Young business owners in Hong Kong border town brace for rising rents amid resumption of mainland Chinese travel

With its HK$35 lattes and a playlist of indie Taiwanese bands on loop, Dannis Yeung’s cafe seems a little out of place in the northern Hong Kong border town of Sheung Shui.

“I don’t have much competition,” Yeung told HKFP. “There’s only one other cafe nearby, but it’s further out [near the residential area].”

The 23-year-old opened Let It Be last August, just around the corner from the rows of pharmacies and discount grocers that Sheung Shui is known for. The town is just one station away from the border with mainland China.

Before Covid-19, the town’s narrow streets were full of mainland Chinese shoppers, among them parallel traders filling their luggage with everything from baby formula to medicine to cosmetics for resale across the border.

The border control points at Lo Wu and Lok Ma Chau, where trains that pass northwards through Sheung Shui terminate, handled an average of 387,500 cross-border travellers daily in 2018.

Starting in 2012, rising anti-China sentiment triggered protests among local residents wanting to “reclaim” their neighbourhood.

Over the past three years, however, the once-busy town has been emptied by pandemic-related travel restrictions. With mainland Chinese travellers unable to visit Hong Kong and rent cooling amid a declining economy, some young entrepreneurs like Yeung have seized the chance to start up a business in the district.

Now, with quarantine-free travel resumed earlier this month, these entrepreneurs fear it is only a matter of time before their rents climb and they are forced out.

Yeung’s cafe brought diversity to an otherwise austere town, he said. Functioning also as an exhibition space, Yeung showcases works by artists and photographers, hoping to give them exposure and draw customers from outside Sheung Shui.

He currently pays HK$28,000 a month in rent, an amount that could go up in June, when his contract finishes and his landlord can raise rental fees.

“If [Sheung Shui] starts getting crowded again, I’m also worried that customers wouldn’t want to visit my cafe anymore,” Yeung said.

‘Us small businesses’

For three years, movement between Hong Kong and the mainland was all but halted due to strict Covid-19 rules requiring travellers to undergo weeks-long quarantines, keeping cross-border families apart and forcing mainland Chinese students to do their schooling remotely as they could not come to the city for classes.

In 2018, the last year before the extradition bill protests and Covid-19 disrupted travel, more than three-quarters of Hong Kong’s 65 million visitors were from the mainland, according to the city’s tourism board.

Beijing scrapped its quarantine requirement in early January, effectively opening its border – a long-anticipated milestone. Cross-border travellers, however, must still get a negative result from a Covid-19 PCR test taken within 48 hours of departure.

So far, Hong Kong is yet to see an influx of visitors from the mainland, and the districts popular among mainland Chinese tourists are not noticeably busier. The flow of travellers northwards has far exceeded visitors to the city, the Immigration Department’s figures showed.

Zoey Lam, 26, and Zoe Wong, 33, co-owners of a nail and make-up parlour in Sheung Shui, told HKFP they were also worried about rising rent. The pair opened their shop – a ground floor unit just large enough to fit a manicure table and a facial bed – last June. Most of their clients are on the younger side and live in the area, they said.

“Our rent is around HK$10,500 a month,” Lam said. “Between the two of us, it’s around HK$5,000 each. It’s considered affordable.”

“But of course, there is concern [that it could increase]. Most landlords would rather rent to pharmacies and shops selling parallel trading goods than us small businesses, because we don’t earn as much as them and can’t afford such high rent,” she added.

Wong said that before Covid-19, mainland Chinese visitors used to gather and pack their luggage with goods to be taken across the border on the wide pavement outside their shop.

“We don’t want to see that again,” she said.

Ahead of the resumption of quarantine-free travel, Hong Kong authorities said they had held a meeting to “plan ahead and guard against the re-emergence of problems arising from parallel trading activities.”

Government departments will “keep an eye on parallel trading black spots” and step up enforcement at control points, the city said.

Still quiet on the northern front

For now, the streets of Sheung Shui are still devoid of the parallel traders that have long been the subject of residents’ complaints.

Jasper Law, chairperson of the North District Council, said stores in Sheung Shui were yet to see a noticeable increase in shoppers from across the border.

“Maybe after Lunar New Year, we might see more people coming,” he told HKFP. “But for now, there hasn’t been much difference before and after the border reopening.”

While Lok Ma Chau station reopened with the resumption of quarantine-free travel earlier this month, Lo Wu – the busier of the two stations – remained closed. According to local media reports, it will restart services early this February.

Not everyone is so sure that Sheung Shui will see the crowds it used to.

“I’m not too worried about parallel traders coming back,” Victor Tam, a manager at a Western restaurant told HKFP.

His restaurant is on the quieter end of a road known as “pharmacy street,” named for the cluster of drugstores there.

“I think the traders have gotten used to not coming to Hong Kong and found new ways of doing business,” Tam said, adding that online shopping had grown in popularity. “I’m more worried about my staff [who are from the mainland] leaving their jobs as they return north.”

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