Hong Kong's Economy at a Crossroads: John Lee Urges Reform Amid Business Closures

20 May 2025

Chief Executive John Lee remains upbeat about Hong Kong’s economy but urges businesses to reform amid shifting trends and a “transitional period.” Sun Yeung

HONG KONG - Despite a visible wave of business shutdowns across Hong Kong, including the abrupt closure of 33-year-old congee chain Ocean Empire, Chief Executive John Lee Ka-chiu remains optimistic about the city’s economic trajectory. Speaking ahead of a weekly Executive Council meeting, Lee called the current climate a “transitional period” and emphasized that structural reform and adaptation are key to navigating changing consumer trends.

“New demands and new likings are emerging. While some sectors struggle, others thrive,” Lee noted, reinforcing the government's revised forecast of 2-3% GDP growth for the year.

Lee pointed to a record 1.46 million registered companies at the end of 2023 an increase of 29,000 from the previous year as evidence of continued entrepreneurial dynamism. He also highlighted the government’s strategic recruitment of 84 high-impact enterprises through the Office for Attracting Strategic Enterprises, which is expected to generate over HK$50 billion (US$6.39 billion) in direct investment and create more than 20,000 jobs.

Fresh from a trade mission to Qatar and Kuwait, Lee reaffirmed Hong Kong’s ambition to open new global markets and diversify its economic base. “We must remain confident, reform ourselves, and stay competitive,” he stated.

Yet, the pressure facing local businesses is palpable. Ricky Wong Wai-kay, founder of e-commerce platform HKTVMall, voiced concern at his company’s AGM, citing significantly lower operational costs in mainland China. “Everyone in retail, from supermarkets to department stores, is facing extreme pressure. Competing with mainland giants on pricing and scale is no easy task,” Wong said.

The closures reflect deeper structural issues. Ocean Empire, once a household name in local dining, shuttered all locations this month, citing worsening operating conditions and HK$8 million in unpaid wages. In October, Garrett Popcorn Shops exited the market, followed by China Resources’ health chain Care and long standing gym operator Physical, which collapsed amid a HK$133 million prepayment scandal.

According to the Food and Environmental Hygiene Department, the number of licensed restaurants fell for the first time since 2019, dropping by 255 year-over-year to 17,154 as of April. A total of 2,034 restaurants closed, while 1,779 new ones opened during the same period.

As traditional businesses falter and digital transformation accelerates, Hong Kong faces a pivotal moment. The city’s leaders are betting that reform, resilience, and strategic investment will steer it toward a more sustainable, diversified future.