This is what Hong Kong retailers must do to maintain edge as China announces fifth round of import tariff cuts

The latest round of import tariff cuts by Beijing is a fresh reminder for Hong Kong to improve its quality of service as well as retail experience, if it wants to continue to attract Chinese tourism spending despite a rapid erosion of any price advantage it enjoys versus the mainland, said analysts.

China announced last week it would reduce the average tariff rate for 1,449 imported products – ranging from cosmetics to home appliances – from 15.7 per cent to 6.9 per cent, effective July 1. This could affect how and where mainland visitors to Hong Kong, who make up a third of the total visitors to the city, and have been instrumental to the recovery of its retail sector since last year, spend their money.

Hong Xueyu, an analyst at Guotai Junan Securities, said the city will need to introduce improvements in quality as well as attractive tools such as mobile payment options more quickly, as mainland shoppers come to Hong Kong not just for the better prices, but also the shopping experience.

“The prices of consumer goods in Hong Kong have lost much of their attraction,” said Hong. “Plus consumers will have to consider the extra money spent on travelling to the city.”