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

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 (approximately $130 million).

Consumption Campaigns 

“When you drive around, you see a lot of empty shops that used to be restaurants and are now closing. Not a lot, but in every neighborhood, in every street corner, you see ‘for sale’ or ‘for rental’ signs,” says Chan, adding, however, that the association lacks data on the exact number of restaurants that have closed down recently. 

Existing official data from the end of 2024 shows that Macau had 4,930 restaurants, just 49 fewer year-on-year.

At a time when the government’s consumption plan is nearing its end, the association leader fears what lies ahead. 

“Of course it will have some effect. The Government claims [the campaign] can generate around 300 million [around $37 million] in extra business for retail – not just for restaurants, but for supermarkets and the rest of retail,” he notes. “After the subsidies, I think we will go back to square one,” he predicted.

Chan argues that the government must continue to roll out these measures. It has been this way in recent years: a vicious cycle. As soon as the subsidy campaigns end, SME and restaurant associations resume their appeals to the government to launch new consumption incentive plans.

“The consumption campaigns are a successful short-term painkiller, but definitely they don’t cure the disease,” says Pontes, arguing that they “do not address the fundamental structural issues that drive Macau residents to Zhuhai.”

Recognizing that they generate “some economic activity,” serving as “emergency life support” for the SMEs, the economist reaffirms that “they are just a platonic solution rather than a structural cure.” 

This is because, Pontes explains, they don’t change the structural real estate costs, high operating overhead, or labor shortages and wages “that force Macau businesses to keep prices high.”

Can Macau Thrive in the Greater Bay Area?

Pontes believes that the local government is already pursuing a dual strategy for these opposing but coexisting realities. “On one hand, mitigating the negative impacts on the local SME, while, on the other, treating this ‘northbound’ trend as a necessary and beneficial cost associated with the long-term integration,” he said.

“We can see the short-term relief via consumption campaigns as a tool to ‘buy time’ preventing a wave of SME bankruptcies, while the mitigation long-term plan – the Hengqin Strategy – is undergoing,” he adds, underlining that this “ambitious project” needs “at least five to eight years to implement.” 

“I think that the Macau government has already accepted that you can’t change the trend and view the integration costs as irreversible,” stresses Pontes. In his view, in addition to measures aimed at keeping SMEs afloat, the government must bolster other initiatives, such as relocating factories to Hengqin and focusing on high-value industries like modern finance and luxury tourism, including medical tourism.

Sonny Lo, a professor in the Department of Politics and Public Administration at the University of Hong Kong, also points out that the “exodus of consumption is a painful but inevitable trend,” arguing that Macau’s businesses, restaurants, and supermarkets “need to adapt to enhance their own competitive edge.”

The political scientist believes that this “irreversible trend (…) will not affect the stability of ‘One Country, Two Systems’ [the principle applied in Macau between 1999 and 2049 stating that the region would retain its own economic and administrative system, although it is part of China], which is a broad concept pointing to economic, political, legal, social and cultural aspects.”

In his view, SMEs need certain conditions to “adapt” and “revive” — “the influx of mainland tourists to the old districts that need revitalized work, the government support via some subsidies if possible, and their own adaptation strategies.” 

These three factors, he believes, will shape SME survivability, success prospects, and adaptability to declines in local customers.

Lo notes that “the challenge to Macau businesses and government is to work in partnership to revive many old districts, to channel mainland tourists to visit formerly old but rapidly rejuvenated districts and to move them away from the casinos-centered districts.”

Recently, in collaboration with the territory’s six gaming operators, the government implemented a strategy whereby casino shuttle buses take tourists to less-frequented tourist areas to boost business. But Chan admits that “it is not very effective.”

Despite the scenario unfolding in the gaming hub, Lo believes that “Macau will thrive in the Greater Bay Area as this is a win-win situation with investment, technological expertise from mainland to Macau, which is too small to survive and excel.”