Big Hong Kong jeweller sets sights on Tokyo – to capture sales from Chinese tourists
The move to a duty-free outlet in fashionable Shinjuku comes amid decline in mainland visitors to Hong Kong and a surge in those travelling to Japan
Hong Kong’s largest jeweller, Chow Tai Fook, is seeking custom from mainland shoppers in Japan in a bid to capture growing demand there by Chinese travellers amid slow business in Hong Kong and Beijing’s travel ban on group tours to South Korea.
An 820 sq ft Chow Tai Fook-branded shop will open later this year at the outlet of Japanese duty-free store operator Laox in Shinjuku – one of the Chinese visitors’ favourite shopping destinations in Tokyo.
Its move follows several years of losing business in Hong Kong, with the jeweller’s sales slipping 25.7 per cent in the six months to last September.
Analysts attribute the slump to more diversified travel choices for mainland Chinese tourists due to easier visa application procedures. Japan and – at least until recently – South Korea were the new darlings of the market.
“Seeking to tap into growing demand for leisure spending by Chinese, we are thrilled to partner with Laox … Shinjuku serves as a major economic centre in Tokyo. Together with opportunities arising from the 2020 Tokyo Olympics, we see great business potential in the Japanese market,” Chow Tai Fook managing director Kent Wong said.
Chinese visitor numbers to Japan continued to climb, hitting 24.04 million in 2016, up 22 per cent from the previous year. By contrast, the number of mainland travellers to Hong Kong fell for a second year, dipping 4.5 per cent last year.
Mainland Chinese also appear to be bigger shoppers in Japan, splashing out an average of 227,821 yen (HK$15,400) per person last year, while the figure for Hong Kong was only HK$6,602.
CLSA senior analyst Mariana Kou said it made sense for local retailers to expand into destinations frequented by mainland visitors to meet their demand. But she questioned whether local brands’ overseas stores could capture international customers other than Chinese due to their limited global awareness.
“It makes sense in that it helps raise the profile of the brand to mainland visitors,” she said, but the business contribution of these overseas outlets was very limited. The jeweller currently operates 19 overseas shops among its 2,326 stores.
But the analyst expected the recent ban on Chinese group tours to South Korea in retaliation for a planned deployment of a US missile defence system there could give Japanese retail operations a boost.
Professor Brian King, associate dean at Polytechnic University’s School of Hotel and Tourism Management, agreed. He explained that Japan and South Korea were regarded as alternatives for mainland visitors, given that travel costs were similar.
“When a political order stops the flow to South Korea, other places will see a jump in the short term,” he said, as people turned to safer and more familiar destinations.
He said Hong Kong retailers enjoyed an advantage in expanding to Japan thanks to their decade-long experience of conducing business with mainland tourists.
But King said despite the recent easing of tensions between Japan and China, Tokyo was still exposed to great political risks from Beijing given the two countries’ historical rancour.