• Thu
  • Dec 25, 2014
  • Updated: 6:24pm
NewsHong Kong
SHOPPING

Drop in retail sales biggest in five years as surge in number of mainland visitors slows

Figures dip for third month in a row, with trade in luxury items down almost 40pc in April as surge in number of mainland visitors slows

PUBLISHED : Tuesday, 03 June, 2014, 11:51pm
UPDATED : Wednesday, 04 June, 2014, 3:39pm
 

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Hong Kong’s retail sales in April dropped the sharpest in five years, adding fuel to the controversial debate on curbing mainland tourist numbers.

Consumption fell 9.8 per cent year-on-year to HK$38.8 billion, or 9.5 per cent in volume, the Census and Statistics Department said yesterday.

It was the third month in a row the figures had declined, after a drop of 1.3 per cent in March and 2.3 per cent in February.

If the decline persists, it could affect the economy and employment
JOHN TSANG, FINANCIAL SECRETARY

The poor performance came as the growth rate in mainland visitors slowed to 14.7 per cent in April from 26.7 per cent in March.

Some economists blamed the gloomy sales figures on the continuing effects of the anti-corruption drive Beijing launched in 2012 to curb the spending of officials on luxury gifts.

But bumper figures in the same month last year, driven by soaring sales after a drop in the price of gold, made for a higher base of comparison.

The biggest decline was for big-ticket items such as jewellery and watches, with sales plunging almost 40 per cent in April.

Sales of consumer durables were down by a fifth, and those of electrical goods and photographic equipment were down by 8.3 per cent. Financial Secretary John Tsang Chun-wah said: “The drop is the biggest since February 2009. If the decline persists, it could affect the economy and the employment situation.”

He said the fall in sales of jewellery and watches reflected a change in tourists’ shopping habits. This view was supported by Terence Chong Tai-leung, an executive director of Chinese University’s Institute of Global Economics and Finance, who said: “Tourists’ spending patterns have changed.

“It will be hard to revert to the old days when they splurged on luxurious products.”

Secretary for Financial Services and the Treasury Professor Chan Ka-keung said: “If you talk about the decrease in sales of luxury goods, I think it may have to do more with the slowdown of the mainland economy and the change in consumption habits of  high-income mainland tourists, rather than to changes in the number of mainland arrivals. It has to do more with the macro environment.”

The chairwoman of the Hong Kong Retail Management Association, Caroline Mak Sui-king, said the slowdown was having a “severe” impact on retailers, who were reeling from rocketing costs and particularly from soaring  rents.

On top of that, retail stocks have been hammered this year. Cosmetics chain Sa Sa has seen its share price fall 41.4 per cent.

Chief Executive Leung Chun-ying said yesterday the government would take into account the figures when mapping out the city’s tourism policy.

Last week, there were reports he was looking for a 20 per cent cut in cross-border travellers, 8angering retailers.

The rising number of mainland visitors since the introduction of the individual traveller scheme in 2003 has fuelled social tensions in the city.

About 40 million mainlanders visit Hong Kong each year, but that figure is projected to hit 100 million by 2020, putting an ever greater strain on the city.

Additional reporting by Jennifer Ngo

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This article is now closed to comments

hkis
This is fantastic news!
Perhaps now the luxury companies will lose a fortune, meaning we can get our neighborhoods back. Maybe its the beginning of lowering store rents for independents, as opposed to losing our Times Square local movie theatre for a Tiffany's, or turning the best neighborhoods into high end luxury goods that are no use to locals whatsoever.
horacejeffry
Hey guys am I reading it wrong or some of you? Their is a DROP in RETAIL SALES and a SLOWING of GROWTH in visitors so we still get MORE visitors only they spend differently a.o. LESS luxury items most likely due to crackdown on corruption.
I have absolutely no pity with the retailers who have to pay high rents, in your greed to make more money you accepted the ludicrous rents asked by the even more greedy landlords. Lets hope for more fall in luxury goods sales so indeed we can get back our local eateries etc. Those who were selling million dollar watches can then get a job there washing the dishes
Dai Muff
A slowing surge is still a surge.
Hong Kong should think more about innovating and less about shopkeeping and rent collecting.
lbsaw
Is this a sign of mainland Chinese wising up? Retail sales of luxury products, irrespective of whoever is buying them, are mere non essentials, as they are just extravagance in life. Hong Kong retailers who focus on generating profits from this sector are merely short-sighted trying to cash in our a fad and cannot expect it to last perpetually. Luxury goods tend to have a better demand in developing countries where the new wealthy people tend to purchase them to present a status in their achievements. Frugality is a lesson people should learn. Essentials in life is more important. Maybe the numerous luxury retailers can cut back and the government can encourage the return of Hong Kong long lost local dai pa dongs and the likes, to restore its originality. This will be more sustainable and create tourism based on Hong Kong as a city with its own uniqueness. The greedy landlords have had too much to reap and what goes up, must come down.
John Adams
GREAT NEWS !
roy.lau.0083
The retail sell significant decrease in five years. I think that is returning to normalization of Hong Kong's commercial environment. Now in MongKok has average 100 drug stores in arbitrary ten streets according to a MongKok's district councillor speech. There is very ridiculous.
I suggest Hong Kong should developed the inherent superior industries, which included Culture, creative industries, education, private health care, testing and certification, and environmental industries.
raglan
Good, we need a correction in shop rents, less luxury **** and more affordable basic products and services....
sipsip1238
What is interesting is that we are getting increases in numbers and overall spending is becoming less and less. Can't imagine on average how much per visitor spends now, and in all honesty, if youre a store owner who chased after mainland money and burdened yourself with absurd rent, isn't that just part of your bad business decision?
Like all markets, there are ups and downs, and there's always going to be people who jumped on the boat last, just like property owners buying at the top; it is unfortunate that jobs will be lost, but doesn't mean that the government needs to save them. Think of it this way, at least these people have the capabilities to start a business, if the government were to help anyone, maybe help the homeless in getting a job or providing support for low income earners first.
chaz_hen
Maybe...just maybe with fewer mainlanders coming to HK, all the people from other parts of the world that thought twice about coming to HK for dining, sightseeing and shopping because of the fact of HK's reputation as a big messy mainland mall, will finally come and take up the slack.
And they won't let their kids take giant cr*ps on the sidewalks!
nicolas
HK government should not rely much on the mainlanders. 70% of our tourist comes from mainland and it only shows poor government policy. don't you know that the mainland tourist is one of the reason why HK is not attracted to foreign tourist. because foreigner think that mainlanders are very annoying and nuisance to the HK society. it's the illiterate attitude and bad behaviour of these mainlanders that cause such problem. they shout, spit, urinate and even defacate in public places. it's about time that the HK government should think of something else that could bring back the "Asia's World City" image to HK. simply cancel all the individual visit scheme with multiple entry and replace it with the previous 2-way entry permit. this will bring peace and loving society back to HK.....

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