As the largest beauty and personal care chain brand in Hong Kong, Mannings' withdrawal from China coincides with its parent company DFI's ongoing contraction of loss-making assets, echoing a similar decision made earlier this year by Sa Sa International.
<h4>Key Points:</h4>
<ul>
<li>Mannings announced it will end its 21-year operation in mainland China, closing all online and offline stores.</li>
<li>Following the same decision made by competitor Sa Sa International in June this year, CK Hutchison's Watsons is now the only major Hong Kong retailer still operating beauty and personal care businesses in mainland China.</li>
</ul>
Tan Ying
Founded over a century ago, DFI Retail Group (D01.SI), which started as a dairy farm in Hong Kong, has been continuously slimming down its vast network of about 10,000 stores across Asia in recent years to improve overall operational efficiency. However, what has truly drawn market attention is the company's recent decision to exit the mainland Chinese market, becoming the latest foreign retailer to withdraw from the region.
For those who have been closely following the company's developments, this decision is not entirely unexpected. Between 2023 and 2024, DFI has closed 92 stores in mainland China, leaving only 16 by the beginning of this year. Nevertheless, when Mannings China announced its official statement on December 17 via its WeChat account, it still caught many off guard. The announcement indicated that Mannings would close all remaining mainland operations by mid-January next year, retaining only a light-asset cross-border model that allows mainland consumers to shop through Hong Kong stores.
With Mannings' exit, two of the &#34;big three&#34; beauty and personal care giants from Hong Kong have now withdrawn from China. Previously, Sa Sa International (0178.HK) closed all its physical stores in mainland China in April. As a result, only Watsons remains operating offline stores in the mainland among the three.
Mannings opened its first mainland store in Guangzhou in October 2004, and at its peak in 2011, the number of mainland stores exceeded 200. However, after 2015, the pace of expansion significantly slowed, and the parent company indicated in 2018 that it was reassessing the related business. In its 2024 annual report, DFI stated that as mainland consumers shifted to online shopping, Mannings China's revenue declined, which would lead to the closure of &#34;most&#34; offline stores, hinting at an impending exit from the mainland market.
DFI's contraction in China is not limited to Mannings. Between 2023 and 2024, the group also closed 186 supermarket stores in the mainland. In September 2024, DFI sold its stake in Yonghui Superstores (601933.SH) to MINISO (9896.HK; MNSO.US) for 4.5 billion yuan (approximately 640 million USD). At the same time, the group continues to dispose of underperforming assets in other Asian markets such as Singapore and the Philippines.
A number of Hong Kong retail brands, including Mannings, Sa Sa, and Watsons, made a significant push into the Chinese market in the mid-2000s, initially focusing on international products that were hard to obtain in the mainland at the time. With China's accession to the WTO in 2001 and its rapid economic growth, these brands successfully leveraged the &#34;Hong Kong halo&#34; to attract a large number of mainland consumers
However, just a decade later, the retail ecosystem in mainland China has undergone significant changes due to the rise of social media, influencer economy, and e-commerce. To survive in this new environment, traditional retailers not only need substantial online exposure and digital channels but also must have a sufficiently large network of physical stores to provide consumers with richer and more convenient choices.
For Hong Kong brands, such a transformation is not easy. These companies have long been entrenched in Hong Kong's physical retail model and have been relatively slow to respond to the establishment of online channels using various platforms and applications that are highly popular in mainland China.
<h4>The Dimming of the &#34;Hong Kong Halo&#34;</h4>
Equally severe is the rapid fading of the appeal of &#34;Hong Kong brands,&#34; which no longer possess the same halo for many mainland consumers. Meanwhile, local retailers are not only becoming increasingly sophisticated in their operating methods but also adopting more aggressive marketing strategies, effectively utilizing local influencers on mainstream social platforms like Douyin and Xiaohongshu to promote products. Additionally, the proliferation of cross-border e-commerce has weakened the original advantages of Hong Kong stores in imported goods.
More than half a year before Mannings officially announced its withdrawal from the Chinese market, Sa Sa had already announced the closure of its remaining 18 physical stores in mainland China by June 30 this year. The company attributed its difficulties to fierce competition and the beauty retail industry being in a &#34;reshuffling period,&#34; disclosing a 9.7% decline in revenue for 2024 and a staggering 65% drop in profits.
Both Mannings and Sa Sa stated that they will shift towards cross-border retail, focusing on the Guangdong and Hainan markets in South China, leveraging the bonded warehouse model to seize opportunities brought by the official launch of the Hainan Free Trade Zone on December 18. The smaller Hong Kong beauty and personal care retailer, Bonjour Holdings, has also continued to close physical stores since its peak in 2018 and announced on December 11 the establishment of a cross-border retail joint venture with medical device company Ziyuan Yuan.
Even at its peak, Mannings had only about 200 stores in mainland China, while Sa Sa reached 77 stores in 2022, both significantly lagging behind the Watsons Group. As the world's largest beauty and personal care retailer, Watsons opened its first mainland store in April 1989 at the Wangfujing Hotel in Beijing.
Founded in 1856, Watsons was originally a pharmacy in Hong Kong and is currently a subsidiary of CK Hutchison Holdings (0001.HK). As of June 30 this year, Watsons had a total of 16,935 stores worldwide, with 3,630 stores in mainland China. However, like other peers, Watsons has also seen a slowdown in its beauty and personal care business in mainland China, with related business revenue declining by 3% year-on-year in the first half of this year, and same-store sales dropping by 1%; over the past year, the group has closed 145 stores in mainland China.
In the first half of this year, the beauty and personal care division of CK Hutchison's retail business in China was the only region to record a decline in growth. Although the overall revenue of this division still rose by 8% year-on-year to HKD 98.8 billion (approximately USD 12.7 billion), the company pointed out that the performance of its Chinese business was &#34;adverse,&#34; primarily constrained by weak consumer spending amid a prolonged economic slowdown
According to reports, CK Hutchison is considering arranging a Hong Kong listing for Watsons in 2026, aiming for a fundraising of about USD 2 billion to catch up with the recent surge in new stock listings in Hong Kong. However, the weak performance of the Chinese market may pose a challenge for this business. Given Watsons' large store presence in mainland China and the company's repeated emphasis on its long-term commitment to the Chinese market, the likelihood of Watsons withdrawing from the mainland in the short term is low.
However, in the current retail environment, Watsons faces pressures similar to those of other Hong Kong peers. Retailers must explore how to better integrate online and offline operations with social media while also dealing with the reality of shrinking profit margins and weak consumer confidence

Mannings announced that it will end its operations in mainland China and close all stores. This is consistent with the strategy of its parent company DFI to reduce loss-making assets and echoes the withdrawal of Sa Sa International. Watsons has become the only Hong Kong beauty retailer still operating in mainland China. In recent years, DFI has been slimming down its assets in Asia, closing multiple stores to improve operational efficiency. Mannings' exit reflects the challenges faced by foreign retailers in China

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