Hong Kong retail sales plunge in biggest drop since 2003 Sars epidemic
January retail scene is at its weakest since the 2003 fatal Sars epidemic, partly because of a late start to the traditional festival this year
A slump of 14.6 per cent in retail sales ahead of the Lunar New Year is the worst since a 2003 outbreak of severe acute respiratory syndrome, putting businesses and concern groups at loggerheads over whether to curb the inflow of mainland visitors.
Sales in January fell to HK$46.6 billion from a year ago, the Census and Statistics Department said yesterday.
It is the first decline in any January since 2007, when sales dipped 1.6 per cent.
The Retail Management Association reacted strongly, saying the data reflected retail difficulties in the face of slowing growth in cross-border arrivals. The association would object to limiting visitor numbers, chairwoman Caroline Mak Sui-king said.
That stance will put the industry in conflict with political parties and anti-mainland protesters that advocate caps on a multiple-entry visa scheme granting permanent Shenzhen residents unlimited trips to Hong Kong.
Proposals to limit such visits will be put to Beijing by Hong Kong delegates to the Chinese People's Political Consultative Conference this week.
Mak is against the idea. "Hongkongers have a certain purchasing power, but 40 per cent of retail spending comes from tourists. The government should increase Hong Kong's tourism capacity instead."
Lawmaker Michael Tien Puk-sun, who runs clothing chain G2000, disagreed. "It is irresponsible not to do anything. The industry will dry up in the long run. Most residents don't want their neighbourhoods to be overcrowded. We must change the structure … to solve [this]." Tien proposed a ceiling of 30 to 40 trips a year to cut down on parallel-goods trading, while expanding an individual visit scheme - now available in 49 mainland cities - further afield to places such as Xian to lure more higher-spending tourists.
In the latest year-on-year figures, the sales value of jewellery, watches and valuable gifts fell 21.4 per cent in January. Sales also fell at boutiques, supermarkets and department stores by more than a tenth. Sales at cosmetics chain Sa Sa fell 10 per cent in the first week of the Lunar New Year.
The department noted that sales in January and February are affected by when the holiday falls. It was January 31 last year but February 19 this time, so this January was quieter as shoppers waited to make festive purchases.
That is not the only reason for the subdued business. Fewer mainlanders visited individually in January despite a slight rise in overall arrival figures, Mak said.
CCB International Securities said any visa policy changes were likely to affect mass-market retailers most, such as Sa Sa, with minimal impact on high-end shops including jewellery chain Chow Tai Fook.
Leung Tin-cheuk, assistant economics professor at Chinese University, said retail sales had limited effect on economic growth because of the little value imported goods added to the economy.
Additional reporting by Lai Ying-kit