Hong Kong is beginning to reckon with the economic cost of ongoing protests against the government’s extradition bill, as the disruption risks driving away local shoppers and deterring tourists from mainland China.
The Hong Kong Retail Management Association on Tuesday said that “most members” reported a single-to-double-digit drop in average sales revenue between last month and the first week of this month, when multiple demonstrations converging on major office and retail districts took place.
The threat to Hong Kong’s vital retail sector is hitting its economy at a time when it is already slowing. Retail sales data for last month is due for release on Aug. 1, with the value of goods sold having contracted every month since February.
Photo: AFP
The “industry is worried that these events will damage Hong Kong’s international image as a safe city, a culinary capital and a shopping heaven,” the association said in a statement.
Hong Kong Chief Executive Carrie Lam’s (林鄭月娥) bid to ease extraditions to the mainland prompted hundreds of thousands of protesters to take to the streets in a wave of historic protests that has brought parts of the territory to a halt since early last month.
Hong Kong Financial Secretary Paul Chan (陳茂波) said at a briefing on Monday that second-quarter economic output is expected to be “slow,” though there haven’t been obvious capital outflows amid the demonstrations.
Sa Sa International Holdings (莎莎國際控股), a seller of cosmetics, reported a 15.3 percent drop in same-store sales in Hong Kong and Macau for the three months through last month.
The company said the demonstrations had affected some stores, as had a high comparison from the previous year.
For the same period, Chow Tai Fook Jewellery Group (周大福珠寶) reported an 11 percent decline.
The political backdrop and a decline in mainland visitors increases the likelihood of a 2 percentage-point reduction in its first-half operating margin, Catherine Lim, an analyst at Bloomberg Intelligence in Singapore, wrote in a note.
The chances of a marked economic impact from the protests raises comparisons with the Occupy movement that blocked parts of central Hong Kong five years ago.
Economic growth slowed in the fourth quarter of 2014 from the previous period, and the government at the time partially blamed that weaker performance on the protest, saying it “affected tourism, hotel, catering, retail and transport industries.”
This year, the number of visitors to the territory from the mainland has been increasing strongly, thanks in part to the opening of a new bridge linking Hong Kong with the city of Zhuhai in Guangdong Province. Arrivals in May surged 23.6 percent from a year earlier, with last month’s tally not yet available.
Images of protesters blocking major city thoroughfares — and retail outlets — is likely to pose a significant risk if the demonstrations continue. On July 1, a gathering that ultimately saw protesters break into and vandalize the territory’s Legislative Council hampered retailers in the shopping district of Causeway Bay and elsewhere.
Yet most businesses are attempting to carry on.
“There were so many people, it was a mess, no one wanted to come in,” said Chen Yan, 30, who works at the counter of a pharmaceutical store in Causeway Bay. “But we haven’t changed our operations because of the protests. We expect it to be temporary.”
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