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
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.
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