Mainland visitor slump underlines retail woes

Falling mainland visitor numbers into Hong Kong underline the city’s current retail woes.

Recent data shows the number of Mainland Chinese visitors travelling to Hong Kong during the first six months of this year fell by 10.6 per cent to just 20.4 million. It is no coincidence that retail sales in Hong Kong for the first six months of the year fell by 10.1 per cent.

If anything it shows that retail spending by Hongkongers is holding strong, especially in non-luxury categories, a fact illustrated by a breakdown of the spending by category in June’s official government statistics: apparel sales overall fell by just 0.6 per cent during that month. Food sales (for consumption at home) has been rising year-on-year.

As previously reported, cashed-up Mainland Chinese travellers are heading to Europe, Japan and Korea thanks to more favourable exchange rates and relaxed visa restrictions.

On a brighter note, as real estate company Knight Frank recently noted, today’s mainland visitors are more likely to spend on affordable products than luxury goods. While this change in consumption will “continue to suppress growth in retail sales value” – and reflects the fact that the mainlanders travelling to Hong Kong nowadays are less affluent – it creates a strong market opportunity for value retailers and affordable luxury and mid-range fashion brands.

David Ji, director, head of research & consultancy, Greater China, with Knight Frank, said in a recent research note the tourism trend may yet swing back. He said the threat of terrorism in Europe, the strengthening Japanese and South Korean currencies and increased political tension between South Korea and China may slow the flow of mainland tourists into those markets.

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