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Fri, Jan 10, 2003 - Page 12 News List

Hong Kong retailers welcome the yuan

BLOOMBERG , HONG KONG

Hong Kong's 7-Eleven stores have begun accepting China's yuan, joining retailers in the city who are fighting a sales slump by allowing a growing tide of mainland tourists to shop in their own currency.

Customers can pay for goods in yuan at about a fifth of the 477 convenience stores Dairy Farm International Holdings Ltd runs under the 7-Eleven franchise, said spokeswoman Windy Ng. Hutchison Whampoa Ltd's drugstore and supermarket chain AS Watson & Co also accepts payment in yuan, as does clothing chain Marks & Spencer.

Mainland visitors who are short Hong Kong dollars "can use yuan to buy drinks, phone cards and cigarettes," Ng said.

Wider use of the Chinese currency underscores the growing role of mainland tourists in Hong Kong's economy, which is still emerging from its second recession since 1997. A decline in retail sales to a nine-and-a-half year low in November has encouraged shopkeepers to cater even more to mainlanders' tastes.

"Mainland tourists are the absolute key," said Dong Tao, an economist at Credit Suisse First Boston. "It is one of the most significant engines for Hong Kong's retail sector and growth."

Tourism from China surged last year, with 6.1 million mainlanders visiting the city in the first 11 months, a gain of about 50 percent from a year earlier.

The Chinese came with money to spend, benefiting from an economy that grew 8 percent last year and may perform similarly this year, according to China's official estimates. The nation's boom doubled average incomes between 1995 and 2001, just as Beijing began allowing its citizens greater freedom to travel.

CSFB's Tao said the growing acceptance of the yuan reflects improving sentiment toward the currency and "the explosion in China's purchasing power, which has gradually spilled overseas."

Visitors to Hong Kong from China outspent those from the US, Europe and Japan in 2001 for the first time since the tourism board began keeping statistics 10 years ago. They accounted for a third of that year's tourist spending of US$8.2 billion, according to the board.

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