What China Should Learn From Hong Kong’s Luxury Malls


Chairman Mao Poses In Front of Central Hong Kong's Iconic Buildings

The Maosuit was in Hong Kong (HK) this week and, as always, took time to visit the major luxury malls and retail districts. HK has been an international shopping destination for decades and for the last few years has even won the accolade of being The World’s Top Destination for Luxury brands.

There are currently upwards of 50 new luxury malls currently being built across China to tap into rapidly growing luxury goods market, yet very few of them will come anything close to the standard of the luxury malls developed in HK over the last few years. So what is it that HK real estate developers know and get right that the Chinese don’t, and what can be learnt from this situation?

Fundamentally, the single most important factor in determining the success of a mall is how many consumers go there (‘foot traffic’). For a luxury malls, foot traffic plus the ‘quality’ (income level) of consumer is the determinant factor for success. The one thing that stood out about all the HK malls I visited was that they were always busy, meanwhile in Mainland China most of the luxury malls are often empty.

What the HK developers do so well is that they create mixed-use shopping malls that encompass retail/entertainment/catering/office/hotel and transport facilities all into one development. Essentially what this does is create an ecosystem of real estate that brings masses of people to the mall everyday and easily translating into sales.  So why aren’t these types of developments being built in Mainland China?

As covered in this post on successful luxury malls in China, many Chinese developers are state owned entities and there is simply a lack of planning and consultation done prior to building the mall. The government will designate a piece of land for development and someone will just decide it will be a luxury mall. Ask any shopping developer in China and chances are their dream is to build a luxury mall. The way they think is: “if Chanel opens a store in my city, it shows we are modern, successful and have status”.  Often these mall developers will rush out and contract architects then design and build a mall before even talking to a luxury brand, consulting retail experts or ever taking into consideration what criteria is needed for a luxury mall to succeed.

On a larger scale what this boils down to is lack of coherent city planning. In Chinese  second tier cities its common for China’s government agencies compete with each other to develop land and retail projects. Therefore you can have two separate mall developments in one city that are both run by state owned enterprises and have government backing. Both then compete for the resources and try to lure the luxury brands into the mall. Imagine you are a luxury brand and two different developers approach you claiming to be from the XYZ city government and building the new best mall in the city. Who do you believe, where do you put your investment?

An intelligent developer thinking of creating a luxury mall will first enlist the expertise of a real estate consulting form such as Savills or CBRE. These companies can do detailed studies into locations and advise not only on the design of the mall, but also what composition of retail, residential, office and hotel facilities would be needed for the mall to succeed in that given city or location. HK developers always do diligent planning and consultation prior to launching their projects.

Chinese shopping mall developers interested in building a new luxury mall would do well to visit HK and spend time really understanding what it takes to be successful in creating a luxury retail platform. They should also enlist a professional real estate or retail consulting firm to advise on best practices and conduct surveys and design consultation with the luxury brands they are trying to entice. Hopefully this will start to happen sooner rather then later and China can begin to enjoy the high standard of malls and city planning that HK does.


Office Workers From The International Commerce Center Pour Into Elements Mall in Hong Kong

Heavy Foot Traffic Outside Chaumet's Store in Elements Mall Hong Kong

Hong Kong's Best Mall All Connect to The City's Subway System


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  1. A very insightful analysis. I would love to read your insights on The Village here in Sanlitun. It seems to have met your two criteria for success–foot traffic and quality–immediately from its opening until today. Solana just doesn’t have the same feeling, and I don’t think it is because because The Village houses more iconic, high-end stores. Both make use of outdoor spaces and include some non-retail stores (e.g., restaurants, supermarket), but Solana is, for some reason, not as inviting as The Village. Location, including a subway stop close to The Village, must be part of it, but there must be more to it.

    • There are several factors that all combine to make or break a shopping mall. The Sanlitun Village is owned an operated by Swire properties from Hong Kong who are much more professional in all operations and particularly marketing than the Chinese operators of Solana. The Village is also surrounded by multiple entertainment, dining and hotel facilities whereas Solana is not. You’re right that the subway also contributes to the success of The Village. Next year Swire properties will open a new mall called Indigo just south of 798 Art district which is an entirely new and unproven retail zone. It will be a good test to see whether the success is purely based on the developer or also location an surroundings.

  2. I lived in Hong Kong for 20 years and I do believe that developers there work extremely hard in order to ensure success. Elements Mall and IFC are both attached to major subway stations, office complexes, luxury grocery stores, cinema’s- they both serve as important throroughfare’s through which much of the city passes through when working or going out for the night; in essence, they serve as excellent ‘shortcuts’ that many use to cut through parts of the city.

    For that reason, and the culture of the people, HK malls will continue to outperform malls on the mainland. The culture of buying luxury apparel and goods is firmly entrenched in HK society, and the excellent prices (relative to the luxury taxes imposed in other countries) keep HK as a luxury centre that even lures mainland Chinese to shop outside of their home cities.
    Thanks for the article- keep writing!

  3. I think the HK Government’s initiatives on Tourism and branding HK as a shopping hub have definitely helped these malls. Singapore is probably also another good example. I’d also agree with Angry Deacon regarding the mainland shoppers. 5 years ago, when I crossed the border from China to HK, it was pretty fast… but now.. try leaving on a Saturday morning, and you will see the massive crowds that are lining up to cross customs

  4. Interesting comments here although to be fair HK shopping malls like IFC and even Elements were disasters when they first opened – it took months (even years in Elements case) for them to develop the masses of foot traffic that they have today. The problem with China is that everyone thinks they can go in and make money overnight – it takes time and plenty of investment especially since its a new market that needs to be developed. Shopping in a mall is part of the culture here in HK. Besides we don’t have anywhere else to go due to lack of space . China seems to be different. Will be interesting to see how things change over the years!

  5. just a minor point:
    we should not forget about the mainland effect on the foot traffic on hong kong. for some apparel stores, 80% of their business is covered by the mainland shoppers. with the confidence of buying the real products, and the lack of both sales tax and luxury tax, mainland shoppers are flocking to the hong kong and buying up a storm.

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