Hong Kong’s retail industry is facing “a crucial, life-and-death moment of survival” according to the city’s main retail body the HKRMA, which has sent an open letter to chief executive Carrie Lam seeking government support.
“Since the social unrest from June last year until the recent coronavirus pandemic, the retail industry has taken a hit for nearly a year,” Hong Kong Retail Management Association chair Annie Yau Tse told Lam in the letter.
“The operating environment has become increasingly difficult,” she wrote, and even though the government has repeatedly offered relief measures to address immediate urgencies, the situation is still dire.
Tse said HKRMA research projects 16,000 retail stores will close across the territory this year. That follows 14 months of negative sales growth, a brief respite, then a 40-per-cent-plus plunge during the Covid-19 crisis in February and March.
“The industry is facing the biggest crisis in its history. Monthly rent is a retailer’s largest expense and the association has relentlessly called on landlords to reduce rent in these difficult times.”
While real-estate developers and individual landlords have shown support of varying degrees, the majority of the rent-reduction methods, scope and term do little to alleviate the losses already incurred “and neither is it enough to support a retailer’s continued operations,” she said.
“In addition, recent responses and attitudes of landlords have become more indifferent and tougher than before.”
Tse called on Lam to take action to force a suspension of rental payments for at least nine months, citing countries including Great Britain, Australia and Singapore where laws were implemented during the Covid-19 crisis to ensure landlords take temporary action to help retail tenants recover. Restricting landlords from taking legal measures or taking back store premises for at least nine months would allow retailers to continue to trade and to recover, she advocated.
“Hong Kong is the world’s most expensive place to rent. The income of many industries, especially those tourist related, have contracted significantly, but store owners still face extremely expensive rent.”
Tse also called for broader economic policies from the territory’s government to maintain a sustainable business environment.
“Although HK’s economy has always been market-leading, the current economy is weak. Investments, consumption and exports have fallen sharply, the worst ever rate recorded in history.
“Even if the global pandemic comes to an end, it is expected Hong Kong’s economy will still need at least half a year to gradually step out of the abyss.”
The association believes that if high rents cannot be resolved in a timely manner, even with government funds and related relief measures, mass closures and layoffs are inevitable.
“In the end, it will not only be a waste of government resources, but also create an irreversible situation in the economy”.
- Tiffany Lung contributed to this story.