Sat, Mar 07, 2015 - Page 13 News List

Chinese traders spark Hong Kong fury

DAY TRIPPERS:The most visible Chinese visitors are now parallel traders, who Hong Kongers say are pushing up prices of daily necessities and clogging up public transport

Bloomberg

Hong Kong wants more Chinese shoppers, just not the kind they are getting now.

The throngs of Chinese visitors snapping up Prada bags and Swiss watches in central Hong Kong are thinning out as Chinese President Xi Jinping (習近平) ramps up his campaign against graft and extravagance.

However, the numbers of so-called parallel traders — who buy shampoo, milk powder and other daily goods to resell at higher prices in China — are growing.

That has put Hong Kong Chief Executive Leung Chun-ying (梁振英) in a quandary between the territory’s luxury retailers eager to see more Chinese shoppers and angry Hong Kongers who accuse the visitors of pushing up the cost of necessities.

Leung yesterday said leaders in Beijing are studying the issue after a discussion this week.

“The overall spending pattern of Chinese tourists has changed,” Hong Kong-based Australia & New Zealand Banking Group Ltd economist Raymond Yeung (楊宇霆) said by telephone. “The real issue is how Hong Kong can cope with that change.”

Sales of luxury goods plunged 14 percent last year, when the territory saw its first annual drop in retail sales since 2003. The decline continued into January, with total expenditure down 14.6 percent from a year ago.

With Chinese tourists making up 78 percent of Hong Kong’s visitors last year, their changing composition has rippled through the economy and dragged down luxury good companies including Chow Tai Fook Jewellery Group Ltd (周大福珠寶) and Prada SpA.

Instead of rich Chinese flying in, the territory is seeing an increasing number of visitors with heavy luggage who take up space on its subways, buses and pavements.

“Hong Kong is basically losing market share” of the rich Chinese, CLSA analyst Mariana Kou (高頌妍) said.

Those are going to Japan, South Korea and Europe, while the tourists coming to Hong Kong now are spending less, she said.

While expenditure on luxury items fell last year, sales of medicine, cosmetics and shopping at supermarkets saw a 9.3 percent gain, government data show.

That is helping companies like YATA Ltd (一田百貨), an operator of seven department stores, which has seen Chinese tourists buy up the shampoo and groceries on its shelves, YATA chief executive officer Daniel Chong (莊偉忠) said.

However, the new shopping habits are upsetting residents.

In Hong Kong’s Yuen Long district, near China, there have been three protest marches in the past four weeks against parallel traders and day visitors from the neighboring Chinese city of Shenzhen.

The solution is to limit the number of visitors who are here for just one day, clothing retailer G2000 Group founder Michael Tien (田北辰) said. Those who come multiple times per year now make up 50 percent of Chinese tourists, compared with 20 percent five years ago, he said.

“Those visitors don’t stay overnight and their contribution is very limited,” Tien said in an interview in Beijing where he was attending annual sessions of China’s top legislative body as a Hong Kong delegate. “I don’t want mainlanders to see Hong Kong in a negative way, but I hope more people other than those from Shenzhen could visit Hong Kong.”

Two-thirds of 743 Hong Kongers surveyed last month wanted the government to reduce the number of individual Chinese visitors, the Chinese University of Hong Kong said on Wednesday.

More than three-fifths of those polled said the tourists have brought inconvenience to their lives.

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