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Hong Kong must raise standards and offer more, luxury forum agrees

Hong Kong's continued success as a high-end shopping mecca depends on raising standards and offering visitors something unique, experts say

PUBLISHED : Tuesday, 19 November, 2013, 5:13am
UPDATED : Tuesday, 19 November, 2013, 4:06pm

As the competition to capture the spending of China's tourists grows globally, Hong Kong should focus on elevating its service standards and offering one-of-a-kind experiences rather than just being a giant retail outlet, a panel of luxury experts said yesterday.

The consensus emerged from a gathering of luxury industry executives at the JW Marriott hotel to discuss how the city can retain its edge as a luxury- shopping mecca, in the fifth of a series of talks, "Redefining Hong Kong", organised by the South China Morning Post.

Hong Kong enjoys the world's highest per capita luxury goods consumption rate, thanks to the large numbers of mainland Chinese tourists who cross the border to shop.

Mainland Chinese buy 30 per cent of all luxury goods sold worldwide, according to research carried out by strategy consultants Bain.

They make a third of their luxury purchases in Hong Kong, another third at home and the rest elsewhere in the world.

The experts yesterday warned that Hong Kong could lose its lustre; already, tourists from some mainland cities, after visiting the city several times, are opting to shop in new destinations such as Europe and Australia. Of middle-class mainland Chinese consumers polled by KPMG for a survey released in January this year, 71 per cent had travelled abroad, up from 53 per cent in a similar survey in 2008.

"[Hong Kong] is a very important luxury capital, but you can't just sit on your backside and expect that to continue. It's time to give some more thought to developing the next stage and the vision," said Clement Kwok King-man, chief executive of Hong Kong and Shanghai Hotels, which owns and operates The Peninsula hotels.

Hong Kong is still ranked the number one destination for mainland Chinese tourists to visit during "golden week" holidays celebrating modern China's founding, according to a survey by Hotels.com

But many cities around the world are marketing heavily to attract the international Chinese traveller.

In September, Thailand announced plans to scrap a 30 per cent tax on luxury watches, clothes and cosmetics by year's end to lure spenders from China.

Last month, the UK said it would significantly ease its visa requirements for Chinese travellers following months of lobbying from some of Britain's best known luxury retailers, including Harrods, which had complained that big brands were losing a chunk of Chinese tourism business to other European countries.

Hong Kong can keep ahead of the pack by improving service and creating quintessentially Hong Kong experiences, said Kwok.

"Luxury is a people business," he said. "A big part of this comes down to how we train our people to offer the sort of knowledgeable and discreet personal service. This is a very important part. Hong Kong has made a start but can develop some more."

Service is regarded as crucial to mainland Chinese luxury-goods buyers. Most - 92 per cent - complained about the service they received from luxury- brand stores at home, according to a survey by public relations firm Ruder Finn and market research company Ipsos that was released this month.

But participants yesterday said Hong Kong shouldn't just be better than the mainland, but every other international competitor.

"We should not just compare [ourselves] to Shanghai," said Adrian Cheng, executive director of New World Development and Chow Tai Fook Jewellery Group. "Compared to China, our software, services and experience are much better, but if we compare to Thailand, I think there are one or two shopping centres that are much better than Hong Kong, service-wise and retail therapy-wise."

Although Hong Kong has top-notch dining and shopping options, the city can tailor a luxury experience that's distinctively Hong Kong, Kwok said.

"I think increasingly, in addition to shopping and dining, to offer experiences for high-end customers you can see they are seeking unique experiences," he said. "The word 'art' has been used. Preservation of heritage and history is very important. We used to conduct Tsim Sha Tsui history tours. I think we can do more events in terms of music, film, jewellery, cars, wine - everything. I also think Hong Kong has underperformed as an international sports venue."

Elsa Rameau, Hermes' managing director for Hong Kong and Macau, emphasised that it's important for sales staff to speak the language of their customers - be it Putonghua, English or Japanese. "Ten years ago, when I came to Hong Kong, the Japanese were the top customers at "golden week". Your team has to adapt, which is also an issue."

Finding and retaining the right talent has been difficult in Hong Kong. "In France, people are very proud to work for those brands and don't change [jobs] as easily [as they do] in Asia," she said.

Sunny Wong Yat-ming, the managing director of Trinity - which owns high-end fashion labels Gieves and Hawkes, Kent and Curwen, and Cerruti 1881 - said losing homegrown talent has been a vexing problem.

"Even though we have good talent we're not able to keep them," he said. "I'm in the middle of it because I run design centres in Hong Kong and overseas. We still use London and Paris to lead as design. We see them as more creative centres. Hong Kong is more executional ... Milan and Paris are proven luxury centres of the world.

"If I have a designer who is really ambitious, they'll say, 'can you post me in Paris or London?' They don't see Hong Kong as their ultimate career destination. They see Hong Kong as a place for good training, but not as a place to develop a global career."

Kwok from the hotel group suggested the best way to retain talent was to send employees overseas while working with a homegrown brand.

"We want young people to be proud of Hong Kong brands and willing to commit [to them], but that doesn't have to take place in Hong Kong," he said.

 

Through six seminars organised by the South China Morning Post, the Redefining Hong Kong Debate Series engages the most influential and critical experts in constructive dialogue on how to reposition and redirect the city for future success. See celebratinghk.com/redefining

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