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Hong Kong
By Mary Kavanagh
Any hopes for a revival of retail sales in the city during the October Golden Week national holiday were unfulfilled. Some retailers even described it as “the worst ever,” according to the South China Morning Post. “There was a noticeable reduction in the number of high-spending consumers from Mainland China during Golden Week,” said a spokesperson for Bee’s Diamonds, a jewelry wholesaler that also provides a bespoke personal service to clients. “This is mostly due to the Chinese government’s recent implementation of an anticorruption policy, which has influenced Mainland customers’ confidence to purchase diamonds, wear them conspicuously or keep them in their homes,” he said. Others in the trade echoed this sentiment. “We made 15 percent less money this year. Shoppers hesitated and tended to compare prices,” said a sales director at Chow Sang Sang. Nancy Liu, president, Forevermark Asia Pacific, reported that sales in Hong Kong and Macau were soft, but they recorded high single-digit growth in Mainland China. In an interview with Bloomberg TV about sales during China’s Golden Week festival, Kathy Chan, executive director and chief financial officer (CFO) at Luk Fook, said, “I don’t feel we should be optimistic.” Luk Fook, one of the leading jewelry retailers in Hong Kong and Mainland China, will focus on expanding its business in China due to the downturn in Hong Kong. Feedback from the Hong Kong Retail Management Association (HKRMA) was also negative. Most of its members recorded single-digit or double-digit declines in sales during October 1 and 2, the first two days of the weeklong holiday.
Even though Hong Kong government data showed visitor numbers from Mainland China to be up marginally by 2.3 percent during this year’s Golden Week, these figures were the worst since a small decline in visitor numbers in 2006. And to aggravate matters for retailers, visitor spending per capita was down. Secretary for Commerce and Economic Development Greg So Kam-leung blamed economic uncertainty, weakening Asian currencies and a series of protests against Mainlanders, which has negatively impacted tourist sentiment. Travel Industry Council Chairman Michael Wu Siu-ieng suggested the minor growth in inbound Mainland tourists was mainly driven by those who visited on business visas and in group tours. Visitors from Shenzhen dropped nearly 20 percent after holders of multiple-entry permits from the border city were limited to one visit a week. Wu acknowledged the tourism industry had relied too heavily on Mainlanders and the slow growth would have a ripple effect on related sectors. A research analyst with GF Securities suggested that some of the visitors to Hong Kong during Golden Week were in transit to other destinations and approximately 9,000 of them were students, who traveled to the city to take the SAT exam held on October 3. Hong Kong continues to experience increased competition from other cities in Asia and further afield, as Mainland tourists are choosing to travel to cities such as Tokyo, Seoul, Bangkok and Paris to shop.
Retail sales in the city declined for the sixth consecutive month in August. The total value of sales declined 5.4 percent compared to 2014, the biggest drop since January this year, when sales decreased 14.5 percent year on year. The government attributed the decline to the downturn in tourism, the recent stock market volatility and the timing of the mid-autumn festival — which fell in late September this year but early September last year — and might have pushed back some sales and contributed to a weaker August. Sales of jewelry, watches and clocks and valuable gifts declined by 8.8 percent in value for the eleventh month running.
The holiday season is looming large and businesses are hopeful of an upturn in the market. “Our retail sales have maintained adequate growth, and we anticipate this trend to continue as we approach Christmas, when it is traditionally a good time to propose and get engaged,” said the spokesperson for Bee’s Diamonds. “However, consumers are a bit more price sensitive and a little more concerned about how to maximize their budget,” he added. Liu is hopeful that Forevermark will see a boost in sales from a new TV commercial and marketing campaign they plan to launch in Hong Kong in early December, just in time to capture the Christmas market and in time for the “gifting burst” on the Mainland for Chinese New Year and Valentine’s Day. According to a spokesperson for Chow Tai Fook, “The Christmas holiday is traditionally a peak shopping season, when many people buy Christmas presents for self-rewarding or gifting purposes. As our annual mega sales starting in late November coincides with this festive shopping season, we expect it will still drive up sales during the period despite the lackluster market sentiment.” Time will tell.Article from the Rapaport Magazine - November 2015. To subscribe click here.
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