Hongkong'S Luxury Retail Downturn: Mainland Consumers Lose Confidence

The disastrous blow to Sino US trade friction on retail industry is more obvious, especially the impact of mainland Chinese consumers in the Asia Pacific peripheral market, among which Hongkong market is a devastating one.

Data released by the Hongkong Bureau of statistics on 31 may show that in April, the retail industry deteriorated further, and the value of sales increased to 4.5% HK $37 billion 731 million, which confirmed that the new chairman of Hongkong Retail Management Association, Annie Yau Tse, thanked Qiu Anyi for his previous prediction.

Xie Ruilin, chairman and chief executive of 0417.HK, was worried that retail sales would be more likely to expand in April because of uncertain economic prospects and heavy rain affecting business.

In 1-4, the overall sales value fell by 2% year-on-year, while the first quarter decline was 1.2%.

The decline in April was the worst in February 2017. It also increased the monthly decline in Hongkong's retail industry to three months, which usually meant the beginning of a long bear market in retail trade. Hongkong's retail industry had been in a long 24 month of decline in February March 2015.

Excluding prices, Hongkong's zero sales volume dropped by 5% in April and dragged down its overall decline in 1-4 months to 2.3%.

The biggest impact is undoubtedly luxury consumption. For a long time, the luxury market in Hongkong is totally dependent on mainland tourists, which accounts for more than 10% of the retail trade. It can almost be seen as a barometer of Hongkong's retail industry and the Asia Pacific region as well as the global economy.

In April, sales of jewellery, clocks and precious gifts in Hongkong's retail industry plummeted by 11.4%, the worst performance in December 2016. So far, sales in this category also fell for three months. What's worse, in the past six months, five months were negative, and only 4.1% in January was recorded with holiday effect.

Since mainland China consumers are the largest customers in the global luxury industry, and 2/3 of luxury goods come from overseas consumption, Hongkong is also the main destination and luxury consumption place for mainland tourists. The downturn in this category almost reflects China's overall economy and consumer desire. Besides, tax cuts, tax cuts and weak renminbi have exacerbated the downturn in the tourism retail market.

The more extreme reaction is also reflected in the decline in the luxury market in Hongkong, which grew by 20.8% in August 2018.

A spokesman for the government said that retail sales continued to be weak in April, and sales increased year by year, reflecting that consumer sentiment remained prudent in the context of external uncertainties. But partly due to the late labor holiday in mainland China (this year, in early May, across four or five months last year), the number of tourist arrivals increased significantly year by year.

The latest data released by the Hongkong Tourism Development Bureau showed that in April, the number of visitors to Hong Kong was 5577201, an increase of 5.2%, a sharp drop compared with 17.3% and 16.8% in March and the first quarter, mainly due to the influence of mainland tourists.

In April, the number of mainland visitors and mainland visitors increased by 5.3% and 2.7% respectively, and two data fell sharply.

In the first quarter of March and the first quarter, the number of visitors to mainland China increased by 22.1% and 19.7% respectively, of which 14.4% and 14.9% increased overnight.

Although Yiu Si-wing Yao Sirong, a member of the Hongkong tourism community, blamed the overnight cost and trade friction on the growth of tourists, he admitted that the hotel industry had reduced the rate of increase in housing prices in April, but there was no immediate effect. The Hong Kong Zhuhai Macao Bridge and the Guangzhou Shenzhen Hong Kong high-speed rail provided convenience for one-day tourists. Some tourists preferred to return to Shenzhen or Zhuhai to live in cheap hotels.

However, data from the exit and Entry Administration in the May 1 Golden Week show that the cooling capacity of the Hong Kong Zhuhai Macau bridge and the Guangzhou Shenzhen Hong Kong high speed rail is also cooling.

More industry experts and economists believe that trade friction is the only reason for the weakening of consumer confidence in the mainland.

Author: Chen Yifei