Decline in sales of luxury to Chinese during Golden Week in Hong Kong
Shoppers from China’s mainland cut down on spending at Hong Kong luxury stores during the Golden Week holiday, reflecting growing pressure on the city’s economy from faltering tourist demand. Purchase of luxury goods by mainland visitors in Hong Kong is set to fall at least 10 percent from a year ago during this week’s holiday, said Joseph Tung, executive director of the Travel Industry Council. The decline comes even as the number of tourists coming from China increases. Mainland tourists have spent less this holiday, with average expenditures of HK$5,000 ($645) to HK$6,000 falling below last year’s HK$7,000 to HK$8,000, Tung estimated.
Weaker retail sales add to the risk of a recession in Hong Kong, where the economy shrank 0.1 percent in the second quarter from the previous three months on declining exports. “The number of big-ticket transactions has shrunk,” said CCB International Securities Ltd. analyst Forrest Chan, referring to holiday spending. “Fewer people will spend several hundred thousand bucks for a luxury watch. The macro-economic situation is dreadful.”
The eight-day Golden Week national holiday, a shopping and travel season for Chinese consumers, began on Sept. 30. Shoppers are pulling back amid a slump in exports and a contraction in manufacturing in the world’s second largest economy. It is “highly likely” Golden Week sales could fall from a year earlier, Caroline Mak, chairman of the Hong Kong Retail Management Association, said on a conference call with reporters yesterday.
The number of mainland tourists to Hong Kong rose about 6 percent to 412,501 on the first three days of October, according to calculations by Bloomberg based on data from the city’s immigration department.
“Golden Week sales this year so far are more or less the same as last year,” said Joseph Chu, an executive director of Prince Jewellery & Watch which runs 13 stores in Hong Kong.“The number of mainland shoppers didn’t decrease but the average spending of each visitor has dropped.” His Chinese customers on average spent about HK$60,000 per bill during Golden Week this year, compared with HK$80,000 last year.
Hong Kong’s risk of a “technical recession” may increase after declines in exports and a slowdown in retail sales, Financial Secretary John Tsang said in September. The economic slowdown in Greater China has rippled through the global retail industry.
adapted from Bloomberg