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Shenzhen mall to sell Hong Kong products to cut number of mainland visitors

Qianhai economic zone plans mall selling HK products to 'ease tourist pressure'; its success may rely on tax arrangement, says lawmaker

PUBLISHED : Wednesday, 25 June, 2014, 4:49am
UPDATED : Wednesday, 25 June, 2014, 9:21am
 

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A shopping centre selling Hong Kong products will be set up in Shenzhen's new economic zone of Qianhai by the end of this year in an effort to ease the pressure on Hong Kong from hordes of mainland shoppers.

The Qianhai Authority announced this yesterday amid demands from Hong Kong residents for the government to limit the number of mainland visitors to the city - a number that reached 40 million last year.

"We are studying whether visitors, especially those from Shenzhen and other Pearl River Delta places who purely want to go shopping in Hong Kong, could come to Qianhai instead," authority spokesman Wang Jinxia said. "It will be totally the same [as] shopping in Hong Kong."

Wang said this would help Hong Kong cope with the influx of mainland tourists, give opportunities to Hong Kong firms by connecting mainland buying power with their services and enhance the cooperation between Hong Kong and Shenzhen. "Our Hong Kong chief officer is in talks with a few local companies and we are striving to launch the centre by year's end," he said.

Although there are special tax and yuan exchange arrangements to encourage the development of a finance industry in Qianhai, Wang did not spell out the tax arrangements for the shopping mall.

Hong Kong legislator Felix Chung Kwok-pan said the attractiveness of the Qianhai centre to shoppers and its impact on local retailers would depend largely on tax. Besides the appreciation of the yuan against the Hong Kong dollar, the city's low or non-existent taxes were the main draw for mainland shoppers, he said. "On the mainland, there is a 17 per cent value-added tax and import taxes for imported goods. In Hong Kong, there are no import taxes on goods except tobacco, strong liquor and cosmetics." There is no sales tax in the city.

Only if there was a similar tax exemption in Qianhai would mainland tourists go there instead of Hong Kong, he said. In that event, local retailers could face stronger competition but residents would be happy about the city becoming less crowded.

Although Hong Kong companies are invited to participate in the plan, Chung said it would be easier for big chains than for small companies to join.

"It will be difficult for small and medium enterprises to learn about the legal system across the border," he said.

President of the Federation of Hong Kong Brands Chao Chen-kuo supported the idea of a Hong Kong mall in Qianhai, but said it would be important to assure the quality of goods and services.

"If there were only pharmacies selling daily necessities there, I would not be interested in going. It should be local brands that represent Hong Kong, not milk formula."

He suggested including catering and leisure facilities in the mall to showcase Hong Kong's service industries and ensure an all-round experience.

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