The Greater Bay Area potential

The Guangdong-Hong Kong-Macao Greater Bay Area has all the elements required for Hong Kong retailers to expand into and diversify their online and offline customer bases, Cheng said.

Home to a combined population of over 72 million, roughly twice that of Canada, with a GDP of US$1.68 trillion, the Greater Bay Area is comparable to the Tokyo Bay market.

This larger consumer base is compatible with the country's "internal circulation" strategy, to leverage the most productive, vibrant regions, added PwC's Cheng.

Online retail merchants can enjoy reduced cross-border indirect taxes, free from tariff, with 30 percent off for import value-added tax and import consumption tax, as well as faster entry into the mainland market.

However, Dai Xianchi, associate professor in the department of marketing at the Chinese University of Hong Kong, listed two major challenges for Hong Kong merchants to serve the Greater Bay Area in e-commerce and retail.

"The first is the infrastructure in logistics and law. Systematic work needs to be done to streamline the logistics system and to provide a matching legal environment for the same business to serve the entire Greater Bay Area," Dai said. He said he believes the second has to do with a mindset change, where there is a pressing need for Hong Kong managers to understand mainland consumers and businesses, on top of their own local market mindset.

Dai agrees with Peter Wong, senior analyst at Euromonitor International, for upgrades to logistics infrastructure, and to provide government regulatory support for Hong Kong e-commerce and retail companies, whose current local focus leaves them underdeveloped as far as the necessary interfaces for cross-border e-commerce and delivery platforms.

While Taobao and other mainland e-commerce platforms have been servicing Hong Kong and Macao buyers efficiently for years, the reverse trade for high quality Hong Kong products via e-commerce delivery has not developed. Mainland shoppers come as visitors for direct purchase at local stores.

Wong suggested that government authorities on either side should align cross-border regulatory measures to facilitate the movement of products. The physical immigration and customs checkpoints between mainland cities plus Hong Kong and Macao restricts the movements of goods, making it impossible for a true Greater Bay Area market to operate. Wong advocates free border passage for certified Hong Kong and Macao products.