Top Biz News
Price stays key factor for mainland shoppers in Hong Kong
By Joy Lu (China Daily)
Updated: 2010-03-06 09:26
 |
Large Medium Small |
|
 |
|
Mainland visitors take pictures at Hong kong's Golden Bauhinia Square. Mainland tourists spent 42 billion yuan in Hong Kong last year, according to China UnionPay. CHEN GANG/ CHINA FOTO PRESS |
But she had no plans to return to her hotel and take a badly needed break. "I'll sit down for a while in the McDonald's. I want to check out stores in Times Square. That will take hours," she said.
The zeal of mainland shoppers has so impressed Hong Kong's retail sector that the ability to speak Putonghua has become a must for sales assistants. After the 2008 economic crisis, mainlanders' spending power has become even more conspicuous.
According to Hong Kong Retail Management Association (HKRMA), mainland tourists have been a key factor sustaining Hong Kong's retail sales, which edged up 0.6 percent in value last year.
Strong growth was registered in categories favored by mainland tourists: jewelry and watches (47.4 percent), cosmetics and medicines (16.7 percent), electrical goods and photographic equipment (16.2 percent) and clothing (16 percent).
In contrast, sales volume dropped 3.8 percent in supermarkets, which typically reflects local consumption, in December, despite an overall jump of 11.3 percent in retail volume.
In a media interview in January, Li Penglin, assistant manager of China UnionPay (Hong Kong), said mainland tourists spent 42 billion yuan in Hong Kong last year, representing a 54 percent surge.
Lower price
Why is Hong Kong attracting mainland shoppers, when most better-off cities have their own glitzy malls and franchise stores of international brands?
Duty free is the obvious answer.
Consumption tax and import duties on the mainland add some 30 percent to the price of luxury goods such as watches, cosmetics and leather products.
According to a report by Li and Fung Research Center, the annual sales value of Swiss-made luxury watches on the mainland is estimated at 20 billion yuan, far below the 50-billion "cross-border consumption" by mainland customers in markets including Hong Kong and Macao.
Luxury brands readily admit that their loss-making boutiques on the mainland actually function as showrooms. If a mainland customer sees something they like, he or she would often postpone the purchase till they're overseas.
Thanks to its geographical position and the convenience of obtaining visas under the Individual Visit Scheme, mainlanders can make day trips to Hong Kong if they live in or travel to Guangzhou or Shenzhen, said Stella So, marketing professor of the Chinese University of Hong Kong.
The price difference between Hong Kong and the mainland is well known, said Dong, who visits Hong Kong almost every year. "Do an Internet search for 'shopping in Hong Kong', and you'll find hundreds of posts," she said.
Discount cosmetic chains such as Sasa and Bonjour are frequented by mainlanders holding long shopping lists. Even men who give the slightest attention to their skin condition are assigned purchasing tasks by relatives and colleagues.
Less obvious pricing advantages are not lost on experienced shoppers like Dong. "Hong Kong is a good place to buy cheap brand name winter coats. The winter is short here so the discounts are given earlier than in northern areas," she disclosed.
However, what she saved through discounts hardly matched her travel expenses, she admitted.
The most important reason for her annual pilgrimage to this shopping mecca is the variety. "There are more brands in Hong Kong. Even for the same brand, the range of products is wider and the style is different," she said.
Countries like Singapore and South Korea have geared up to tap this tourist shopper market. In addition, ambitious plans have been mapped out to develop southern China's Hainan province into a duty-free shopping haven. And there are reports that the Ministry of Commerce is drafting a bill to lower import duties to encourage affluent mainlanders to buy luxury products at home.
Wang Jianfeng, assistant professor of the department of marketing at City University of Hong Kong, believes that the central government is set to reduce import duties for luxury products, although the majority of mainlanders would want higher taxes for rich people.
The wealthy could find ways to avoid tax by traveling overseas. Lower taxes will actually have a larger impact on the consumption of the middle class or young people, he said.
