Malls try to cash in on duty-free edge granted to HK products

PUBLISHED : Thursday, 11 December, 2003, 12:00am
UPDATED : Thursday, 11 December, 2003, 12:00am

Retailers in Guangdong are jumping on the Cepa bandwagon with plans to open shopping malls that specialise in Hong Kong products.

Juntai Shopping Mall in Beijing Road, the Guangzhou equivalent to Causeway Bay, is refurbishing 3,600 square metres of shopping space and plans to reopen early next year with tenants from Hong Kong.

'Hong Kong compatriots have been given the opportunity to enter the mainland market but they need a platform, a centre where they can all display their products,' said Gao Hungwei, the property manager of the complex. Under the Closer Economic Partnership Arrangement, Hong Kong products are allowed to enter the mainland free from tariffs from next year.

Ms Gao said that although retailers could operate standalone shops, a mall for zero-tariff products made more business sense because it would benefit from group promotional efforts.

'We've had good response from prospective tenants. The very fact that we are selling duty-free products is a guarantee of its success,' Ms Gao said.

But Zhou Zhaosen, vice-president of the Hong Kong Chamber of Commerce in China-Guangdong, said zero-tariff stores were not a selling point on their own, and the malls would still need to find good anchor tenants.

Questions have also been raised about why the list of products to be promoted in Juntai was compiled without market research or consulting Hong Kong manufacturers.

The list was reportedly based on Customs Department data, and includes items such as ice cream. The customs figures mask the fact that much of the ice cream imported by China through Hong Kong is from foreign companies. Imported brands, such as Dairy Queen, are likely to benefit from Cepa, while other stronger food brands, such as Maxims, are left out.

Wu Fan, a manager responsible for the project, which has the support of the Yuexiu district government, said more than 60 prospective tenants had placed deposits on store space, while 100 others were expected to come to assess the complex in Guangzhou.

Other centres are also targeting Hong Kong products. A similar mall will open in Zhongshan, while at least three other shopping complexes in Guangzhou are planning to sell duty-free Hong Kong items.