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  • Oct 23, 2014
  • Updated: 9:28pm
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

swami.vas
Reproduced below is one of my earlier comments relevant to tourists from the Mainland: "swami.vas Apr 5th 2014
8:05am
Tourism has been a backbone of the Hong Kong SAR economy for ages and it is totally inadvisable to tamper with it in anyway whatsoever. In fact, even without any control measures, a cursory look around tourist centres at usually busy hours would give one the impression that inflow of visitors has been thinning of late with some popular shopping areas almost deserted! Further, most of the tourists from the mainland are one time visitors apparently longing to visit the territory which to them is affluent and it is inappropriate to restrain them from fulfilling their obvious dream! With the Hong Kong SAR economic growth showing signs of sluggishness, there ought to be utmost caution in taking any steps that would only worsen it. Whereas ways and means of meeting the needs of visitors should be explored and implemented as it is imperative to ensure a steady inflow of income from various sources which will only be beneficial to have a sustainable economic growth which is what the territory needs in the years ahead! Do not strike the golden goose, it will be sheer short-sightedness!" There ought to be a rethink at government level on proposal to curtail inflow of mainland tourists! After all, it seems it won't be necessary!
Beaker
Aww, boohoo to the landlords and the money laundering shops posing as "luxury goods" stores. How many people not money laundering buy 15 watches at a time anyway? Has anyone ever done a serial number check of expensive watches to see if the numbers produced correspond to the numbers actually sold vs how many receipts are made for new watches sold? I bet the same watches are sold over and over again from one store to the next with cooperating pawn shops buying them back from the Mainland watch buyers as soon as they leave the shop at pre-arranged places. The un-opened boxes are then resold as new again at another store in the city or Macao. Then, SCMP writes an article about how HK is the largest "luxury market" in the world and allude to how important this 'trade' is to HK's economy. It only raises rent and food prices and benefits a few of the laundry shops and landlords who collude with the laundries. If they all got gassed, rents will come down and we can eat at decent prices again and the economy will improve because most people will have more spending money to keep regular people employed with jobs. Can we still buy Zyklon B or is there better products these days?
jam2morrow
We should be proud that Mainland Chinese see Hong Kong as the capital of China...... just like French people visit Paris to say 'wow!", Americans go to New York, Italians go to Rome, Brits go to London, Russians go to Moscow etc.. Sure, it comes with some challenges, especially because we are a small town and there are a lot of people who want to visit. But let's embrace it and find a way to make sure that all HK citizens benefit (not just landlords). What's happened to our pride? Don't we want to be the best city in China? If so, we have to listen to our customers.
Camel
You know, those Mainland bashers, British d, along with those foreigners, who thinks HK belongs to them will be with the first plane out of HK if the city is going down.
538eaa69-8078-43ce-a47c-34f30a320969
@cicero - below
Are you insinuating you are one of those buggers whose income relies solely on mainland tourists ?
Let me guess, you sell mark-up bottled water at Ocean Park's entrance and that makes you not obnoxious ? Get a real white collar desk job.
5382af6f-e99c-48b5-ac7a-34fc0a320969
Lets hope the obnoxious mainland haters in HK gets their wish and no mainland tourists visits HK again. The buggers will be starving in the streets of HK.
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.....
538eaa69-8078-43ce-a47c-34f30a320969
Good riddance! Let the market crash if it need be but just wipe out all the luxury retails and bring back the neighboring stores that sell necessity items. How do you get rid of cockroaches ? You don't leave bread crumbs behind on the floor. (All Pun Intended).
This is a war! a battle of survival for most of the Hkongers and if you don't want to see your children or grandchildren to live in cages and having them think twice before buying an apple off the supermarket, you better hope they shut the flood gate.
-
If the repeat of HK riots of 67 is required to jolt some sense into those bureaucrats then be it.
eddywonlung247
We need to hit them harder, cut 90%of mainlanders coming to Hong Kong , slap a 50% tax on goods to stop cross border trading,why on earth does Hong Kong people have to pay tax duty on cigarettes , when all those Mainlander s are paying not tax whatsoever, and making a huge profit selling it on in on china, double standards in Hong Kong , well I guess the government is taking huge back handlers to allow this to operate. Nowhere in the world does this happen without tax. Only Hong Kong.
raglan
Good, we need a correction in shop rents, less luxury **** and more affordable basic products and services....

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