Hong Kong's iconic diners are pursuing an outward expansion strategy, particularly into mainland China, in response to evolving market dynamics. ShamChai Kee, a 42-year-old Hong Kong diner, recently opened its first mainland branch in Shenzhen's Luohu District. This move reflects a broader trend of Hong Kong culinary establishments entering the mainland to offer authentic Hong Kong flavors at more competitive prices, directly challenging local counterparts. For instance, ShamChai Kee's signature wonton noodles are priced at RMB 28.9 on Meituan, approximately 20% cheaper than their Hong Kong prices.
This expansion is driven by several factors, including lower operational costs in Shenzhen, such as reduced rents and salaries, and a more abundant labor pool compared to Hong Kong. The owner of ShamChai Kee, Lee Man-tat, noted the ease of recruiting staff in Shenzhen. Additionally, these establishments are adapting to mainland dining culture by introducing social media-friendly dishes, like visually striking chilled abalone, and adopting local service standards, such as offering lemon water to customers waiting in line.
The trend of mainland Chinese food and beverage brands making inroads into Hong Kong, while international eateries retreat, highlights a shifting landscape. Between 2019 and 2024, there was a significant increase in trademark applications from mainland Chinese brands in Hong Kong, with 193 applications in the first half of this year alone, accounting for over 50% of total incoming brands. This contrasts with a downward trend in applications from European, American, Oceanian, and other Asian companies. Chinese fast-food chains are also increasingly looking to list in Hong Kong to fund global expansion, with companies like Guming, Home Original Chicken, Green Tea, and Mixue Ice Cream & Tea preparing for IPOs, using Hong Kong as a strategic "testbed" for expansion into markets like Southeast Asia. Cha Bai Dao, for example, raised $331.7 million in its April 2024 IPO, and Xiaocaiyuan raised $110 million in December 2024.
This dynamic demonstrates a strategic pivot for both Hong Kong and mainland Chinese F&B businesses. Hong Kong brands are leveraging their authentic roots and lower costs in the mainland, while mainland brands are using Hong Kong as a launchpad for international growth and to access capital markets. The overall F&B sector in Hong Kong has seen a decline in overall new market entrants, despite the rebound in Chinese companies, reflecting potential changes in how foreign brands assess the Hong Kong market, possibly due to post-pandemic economic impacts and political changes.
