Mainland Chinese visitor numbers and spending continue to fall in Hong Kong, with the HKSAR Government reporting a double-digit drop in value (-12.5%) and volume (-11.3%) in the first quarter ending March 2016.

 

The Travel Industry Council of Hong Kong (TICHK) reports this month that sales in March continued to fall, recording a high single-digit decline in both value (-9.8%) and volume (-8.8%) when compared with the same period last year. It adds that in March, 11 of out of 20 product and sector categories registered negative performances, ranging from -2% to -38.2%.

 

The Council added that although food, alcoholic drinks and tobacco recorded a mild increase of 2.6% in value, the volume dropped 1.5%, due to the bad weather in Mainland China.

 

The category of ‘Other consumer durable goods, not elsewhere classified’ registered the highest drop in sales (-38.2% in value and -32.1% in volume), followed by jewellery, watches and clocks and valuable gifts (-20.3% in value & -17.7% in volume) and electrical goods and photographic equipment (-20% in value & -12.6% in volume).

 

 

In effect, virtually all of the retail sales numbers have continued to fall in Hong Kong in January, February and March, with all three months’ sales registering the aforementioned -12.5% fall in value and a -11.3% decline in volume.

 

SIGNIFICANT SALES FALLS

Sales in January alone hit HK$43,538m in January, down -6.6% in value and -5.2% in volume. February was worse at HK$36,963m, down -20.6% in value and off by -19.5% in volume. However, March was slightly less dramatic, but still serious in terms of the decline-rate, with total sales estimated at HK$34,666m – down -9.8% in value and by -8.8% in volume.

 

The Council and other bodies are now pointing to a consistently depressing downward trend in retail sales, with these latest results said to be the worst quarterly results since 1999. Optimists do point to a slowing of the decline rate however, although it may be too early to know whether this is a real trend and if so, whether it will continue.

 

 

More positively, some local government and press commentators point to a good recent Golden Week holiday period in terms of the number of mainlanders visiting Hong Kong in the quarter, but this enthusiasm certainly did not extend to overall retail sales during this period.

 

Cut-price hotel rates are said to have helped swell Chinese Mainland visitors, although they still spent less, with a clear trend of trading down in many instances.

 

MULTIPLE THEORIES FOR CONTINUING DECLINE…

Of course, theories abound as to the fall in retail sales, with legislative restrictions on repeated short-term permits for workers and traders crossing from China into Hong Kong blamed by some, along with continuing tensions after the anti-government protests in September 2014.

 

Others point to a lack of friendliness by some ‘Hong Kongers’ towards Mainland Chinese visitors, as well as a tightening of purse strings by Chinese visitors – in line with the Beijing government’s increasing desire to keep as much discretionary spending as possible within its borders – despite Hong Kong’s status as a full territory of China.