Hong Kong less of a paradise for shoppers from China
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It used to be widely known as the Pearl of the East, a shopping paradise beckoning residents of China.
But these days, Hong Kong has lost much of its lustre and is finding it harder to attract big spenders from China.
Tourists from China spent an average of HK$7,105 (S$1,300) in Hong Kong in the first half of last year, down 15.8 per cent from the same period in 2015. This is also way below the corresponding figure for 2014 of more than HK$9,000.
With three in four tourists to Hong Kong hailing from China, the decline in spending has hit Hong Kong’s retail sector badly.
Last year, no fewer than four major luxury brands have shut at least one of their stores in Hong Kong. The latest is Prada, which closed its flagship boutique at Peninsula Hotel’s shopping arcade yesterday.
$1,300
Average amount tourists from China spent in Hong Kong in the first half of last year, down 15.8 per cent from the same period in 2015.
35.4m
Tourist arrivals to Hong Kong from China in the first 10 months of last year, down 8.2 per cent from the same period in 2015.
The Italian fashion brand joined Ralph Lauren, Paul Smith and Tonino Lamborghini in having store closures in Hong Kong last year.
Analysts expect more to follow. Some have already served notice of their plans to shut their stores.
Abercrombie and Fitch will pull out of Hong Kong before the lease of its 25,600 sq ft store in Pedder Street expires in 2019. The United States fashion label suffered a 14 per cent year-on-year drop in sales from August to October last year. The company intends to open five stores in China by the end of this month.
“Tourists from China spent an average of HK$7,105 (S$1,300) in Hong Kong in the first half of last year, down 15.8 per cent from the same period in 2015.”
Another US fashion chain, Forever 21, has confirmed that it will shut its 51,188 sq ft store in Causeway Bay shopping district by August.
Mr Pascal Martin, partner of OC&C Strategy Consultants, said: “Until recently, Hong Kong was a key part of a brand’s strategy to build brand equity with Chinese tourists in view of entering China.
“This is still true to some extent, but now, brands rely more on building brand equity directly with Chinese visitors in their flagships in Europe and the US, as well as online, rather than in Hong Kong.”
He added: “Most affluent Chinese tourists have now diversified their travel destinations beyond Hong Kong, to places such as Japan, Korea, Europe and the United States, where they also shop.”
Hong Kong saw 35.4 million tourist arrivals from China for the first 10 months of last year, down 8.2 per cent from the same period in 2015.
But things got better during the recent Christmas holiday period from Dec 23 to 26, as Chinese visitor numbers jumped 18 per cent year on year, and overall visitor numbers rose 13.8 per cent, South China Morning Post reported.
But many tend not to spend much on shopping in Hong Kong.
Cafe owner Lin Chang, 29, was among the Chinese tourists who visited Hong Kong over the Christmas period. Despite the attractive deals on offer, she did not buy a single item. “I plan to buy a designer handbag, but I want the novelty of getting it in Paris,” said Ms Lin, who spent only two days in Hong Kong before heading off to Paris for a week.
The retail slump in Hong Kong may not spell bad news for all – the closure of some stores has allowed new players to take over shop space at lower rents, noted Mr Martin.
Hong Kong still remains an attractive tourist destination, said executive director of the Travel Industry Council of Hong Kong Joseph Tung.
Mr Tung said: “The latest statistics showed that the number of overseas visitors to Hong Kong has increased in recent months. It means that Hong Kong is still an attractive destination to tourists from other countries, not only mainland visitors.”
Questions & Answers
Q.What is the primary reason for the decline in Hong Kong's retail sector, according to the article?
What is the primary reason for the decline in Hong Kong's retail sector, according to the article?
The main cause is a significant drop in spending by tourists from China, who comprise three-quarters of all visitors. Their average spending decreased by 15.8 per cent in the first half of last year compared to 2015.
Q.Which luxury and fashion brands have closed stores in Hong Kong recently?
Which luxury and fashion brands have closed stores in Hong Kong recently?
Prada, Ralph Lauren, Paul Smith, and Tonino Lamborghini all closed stores last year. Abercrombie and Fitch and Forever 21 have also announced plans to shut their large stores in the city.
Q.Where are Chinese tourists choosing to shop instead of Hong Kong now?
Where are Chinese tourists choosing to shop instead of Hong Kong now?
Affluent Chinese tourists are diversifying their travel destinations. They are now opting to shop in places such as Japan, Korea, Europe, and the United States, as well as online, instead of Hong Kong.
Q.Despite the decline in Chinese tourist spending, did visitor numbers always fall?
Despite the decline in Chinese tourist spending, did visitor numbers always fall?
No, while overall Chinese tourist arrivals decreased last year, numbers improved over the Christmas holiday period. Chinese visitor numbers jumped 18 per cent year on year during those specific dates.
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