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Hong Kong
By Mary Kavanagh
The Year of the Rooster — Chinese New Year — kicked off on Saturday, January 28, but sadly doesn’t appear to have reversed the downward slide in jewelry sales in Hong Kong. The seven-day holiday is typically a time to spend with family and friends and also to buy gifts. Yet even though this year saw a significant 5.1 percent upturn in overall visitor numbers to Hong Kong during the holiday period compared to 2016, this has not translated into an upswing in retail sales. The number of visitors from Mainland China was up 6.6 percent year-on-year over the seven-day holiday period. In stark contrast, 2016 saw a 12.1 percent decline in visitors from the Mainland compared to 2015. In spite of the increase in tourist numbers, retailers reported a drop in same-store sales over the holiday period. Chow Tai Fook Jewellery Group (CTF) saw a decline of 7 percent in same-store sales in Hong Kong compared to 2016, with retail sales slumping 11 percent overall. Same-store sales in Mainland China increased by 1 percent and retail sales rose by 4 percent. There appears to be a general trend that visitors from Mainland China are spending less in the city. Figures from the Hong Kong Tourism Board indicated the average per capita spending by Mainland visitors has been sliding since 2014, which could mean travelers on lower incomes are less inclined to splurge than their wealthier predecessors on luxury items. Retail spending in Hong Kong dropped to a 17-year low in 2016 with overall sales declining 8.1 percent in value and 7.1 percent in volume — the biggest drop in consumer spending since 1999. The grim figures were in line with the expectations of the Hong Kong Retail Management Association (HKRMA). Thomson Cheng, HKRMA chairman, said it is unlikely the retail sector will see a revival in 2017. Yet he predicted that the dip in sales this year would be less steep than in 2016. Cheng attributed the decline in spending by Mainland visitors to the strong Hong Kong dollar fueled by increases in the U.S. interest rates and the devaluation of the yuan. Sales in December dropped 2.9 percent in value and 2.8 percent in volume compared with December 2015. Yet a spokesman for the government pointed out that total sales in the fourth quarter were up 2.3 percent over the third quarter and December’s year-on-year sales decline narrowed, compared with previous months, reflecting a revival in tourist arrivals that month. More importantly, sales of jewelry, watches, clocks and valuable gifts grew 2.3 percent in value, but decreased by 1.3 percent in volume, in December after declining in value for 27 consecutive months since October 2014 — a sign of hope for the jewelry industry.
Cheng called for Hong Kong retailers to change their strategies to try and increase sales, encouraging them to tap into the thriving online sales platforms in Mainland China. He said a key focus area for HKRMA in 2017 would be encouraging more local retailers to adopt online practices. He noted plans to co-host relevant courses together with well-known Mainland ecommerce company, Alibaba Group. However, Cheng acknowledged that retailers have shown little interest so far.
Christopher Ho, general manager, Aberdeen Jewelry Factory Ltd., said business over the past few years has generally been slow and February is a quiet month. He acknowledged the cyclical nature of the business and the market in general, but said this time it is taking the market longer to bounce back and he doesn’t think it will happen in 2017. “Exports are down, with so many things happening in the world. People don’t want to buy big items,” he said. “We used to have quite a number of people from China who bought big diamonds and jade, but not any more, due to the clampdown on corruption. They don’t want to show off now. In the old days, they bought big items to give for gifts, but not now.” The company has been around for over 75 years and most of its new customers are referrals through word of mouth. They cater to visiting tour groups from all over who visit the factory and showroom by appointment, as well as local clients and expatriates. “If customers are satisfied with our products and service, they spread the word and we get more business,” Ho said.Article from the Rapaport Magazine - March 2017. To subscribe click here.
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