As mainland e-commerce players step up their presence in Hong Kong, capitalizing on the “618” shopping festival, experts call on local retailers to take more proactive measures to change and urge greater efforts to support smaller merchants in digital transformation.

Major e-commerce platforms including Taobao and JD.com have launched generous discounts and subsidies in Hong Kong to attract local consumers to shop online during the midyear promotional campaign, which started in May and runs until Wednesday.

For example, Taobao offers a 15 percent discount on eligible items for Hong Kong shoppers; JD.com hands out coupons to get 30 yuan off ($4.17) for every 200 yuan shoppers spend.

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This “618” shopping festival marks the first since JD.com significantly increased its investment and marketing in Hong Kong in March. According to the company, the numbers of its Hong Kong and Macao users and online orders from the two special administrative regions have both doubled over the past two months, with turnover surging 200 percent on a yearly basis.

Enthusiasm over setting up online stores on the JD.com platform among local brands and merchants has also grown. The company said over 200 brands and merchants have established a presence there within the past month. It expects the number of Hong Kong and Macao sellers on the platform to reach 1,000 or more within this year.

“Currently, online sales in Hong Kong account for a relatively low proportion of total retail sales, indicating that the city’s e-commerce market has enormous growth potential,” Calvin Chan Ka-wai, chairman of the Hong Kong Brand Development Council, said.

Hong Kong’s consumer spending has weakened over the past year, dragged down by outbound travel and tariff-induced uncertainties.

According to the latest statistics from the Census and Statistics Department, the value of total retail sales sank 2.3 percent year-on-year to HK$28.9 billion ($3.68 billion) in April. Although the decline narrowed from March’s 3.5 percent, it marked the 14th consecutive month of contraction since March 2024.

Online sales, which stood at HK$2.3 billion, accounted for 8.1 percent of the total retail sales value in April.

Chan said with the changing purchasing behavior of Hong Kong’s younger generation, which favors online shopping, and the cost and delivery advantages enjoyed by mainland online platforms, Hong Kong’s retail industry needs to strengthen its digital infrastructure and enhance its differentiated branding.

“Hong Kong businesses should move away from relying solely on third-party platforms and build their own e-commerce platforms to gain better control over user data,” he said.

“They should also make their brands stand out by underlining the advantages of ‘Hong Kong quality’,” he added.

Chen Tao, a senior analyst at Beijing-based market consultancy Analysys, said while the entry of mainland e-commerce players is expected to intensify competition in Hong Kong’s retail industry, which is already bearing the brunt of slower economic growth and a rise in northbound spending, it will accelerate industry transformation and upgrading.

“Competition often leads to enhanced operation efficiency. It will force local retailers to take proactive steps to change and seek new business opportunities, which will be beneficial to the whole industry in the long run,” he said.

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“Hong Kong retailers need to transition from gatekeepers to guides,” Wan Jue, a researcher at 100EC.cn E-commerce Research Center, said, stressing the need for action.

He suggested local industry players identify niche demands that remain uncovered on mainland platforms by analyzing the data in reports produced by the Hong Kong Consumer Council and others.

The researcher also suggested that the Hong Kong Retail Management Association negotiate with mainland e-commerce platforms to establish a dedicated “Hong Kong zone” — similar to Macao’s on Taobao — to provide greater support to local small and medium-sized enterprises.

Contact the writer at sally@chinadailyhk.com