HK retailers suffer sales decline

First drop in National Day holidays business since 2003

Retailers in Hong Kong expressed disappointment in their sales performance during the National Day Golden Week, with most of them seeing a double-digit drop in retail sales year-on-year due to the negative impact of the recent social activities, a local retail association said Monday.

The drop in retail sales during the holiday week (October 1 to 5) ranged from 15 percent to over 50 percent year-on-year, with watches and jewelry, fashion and accessories, and the catering sectors seeing the largest declines, the Hong Kong Retail Management Association (HKRMA) said in a statement on its official website.

Small and medium-sized enterprises (SMEs) who are part of the association also saw a significant drop in retail sales, with falls of as much as 80 percent. SME retailers operating in three locations - Mong Kok, Causeway Bay and Tsim Sha Tsui - were most adversely affected, said the association.

"Both the number of customers and our sales values declined dramatically this holiday week compared with the previous year," a staff member at a luxury fashion and accessories store located in the Central area told the Global Times Tuesday.

It is the first time local retailers have seen a year-on-year drop in sales during the National Day holidays since 2003, when individual tourists from the Chinese mainland were permitted to start visiting Hong Kong, according to media reports.

Retailers in Hong Kong normally see a boom in business during the National Day holidays due to the strong purchasing power of Chinese mainland tourists, local media reports said.

However, some tourists from the mainland who had been planning to go to Hong Kong for the one-week holiday chose other destinations such as South Korea, out of concern about potential safety issues caused by the recent Occupy Central movement launched by Hong Kong opposition groups.

"My family had planned to go to Hong Kong, but we went to South Korea for the holiday instead," Han Tao, a 29-year-old engineer in Beijing, told the Global Times Monday.

Han said it was common to see crowds of Chinese tourists shopping in Lotte Duty Free stores when he was in Seoul. "At least 80 percent or 90 percent of the customers there were Chinese tourists, I believe," he noted.

Retailers in Hong Kong have seen generally poor performance over the past 10 months. The retail sector has been on a downward trend since February, except for a slight recovery in August when total retail sales recorded a slight increase of 3.4 percent year-on-year, according to the HKRMA.

The Hong Kong Federation of Students admitted during a local media interview Tuesday that the Occupy Central movement has caused inconvenience for local citizens and has affected business for local retailers.

The protest group said they will go to the affected districts and apologize to the retailers in person. They will also start a campaign and ask citizens and protesters to visit the affected shops more, by way of compensation.

The HKRMA said in the statement that "the negative impact of the recent social activities will emerge fully in the coming months, as both local consumption sentiment and tourist spending have been affected."

Despite the disappointing sales, most retailers still saw a slight rise in their shares. For instance, shares in luxury jewelry maker Chou Tai Fook saw a slight rise of 0.4 percent Tuesday compared with the previous trading day.

Hong Kong's financial market has also been relatively unaffected so far.

Hong Kong's Acting Financial Secretary K C Chan was quoted by Xinhua News Agency as saying on Monday that with the implementation of contingency plans by the government, Hong Kong's stock market, foreign exchange market and financial system have continued to function normally and in good order.

The Hong Kong dollar's exchange rate "remains generally steady and the foreign exchange market is operating as usual. There is ample liquidity in the interbank markets, with interbank rates remaining steady," Chan said.

The spokesman for the Hong Kong Monetary Authority (HKMA) said in a press release on Monday that in the past week, "the banking system and the financial market have continued to function normally."

According to the reports to the HKMA from banks as of 8 am Tuesday, six branches of six banks were affected and remained temporarily closed, but suspended ATMs in the affected areas have largely resumed normal operation, the HKMA said in the statement.

The HKMA also said that it has asked banks to resume other services as soon as circumstances permit.