’s stamp duty, the housing market has regained momentum, compounding a year of relentless rent hikes. Are we facing a dystopia where Hong Kongers spend HK$20,000 monthly on mortgages or leases, yet can only afford queuing for HK$10 food items? Is this still the aspirational “World City” where dreams of family life and communal joys can be pursued?

Hong Kong’s rentier burdens have surged excessively over two decades, with many restaurants and small businesses spending half their monthly revenues just covering overheads before even breaking even, while salaries are halved by housing costs. Small wonder the lure of the Mainland appears so magnetic when outflows there vastly outstrip southbound migration. The northbound consumption exodus is not the cause but a symptom of Hong Kong’s dysfunctional economic paradigm. In this strangled marketplace, just staging more mega-events, exhibitions and publicity campaigns may not offer the reliable crossing that adage demands. Not only must Hong Kongers “live by their wits”, but the government must courageously reform the economy, fostering new advantages and dynamism.

The meteoric rise of the “All Hong Kong Shop Closure News Concern Group” on Facebook laid bare a groundswell of mercantile anguish. Within days, membership numbers exploded from around 5,000 to over 309,000, as shuttered business owners and dismayed locals flocked to share their stories and disillusionment.

Some haunting outcries emerged: “My shop is closing at month’s end! Not for lack of business, but because the landlord’s exorbitant rent hikes have made survival impossible.” Another dejected voice wondered, “With each holiday, so many flock northwards. I’ve lost heart – if things are so booming up there, why not just start afresh in Shenzhen?”

Kwong, a spokesperson for a local property company controlling multiple retail premises, acknowledged that Hong Kong’s service and food quality often pales against the mainland in cost-competitiveness. “I’ve dined there recently – Hong Kong’s frozen ribeye simply can’t match the freshness and quality of chilled beef from the mainland, at less than half the price! Our beef sellers need a serious rethink, expanding meat choices and cuisine styles.”

Kwong cited Hong Kong’s towering rents, staffing difficulties, and deteriorating service standards as draining factors. “Dining out, you’ll encounter unhelpful staff attitudes that locals have learned to sadly accept without complaint. Just look at many taxi drivers’ poor service – an emblem of our City’s hospitality decline!” Under such circumstances, he reasoned, it’s only natural for consumers to gravitate towards the mainland’s better value proposition. Overhauling service quality, he advocated, must be an urgent priority for Hong Kong’s retailers.

However, he cautioned against despair at talk of “shifting to the mainland’s greener pastures”, deeming it overly pessimistic. “The whole street is our customer base! I actually see this as prime start-up opportunity. Have faith – while the customers may roam, Hong Kong still offers myriad openings for new ventures. Shop closures will precipitate rental corrections, easing costs and staffing crunches. Some locations have cooled, allowing more sustainable lease terms to attract tenants.”

While hapless local retailers bled, Kwong pointed out some sectors were flourishing, from jewellery to luxury brands, essentials, and real estate: “As Hong Kongers splurge northwards, we’re seeing mainlanders coming to buy property here, drawn by our stable, quality housing market.” He remained convinced Hong Kong’s appeal wasn’t extinguished, merely in need of reinvigoration.

“There’s still hope if businesses up their service game – locals will gladly spend here again.” Kwong recommended learning from the mainland’s innovative use of social media like Xiaohongshu to promote shops and magnetise tourists.

Yet the great disconnect between the mega-event economic narrative and street-level realities appeared too chasm-like to bridge with boutique e-commerce tactics alone.

The juxtaposition bordered on the schizophrenic: With one side of its persona, the government aggressively touted Hong Kong’s renaissance through high-profile circuses of Art Basel, global CEO conclaves, sporting spectacles, and a kaleidoscope of industry trade fairs.

Yet this rictus grin contrasted jarringly with the other face of a city watching mom-and-pop businesses wilt beneath strangulating rents. Where a privileged class still indulged in jewellery, haute couture and real estate, the mainstream were queueing for HK$10 meal sets or scouring Facebook groups on shuttered restaurant bargains, retailing their despair through profanity-laced lamentations over exorbitant overheads and the magnetic pull of the mainland’s greener pastures.

Hong Kong’s existential crisis transcended the economic, striking at the sociological fabric binding the city’s aspirational identity. For how could it truly style itself as “Asia’s World City”, a cosmopolitan crossroads of global capitalism and art-de-vivre, when its middle and working classes increasingly struggled to make rent, let alone pursue creative passions or nurture family dreams?

The city’s two faces appeared to be drifting further apart into parallel realities – one of high-glamor events and luxury merchandise for an international jet-set, the other of downward-spiralling malaise for the very inhabitants giving Hong Kong its ethnic character and cultural dynamism. Were the mega-events and trade fairs merely elaborate stage dressings, camouflaging an ongoing hollowing-out of the core that made this vibrant city beat?

Observers argued that relying on event-driven campaigns as quick economic fixes was akin to crisis management through adrenaline shots. Yes, the optics of residential “Hospitality Days” lent a feel-good boost while conventions and exhibitions created welcome hustle. But were such techniques crafting long-term sustainability, or merely applying cosmetic makeovers to systemic malignancies?

The deeper surgery Hong Kong may require are land reform policies reining in the property hegemony dictating exorbitant commercial and residential rents. Until this burden eases, the constant hollowing-out seems inexorable – with businesses large and small inevitably pursuing arbitrage across the border, while ground-level consumption bleeds away to regions offering reasonable costs of living.

Progressive voices advocated exploring alternatives like reviving Hong Kong’s industrial sector with high-value manufacturing and innovation hubs as a new growth catalyst. Urban rezoning, targeted investment incentives and skills training were floated as components of an economic pivot towards knowledge-based industries producing concrete products, moving beyond Hong Kong’s longstanding mercantile and renting paradigms.

The image of a once-proud San Francisco laying out the red carpet for tech conferences and festivals, even as empty storefronts and homeless encampments spread like wildfire through its neighborhoods, sprang to mind as a possible worst-case scenario trajectory.

To avoid such a fate, Hong Kong’s policymakers would need daring visions backed by steely conviction, rather than defaulting to patchwork policies trapped in a regressive loop – aiming low with further mega-event regulatory kickstarts when more fundamental restructuring was imperative to resurrect vibrancy and harmony.