Late Spring Festival, drop in mainland visitors blamed for dismal performance

Hong Kong's retail sales fell to HK$46.6 billion in January - down 14.6 percent from a year earlier - deepening worries that the city may be losing its allure as the region's shopping paradise.

January's slump followed a 4-percent retail decline in December, latest official figures show.

Leading the fall was a 44-percent drop in sales of miscellaneous consumer durable goods, followed by a 21.4-percent dive in sales of luxury products, including jewelry and watches. Sales of shoes and other accessories plunged by 19 percent, while apparel sales slipped 12.8 percent.

In contrast, sales of vehicles and furniture rose by 6.1 percent and 5.9 percent, respectively, in January.

The decline in retail sales was partly attributable to the timing of the Spring Festival holidays, the busiest shopping season, which fell on Feb 19 this year rather than on Jan 31 in 2014, a government spokesman noted.

"Unless this February could achieve 19.7-percent annual growth in retail sales, it would be very hard for the figures of the first two months to match those for the same period last year," Caroline Mak, chairperson of the Hong Kong Retail Management Association (HKRMA), said on Tuesday.

She said the decline in the number of mainland visitors had also taken a toll on local retail business. "Roughly 40 percent of Hong Kong's retail sales are driven by mainland buyers. The poor number in January is an instant reflection of fewer cross-border visitors," she emphasized.

Although the total number of mainland visitors in January rose by 3.3 percent from a year earlier, the number of big-spending tourists under the Individual Visit Scheme (IVS) slipped by 2.4 percent.

Industry estimates have shown little improvement in February, Mak said. Local retailers reported that sales during the Spring Festival holidays had fallen by up to 20 percent from a year earlier, a recent survey by the HKRMA found out. In particular, electronics, cosmetics and jewelry were facing headwinds.

A recent survey by the HKRMA shows that sales of electronics, cosmetics and jewelry in February were all down.

Chief Executive Leung Chun-ying said on Feb 24 that, instead of stay and consume, more mainland visitors are becoming transit passengers.

Compared with the Spring Festival holidays in 2014, the Immigration Department recorded 3.2 percent less visitors from the mainland this year. In the first six days of the festival, the number of travelers under the IVS shrank by almost 5 percent - the first time in two decades.

On the other hand, Leung promised to avoid extending the existing IVS to ease pressure on local residents' livelihood. He said the SAR government will develop more tourism facilities, including shopping malls, to boost the city's capacity.

"We oppose any major change to the IVS. Tightening measures would have a considerable impact on retailers," Mak said, adding that a comparatively strong currency and recent protests against mainland tourists have already made the city a less attractive destination.

"We hope Hong Kong, not just the government but also the people, could support more infrastructure projects to boost local tourism capacity and help the retail industry," she said.

emmadai@chinadaily.com.cn

Local retailers reported that sales during the Spring Festival holidays had fallen by up to 20 percent from a year earlier, according to a recent survey. The city's electronics, cosmetics and jewelry, in particular, were facing headwinds. Billy H.c. Kwok / Bloomberg

(HK Edition 03/04/2015 page9)