China Power | Economy | East Asia

As Integration in the Greater Bay Area Accelerates, Small Businesses in Macau Suffer

Drawn by lower prices, a wider variety of products and convenience, Macau’s residents have taken to spending in mainland China.

Cross-border consumption has become a part of daily life for Macau residents, facilitated by easier border crossings and, above all, by the “northbound travel for Macau vehicles” scheme, which allows cars from the territory to circulate in Guangdong province. Especially on weekends, thousands cross the border of the former Portuguese-administered territory in search of lower prices in the supermarkets and restaurants of neighboring Zhuhai.

Macau is a special administrative region of China, located about 60 kilometers from Hong Kong. It is the only place in the Asian giant where gambling is legal.

Beijing has been pushing for its integration into the Guangdong-Hong Kong-Macau Greater Bay Area, and the territory is, step by step, aligning with the national strategy envisioned by Xi Jinping. However, as integration accelerates, Macau’s small and medium-sized enterprises (SMEs) are suffering from the consumption exodus.

Since 2024, the Macau government has launched four promotional campaigns to boost domestic consumption. In the latest, which runs until June 18, it injected 400 million patacas (around $50 million) into the local economy to encourage residents to spend money within the territory.

“People tend to go up north across the border for their vacation or during weekends. So, it affects the restaurant industry tremendously, especially around areas very close to the border, like Fai Chi Kei, Hac Sa Wan, or Iao Hon,” says Chan Chak Mo, a former lawmaker and president of the United Association of Food and Beverage Merchants of Macao.

Chan notes that May was “good” for business – in addition to the Labor Day Golden Week, a major holiday in mainland China that brings thousands of tourists to Macau, the government’s consumption plan was already underway, with restaurants benefiting from “around 30 percent of the total amount injected.”

June, however, “is a complicated [month].” 

“Depending on the location of the restaurants, [the situation] is pretty extreme. Some don’t have any business because they don’t have tourists; they only depend on neighborhood customers, and that’s pretty grim,” Chan lamented.

Official data shows that in the first four months of 2026, more than 1.87 million vehicular outbound trips were recorded across the borders, representing a year-on-year increase of 15 percent. At least 1.23 million (about 66 percent of the total) headed toward mainland China through the Border Gate, Hengqin, and the Zhuhai-Macau cross-border industrial park checkpoints. Around 640,000 cars also exited via the Hong Kong-Zhuhai-Macau Bridge, though in this case, the data does not specify whether they were heading to Zhuhai or Hong Kong – yet, there are limited quotas for vehicles to go to the other special administrative region.

The primary reason driving residents to mainland China is “substantially lower prices,” points out António Félix Pontes, a Portuguese economist based in the territory since the 1980s and a former president of the Monetary Authority of Macao.

But there are other factors, such as “a greater variety of products and their freshness” and “convenience and hardware connectivity,” given that driving from Macau to Zhuhai takes “only 20 minutes.” The “blurring boundaries” is another aspect mentioned, with Pontes observing that, on the other side of the border, residents enjoy a “feeling of home extension.”

Although retail trade turnover grew 23 percent year-on-year between January and March to 21.64 billion patacas (approximately $2.7 billion), it was driven, for instance, by communication equipment, watches and jewelry – products mostly purchased by mainland Chinese visitors. On the other hand, supermarket turnover suffered a 5.2 percent drop to 1.26 billion patacas (around $156 million).

Pontes believes that “the great handicap for Macau results from the economies of scale that will continue in the future.” He says, “It’s a fight between ‘high cost, small scale’ for Macau and ‘low cost, huge market’ for China.”

Local supermarkets and restaurants, Pontes continues, are struggling in the competition with mainland China due to structural disadvantages, such as higher operating and labor costs, cramped real estate, limited scale and heavy reliance on imported goods. 

“So, Macau’s sky-high rents and wages drive menu prices and retail costs significantly,” Pontes observes.

According to statistics on bank credit granted to Macau SMEs for 2025, the new approved credit limit grew by 22 percent to 9.5 billion patacas (around $1.18 billion) compared to 2024. The “wholesale and retail trade” sector absorbed 13.8 percent of the loans, followed by “restaurants, hotels, and similar activities” with 6.8 percent. Notably, “working capital” motivated 11.1 percent of the new credit to SMEs, totaling around 1.05 billion patacas........

© The Diplomat