Time to review tourism policy in HK

Illustration: Liu Rui/GT

The plunge in retail sales in Hong Kong in April and the number of tourists from the mainland to Hong Kong during the Dragon Boat Festival has highlighted an ongoing debate about whether Hong Kong should receive fewer mainland tourists.

Hong Kong's April retail sales totaled HK$38 billion ($4.9 billion), a drop of 9.8 percent compared to the same period last year, the biggest contraction in a single month in five years, the city's Census and Statistics Department announced last week.

Meanwhile, the number of mainland visitors to Hong Kong during the Dragon Boat Festival has dropped 2.5 percent, the first time in five years and a reversal of an average growth of 20 percent for the past three years, according to data released by the Hong Kong Special Administrative Region (SAR) government Thursday.

The statistics department said the main reason for the plunge in April retail sales was the drop in sales of jewelry, watches and valuable gifts, which "partly reflect some moderation in visitor spending after a prolonged period of brisk growth."

The department also forecast that the short-term outlook for retail sales will continue to be affected by the changing pattern of visitor spending.

The figures should not come as a big surprise because, for one, the growth of retail sales, which is mainly supported by the purchasing power of mainland visitors in Hong Kong, cannot be maintained after many years of rapid growth.

For another, there has been increasing protests by Hongkongers targeting mainland tourists since last year in areas such as Tsim Sha Tsui. The protestors said the influx of mainland visitors, especially those who travel to Hong Kong on a multiple visa, has disrupted local lives, and called for a reduction in the number of mainland tourists to Hong Kong.

But the series of protests have made mainland tourists feel they are not welcomed in Hong Kong.

Caroline Mak, chairman of the Hong Kong Retail Management Association, said these protests have affected retail sales in the city, according to local media reports.

Hong Kong SAR Chief Executive Leung Chun-ying said last week that the government would study whether Hong Kong should adjust the number of mainland tourists and the SAR government would reflect the opinions of Hong Kong public on mainland tourists to the central government.

Leung suggested cutting the number of mainland tourists by 20 percent at a government meeting at the end of May, according to media reports in Hong Kong. As Hong Kong received more than 40 million visitors from the mainland last year, cutting 20 percent would mean 8 million less mainland visitors.

Wong Wai-sheung, chairman of Hong Kong jewelry chain Lukfook Jewellery, said 70 percent of their customers are from the mainland in commercial areas such as Causeway Bay, and he did not want to cut the number of mainland tourists.

Understandably, the retail industry prefers to keep the numbers up, since the mainland is the major source of their customers. As they are already spending less in Hong Kong, a further reduction in the number of mainland tourists could only lead to even less retail spending.

Less mainland visitors would also affect industries related to tourism such as hotels and restaurants.

But the fall in mainland visitors' spending may not have a long-term effect on the city's retail industry. Actually two-thirds of overall retail sales in Hong Kong come from local consumption and not from mainland visitors.

If local spending can maintain a steady growth, the effect on the reduction in the number and spending of mainland visitors to Hong Kong's economy will only be temporary.

The more important implication from the latest figures is that it is time to review Hong Kong's tourism policy.

The SAR government should conduct a detailed study on how many visitors Hong Kong can receive in a year and discuss with mainland authorities setting a new daily limit.

At the same time, there should be more promotions for mainland visitors to see the interesting places that can only be found in Hong Kong to make up for the slump in their retail spending.

There is actually a great variety of local cultures in Hong Kong for tourists to experience and it would be a shame if mainland tourists only come to Hong Kong to shop.

As shown on the Hong Kong Tourism Board's website, there are many guided tours available for tourists to experience, such as "Handmade in Hong Kong" that let visitors meet the old masters of Hong Kong's handicrafts.

There have been talks about reviewing the tourism policy in Hong Kong for months. It is time fort the SAR government to really start conducting a detailed review.