Hong Kong's tax-free retail sales, proximity to the mainland and reputation for genuine goods will allow the city to keep its position as the top destination for mainland shoppers, in spite of any recent anti-mainland sentiment, a Jones Lang LaSalle report says.
“The growth of Chinese visitor arrivals in Hong Kong has tracked well with China’s economic growth. We expect, at least for the upcoming years, that Hong Kong will continue to enjoy a 10 to 15 per cent growth in Chinese visitor arrivals per year,” according to the latest white paper on retail sales by Jones Lang LaSalle.
Even if China were to remove tariffs on goods entirely, and assuming distributors’ margins remained unchanged, the same items on the mainland would still command a price premium 12 to 37 per cent over those in Hong Kong, the report said.
Over the last few months, the city has seen an increase in anti-mainland sentiment with backlashes against pregnant mainland women giving birth in local hospitals, the rising stream of tourists from across the border and mainlanders snapping up property and driving prices up.
“Even though some mainlanders may cancel their trips to Hong Kong because of all the anti-mainland activities, the market potential is still going to be huge,” Marcos Chan, national director and head of research for Greater Pearl River Delta at Jones Lang LaSalle said. “The number of people interested in coming to Hong Kong would be much greater than those afraid of coming to the city.”
Amidst lingering concerns over the European debt crisis and a potential hard landing for the Chinese economy, Hong Kong’s retail sector continued to expand strongly in 2011. The city’s total retail sales increased by 24.9 per cent from the previous year to reach the HK$406 billion mark.
The city is a popular destination for mainland tourists – four out of ten of whom travel to Hong Kong when going abroad, according to the report. In 2011, Hong Kong welcomed 42 million tourists.
In the first half this year, a total of 15.5 million mainland Chinese tourists came to Hong Kong, up 22.9 per cent year on year, accelerating from the 21.4 annual growth a year earlier, the report shows.
The percentage of tourists visiting Hong Kong who were from the mainland has grown from just over 40 per cent in 2002 to almost 70 per cent in 2011, according to the paper.
In 2011, the shopping expenditures of mainlanders accounted for 27.3 per cent, or HK$110.8 billion, of Hong Kong’s total retail sales. That is almost 6 per cent of the city’s GDP.
Mainland tourists to Hong Kong are also big spenders, according to the report, spending an average of HK$8,200 each, 30 per cent more than visitors from other countries.