HONG KONG RETAIL SALES

Retail sales plunge 9.8pc

Eddie Luk and Imogene Wong
Wednesday, June 04, 2014


Hong Kong retail sales have plunged 9.8 percent - the biggest drop since February 2009.
The government attributed the drop to HK$38.8 billion in April to sales of high-value goods including jewelry and watches. It noted that the decline - the third in as many months - might reflect a cutback in visitor spending after a prolonged period of brisk growth. However, an economist suggested the fall may also be related to the crackdown on corruption in the mainland, with many big spenders lying low. Financial Secretary John Tsang Chun-wah warned that if the drop in local retail sales continues and becomes a trend, it could affect local economic development and employment. Speaking before the release of the figures, Chief Executive Leung Chun- ying said he hoped they would stimulate further discussion on whether Hong Kong should act to reduce the number of mainlanders visiting the SAR. Retailers fear the situation will worsen if the number of mainland visitors is to be cut by around 20 percent. In the face of criticism from some Hongkongers about the number of mainlanders flooding across the border, Leung earlier floated the figure of a 20 percent cut in visitors as an option for the Commission on Strategic Development to discuss during a meeting last week. Analysts and economists say the latest plunge indicates that spending by mainland tourists has slowed despite the rise in tourist numbers. The hardest hit were jewelry, watches and valuable gifts, which fell 39
.9 percent year on year to HK$7.8 billion.
Sales of consumer goods such as cellphones and tablets dropped 22 percent to HK$1.14 billion, while electrical goods and photographic equipment dropped 8.3 percent to HK$2.7 billion. Retail sales in March and February this year dropped by 1.5 percent and 2.2 percent to HK$39 billion and HK$40 billion, respectively. Hong Kong Retail Management Association chairwoman Caroline Mak Sui-king said retail sales might drop further if the number of mainland tourists visiting Hong Kong is reduced. In the worst-case scenario, retailers might cut their advertising budgets and lay off staff to save costs, Mak warned. Joseph Chu Kai-To, former chairman of the Federation of Hong Kong Watch Trades and Industries, said spending on high-end products by mainland tourists during last month's Labor Day Golden Week holiday had dropped. He said more mainland tourists are traveling to Europe for shopping and it is unnecessary for Hong Kong to curb tourists arrivals. Economist Andy Kwan Cheuk-chiu is not surprised at the plunge in sales of luxury goods amid the mainland corruption crackdown, and he expects the trend to continue. He suggested setting a cap for multiple-entry permit visitors to solve the problem. Shares of leading cosmetics chain Sa Sa International (0178) dropped 0.95 percent to HK$5.21 yesterday. It has plunged 42.7 percent since the beginning of the year. Financial services and treasury secretary Chan Ka-keung said the decline in retail sales was due to mainland economic development and changes in consumers' consumption patterns.