Hong Kong’s retail sector may see double-digit decline year on year over summer holidays due to extradition bill protests, business association warns
- Most shops record drop in revenue in June and first week of July, some posting a double-digit fall, Hong Kong Retail Management Association says
- Another expert says impact of extradition bill protests would be felt more on spending of tourists than local shoppers in medium term
Hong Kong’s retail sector should brace for a double-digit percentile decline year on year over the summer holidays, a leading industry association has warned, after more violent clashes against the city’s controversial extradition bill broke out in two shopping districts over the weekend.
The Hong Kong Retail Management Association said most of its 8,000 member shops in the city had recorded a drop in revenue in June and the first week of July on average, with some posting a fall of double digits.
Mixed fortunes for businesses as Hong Kong anti-extradition protests force some to close and bring a roaring trade to others
The association said July and August were the traditional high season for the industry and its members made such forecast as the massive protests spread to various districts.
“If the situation continues, the association will revise the forecast on overall sales in 2019 to a double-digit decline,” it said, pointing to a sharp downgrade from the group’s earlier annual forecast of single-digit growth.
Protesters were there to demand the complete withdrawal of the now-suspended bill that would have resulted in the transfer of fugitives from Hong Kong to jurisdictions with which the city lacked such an arrangement, including mainland China.
On Sunday, shocking images emerged of bloodied faces, head wounds, a police officer kicked from an escalator and viciously assaulted by youths and protesters pepper-sprayed and beaten with batons – painting a stark contrast to the peaceful demonstration that had taken place earlier in the day.
In total, 28 protesters and officers sought help from accident and emergency departments in the city’s public hospitals. Police arrested 47 people, including 29 men and 18 women, for offences such as unlawful assembly, assaulting and obstructing officers and possessing offensive weapons.
The association said massive protests had led to suspension of business in shops and also affected the income of retail workers.
How a peaceful rally descended into bloodshed and chaos in Sha Tin’s New Town Plaza mall
“The industry worries the incident will dent Hong Kong’s international image as a safe city, a food and shopping paradise,” it said.
“The protests affected people’s lives and the business environment. The association called on the government to solve the problem peacefully and bring [back] social order.”
Hong Kong’s retail sales fell for the fourth straight month in May, posting a 1.3 per cent drop to HK$40 billion (US$5 billion) year on year. In the first five months of 2019, the value of total retail sales in the city has decreased by 1.8 per cent compared with the same period last year.
But forecasts by two other analysts were not that pessimistic.
Economist Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, said the retail sector would be unlikely to record a double-digit fall in sales in July and August because the protests only happened in certain districts and shoppers knew where to go.
“It’s not a citywide protest. For example, there will be an assembly in Admiralty on July 21, but those going to Causeway Bay will not be affected,” he said.
He expected the city’s retail sector to record a drop of only 3 to 5 per cent in July and August, adding that even if the protests took place next month, shoppers would get used to them and know how to avoid those areas.
Near site of Hong Kong’s anti-extradition clashes, businesses still taking a hit
Mariana Kou Chung-yin, head of China education and Hong Kong consumer research for investment group CLSA, predicted a single-digit decline for July and August from the same months last year, but added that this would depend on how the situation unfolded.
Kou said the impact would be felt more on spending by tourists than local shoppers and the recent incidents might affect tourist flow more in the medium term, even though the impact might not show in the near term since trips were usually planned well in advance.
