• Tue
  • Sep 16, 2014
  • Updated: 1:01pm
NewsHong Kong
ECONOMY

Slide in Hong Kong’s retail sales continues in June with 6.9pc drop

Mainland corruption crackdown blamed for falling demand at Hong Kong's high-end shops

PUBLISHED : Thursday, 31 July, 2014, 11:36pm
UPDATED : Friday, 01 August, 2014, 8:27am

The grim performance of Hong Kong's retail sales continued in June, producing the worst first-half showing since 2009.

The government's monthly statistics released yesterday showed that sales revenue declined in June for the fifth month in a row, dragged down by a continued plunge in demand for luxury goods.

An economist said he expected the woes in the sector to continue amid President Xi Jinping's anti-graft drive on the mainland.

Total retail sales in June decreased by 6.9 per cent year on year to HK$37.1 billion. That was a larger decline than in May, when sales dropped 3.9 per cent from a year ago.

The value of sales of jewellery, timepieces and valuable gifts decreased 28.2 per cent in June from the same period last year. Sales of commodities in department stores dropped 3.6 per cent from a year ago.

Retail sales experienced their worst month in April when sales of luxury goods dropped almost 40 per cent year on year, a fall attritubet to sluggish spending by mainlanders.

Tim Condon, ING Asia chief economist for Asia, said he expected the collapse of luxury sales to continue in view of Xi's anti-corruption drive and the announcement this week that former security chief Zhou Yongkang was under investigation for corruption.

Condon said the slide would not go on indefinitely, but that the market could not be expected to stabilise before the end of this year.

For the first six months as a whole, retail sales decreased 1.3 per cent - the worst first-half performance since 2009, during the global financial crisis.

The Hong Kong Retail Management Association attributed the "below expectation" sales to unstable weather, sluggish growth in mainland visits and spending, and the World Cup in Brazil distracting people from their shopping.

Bank of East Asia chief economist Paul Tang Sai-on said the drop in department store sales on top of jewellery sales indicated a general weakening in the purchasing power of tourists.

Industry groups and analysts maintain a cautious outlook.

The retail association predicted sales remaining soft in July and single-digit growth for the summer.

Tang expected a decrease or single-digit growth for July and August.

 

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This article is now closed to comments

daily
This is good news actually cause now there's less mainlanders laundering their dirty money in HK by spending it on the brand name shops................
mdap
I think we can live with quite a few less Louis Vuitton shops and Chow Tai Fook! At the rate it is going Hong Kong people will not be able to buy milk or bread but will be the best dresses corpses in the morgue!
fmhung
So hk's retail sector is dependent on the money laundering of corrupt Chinese officials....sustainable business model?
likingming
Perhaps, it is the best time for the retailers and the china associates to fire some of their employees to drive up the unemployment rates of HK until the HKers beg the mainlanders to come back. It would be even more effective if China could limit or even stop the mainlanders to HK in the pretend of answering the calls of HKers first.
pure88
Having been recently forced out of both my office and apartment, I hope for a HUGE crash. Office is turning into serviced apartments, entire apartment building is being renovated - get out! Right before signing new apartment lease, the landlord was trying to get an extra $100 per month!! Seriously, I've had it with the greed in this city. Tourists come and go in a day or two, but are making the lives miserable for the people who actually live here!!
sparxasia
Bring back the mainland Chinese!!! (sarcasm)
felix_wong
As a Hongkonger I don't think it hurts the overall HK economy that much. Perhaps it's time for the retailers to revisit the strategy of doing retail business in HK. How about creating something like the Sommerset Orchard Road in Singapore in HK? Opening up chic shops and retail outlets for HK's young and affluent workers to experience, giving HK a fresh look, and closing down some of the jewelry shops, milk formula chemists and Sasa? For Christ's sake??
chaz_hen
Why INVEST in something nice that'll give your community a good vibe and aesthetic appeal when you can continually schlep your sh*t merchandise on a loud, dangerous, polluted street (Nathan Rd) because that's what your customer base (mainlanders) are used to back at their home?
mcorg@shaw.ca
Perhaps it has very little to do with mainland corruption, but rather the long overdue response to discrimination and ridicule of mainlanders by uppity Hong Kong types.
Frankly, as an outsider, I don't know if I would even bother travelling to or shopping in Hong Kong at the risk of being labelled an inferior just as so many Chinese mainlanders are simply because they don't meet the standards set for others by some in HK.
The fact is, if retailers and others don't appreciate that not everyone is going to arrive at their doorstep in the latest fashion attire , but with a dollar that's worth the very same as the dude in the latest style, then perhaps a period of economic stagnation is a good thing to teach folks a wee bit of humility and the old adage about the customer always being right regardless of his or her dress.
I'm sure you all understand what inward reflection is all about.
fmhung
The customer is NOT always right especially ones as uncivilised as the mainlanders. We would rather make less money than to become a slave. But of course some people are happy to sell their mothers for a few stinking RMB.

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