The not-so-Great Singapore Sale: Mainland shoppers say Hong Kong is better value

Retailers billed it as the Great Singapore Sale. Chinese tourist Zhu Liang bought into it, only to regret it afterwards.

"We will never come here again to shop on purpose," said Zhu, a 35-year-old businessman from Hangzhou. Visiting the city during the final days of the summer sale season in July, he bought a Loewe handbag for his wife, only to discover he could have paid less in Hong Kong.

Behind the mark-up: a strengthening exchange rate, rising labour costs and a sales tax mainland tourists do not encounter in neighbouring Hong Kong. A reduction in visitors from Asia's largest economy contributed to a sales slide of as much as 4 per cent in Singapore's annual shopping festival, according to the retailers' association.

Visitors from China to Singapore dropped 27 per cent in the five months to May from a year earlier amid slower economic growth on the mainland and the impact of a new Chinese law that clamped down on cut-price shopping tours. Total tourist arrivals declined 1.7 per cent, according to the Singapore Tourism Board.

Singapore's retailers, already facing growing regional competition, are under the most pressure since the Asian financial crisis, Singapore Retailers Association honorary treasurer Kesri Singh Kapur said.

"It is that grim," Kapur said. "Both sides of consumption, which are the domestic customers and tourists, are not spending. I anticipate that at least for the next 12 months, the market will be sluggish."

While Beijing's anti-corruption campaign against extravagant spending by government officials and state-owned companies has also dampened spending on the mainland and in Hong Kong, retailers in Singapore are grappling with the threat of a broader decline in appeal.