Sales drop as mainland visitors ease their spending in HK
内地游客降低消费 香港零售量下降

Hong Kong’s retail sales have seen their sharpest drop in five years, as spending by visitors from the Mainland slows.

Mainland visitors used to come here in droves, packing these jewelry shops to fever pitch, and ringing the tills with thick wads of Chinese Renminbi. Now all that has changed. Mainland tourists, who used to splurge on jewelry and watches, are now spending a lot less on luxuries.

Here in this jewelry store in Wan Chai, Mr. Ngai told us late last April that turnover from Mainland customers dropped 20 to 30 percent, as they bought a lot less over the Easter holidays. Mainland clients account for 30 to 40 percent of his business.

Today, turnover has slipped even further, laments Mr. Ngai.

Hong Kong’s retail sales in April dropped the sharpest in five years, the third month in a row the figures had fallen. The biggest decline was for big-ticket items such as jewelry and watches, with sales plunging almost 40 per cent in April. Shops like these that have relied mainly on visitors from the Mainland for their sales over the past few years are struggling now, with some of them losing about 50 percent of their business since April, as Mainland spending in the city for such luxuries continues to shrink.

The fall in sales of jewelry and watches reflects a change in Mainland tourists’ shopping habits, says Clare Lui of market researcher Ipsos.

"The downturn on the mainland, the slowdown in the growth rate of the number of visitors and the fact that visitors are less inclined to extravagant spending are the main contributing factors to this." said Clare Lui, Executive Director, Ipsos.

While the record drop in retail sales comes as the number of Mainland visitors continues to slow, some economists blame the trend on the anti-corruption drive Beijing launched in 20-12 to curb government spending on luxury gifts.

If the retail sales decline persists, warns Financial Secretary John Tsang, it could affect Hong Kong’s economy and development.

Unlike his rivals in Causeway Bay, majority of Mr. Ngai’s clients are still Hong Kong locals, whom he says are still spending on jewelry. And it’s helping this 40 year-old shop in Wan Chai tide itself over in this latest downturn.