Local voices discuss and share competition in cross-border deals

Local businesses in residential neighborhoods have struggled over the past year as more residents opt to spend their money across the border on the mainland. The Macau Economic Association has sounded the alarm about this troubling trend and its impacts on local consumption.

With the reopening of borders and the increase in cross-border travel through programs like the Northbound Travel for Macau Vehicles, it has become much more convenient for Macau residents to shop and dine in cities like Zhuhai at low cost. This is exacerbating issues faced by local retailers, as quiet streets and numerous shop closures have become a common sight, especially on weekends when citizens favor mainland trips.

While casino districts and other tourist areas continue seeing positive sales, neighborhood enterprises highly reliant on local patronage have been hit hard. Despite government efforts to boost tourism through new attractions and casino collaborations, these initiatives have not been enough to counter falling customer numbers and rising operating expenses for local merchants.

Going forward, Macau is expected to maintain healthy GDP growth in 2024. However, business groups are increasingly worried about the long-term viability of small businesses as cross-border travel to Guangdong becomes a more regular occurrence, continuing to draw spending away from local tills.

Beyond Macau’s Borders

The Times discovered, through a series of interviews, that residents frequently venture across the border to mainland China and Hong Kong in search of more affordable goods and services. A Macanese local explained, “Recently, I’ve been going to the mainland quite often, like every other week.” This sentiment was echoed by a Chinese resident in their 20s, who reported traveling to the mainland around twice a month.

For some, the lure of lower prices is an irresistible draw.

“We buy everything we can across the border easily with our car. We go to Zhuhai at least once a week to buy groceries and many other things,” admitted a Macau-based foreign couple in their mid-40s. They elaborated, “Way cheaper than in Macau, and above all, there are way more options. For instance, we buy a lot of sports apparel, and in Macau, the prices are ridiculous.”

The same residents also highlighted specific products and services they found more appealing or affordable outside of Macau. As one Macanese local noted, “In China, public transportation is unbelievably cheap compared to Macau, which I appreciate. Grocery shopping has also been very nice as it’s quite affordable.” The younger Chinese Macau resident chimed in, “China: meals, groceries, anime goods. Hong Kong: Variety of events, creative museums.” A foreign Macau resident simply stated, “Food, massage, and a few unbranded products” were the main reasons to go outside of Macau.

Price differences are a major drive

Residents told the Times they have noticed significant price differences for everyday items when compared to mainland China and Hong Kong. Interviewees provided several concrete examples.

One Macanese resident noted that a large pack of wet wipes costs around RMB3 in the mainland but over MOP13 in Macau. Groceries also tend to be cheaper across the border, with one resident shocked to find a Tomahawk steak priced at just RMB59 in China, in contrast to Macau prices.

Even for service-based items, the savings can be substantial.

“In Europe, laser hair removal starts at about MOP900 or more per session, while in mainland China, it’s about MOP200 per session,” the Macanese resident observed.

A Chinese resident in their 20s highlighted the price differences for dining out, noting that a meal at the popular hotpot chain Haidilao might cost around RMB150 on the mainland compared to MOP300 in Macau. They also pointed out that corn, which costs about RMB10 for three corncobs on the mainland, can inflate to MOP40 for just two corncobs in Macau supermarkets. Comparatively, this same resident said Hong Kong arguably has cheaper Japanese sushi conveyor chain stores than Macau.

Foreigners living in Macau corroborated these findings, with one couple stating that they can save 40-60% on their monthly budget by shopping and dining across the border in Zhuhai, compared to prices in Macau. As one foreign Macau resident summarized, “Everyday items like vegetables, restaurant [meals], are perhaps around 20-30% cheaper in the mainland” when compared with Macau and other surrounding regions, including Hong Kong.

Shopping Preferences: Macau vs. Hong Kong and mainland China

When it comes to shopping and entertainment, many Macau residents appear to prefer options across the border in Hong Kong and mainland China due to the greater variety of products and experiences available.

A Macanese noted the challenges of finding suitable clothing options in Macau, saying, “It’s been quite hard to shop for clothes here in Macau.” They enjoyed the “lot of variety in stores and products such as clothing stores” available in Hong Kong and the mainland.

A Chinese resident in their 20s agreed, stating that “[mainland] China offers more variety and fresher products at more economical prices.” Another foreign resident pointed out that while quality can vary depending on the type of establishment, they generally “prefer shopping in Hong Kong and Macau than China.”

Some residents also praised Hong Kong’s ability to “attract big international names for stadium tours,” an achievement Macau has yet to match as it “has yet to build a non-neighborhood -disruptive stadium venue.” Convenience plays a role, too, with some preferring the wider selections at stores like Uniqlo and Muji available in Hong Kong.

However, a middle-aged foreign couple living in Macau lamented the “lack of competition in Macau [that] leads to monopolies that ruin everything.” They were frustrated by the “high prices and limited product selection” in Macau, which they felt was too focused on “targeting tourists.”

While Macau offers local shopping, the consensus seems to be that residents favor the greater variety, quality, competitive pricing, and entertainment options found across the border in Hong Kong and mainland China. There is optimism that improved access to products from these neighboring locations will continue to benefit residents.

‘Greed’ and challenging conditions for local businesses

Macau’s business landscape appears to be fraught with challenges, according to an interview with a resident foreign business owner. The individual, who spoke on condition of anonymity, painted a concerning picture of greed, high costs, and a lack of competitiveness.

“I believe there is a lot of greed in Macau,” the business owner said. “As a business owner, I try to have great products and good prices for my clients, but it’s not easy.”

The interviewee noted that brutally high rents and the burden on salaries make it difficult to operate.

“I believe people’s mindsets need to change. We have brutal rent prices, and the burden on salaries is also terrible.”

Comparisons to the nearby financial hub of Hong Kong only highlighted Macau’s disadvantages.

“We are not Hong Kong. We are only 10% of the Hong Kong market. Businesses cannot survive if they have the expenses of a Hong Kong company but clients of Macau.”

The business owner shared anecdotes that underscored the unique challenges faced by local shops. “I wanted a product, and I went to a specialized shop in the city center. The owner told me, ‘Oh, that we don’t have. Just buy it on Taobao, it’s cheap!’”

Even delivery services appear to have an unusual dynamic, with the interviewee describing a recent experience. “Even a few weeks ago, my wife wanted to buy some heavy stuff… the shopkeeper offered to deliver the goods to our door, and to our surprise, they were delivering them the next day.”

Perhaps most concerning is the apparent monopoly on fresh products. “The same goes for fresh products, fruits, etc. All in Macau is a monopoly. Absolutely no competition.”

The insights provided a sobering look at the difficulties faced by businesses in Macau, emphasizing the need for reforms to address greed, high costs, and lack of competitiveness. Victoria Chan