China Day-Trippers Spending Less on Luxury in Hong Kong: ChartBilly Chan and Richard Frost
Hong Kong’s status as a mecca for luxury brands is eroding as day-trippers on a budget from mainland China replace wealthier tourists, who are increasingly opting for destinations such as Japan, South Korea and Taiwan.
The CHART OF THE DAY tracks the proportion of same-day visitors to Hong Kong from China against those staying at least one night. Day-trippers accounted for a record 60 percent of the
47.2 million Chinese who crossed Hong Kong’s borders last year, compared with just 38 percent in 2006. The lower panel show monthly sales of watches and jewelry in the city versus sales of medicines and cosmetics.
High-end retailers from Cie. Financiere Richemont SA to Burberry Group Plc and Chow Tai Fook Jewellery Group Ltd. reported weaker sales in Hong Kong in the last quarter of 2014, even as arrivals of mainland tourists climbed. China’s anti-corruption campaign and slowing economic growth is cutting demand for luxury goods, while the stronger Hong Kong dollar and lack of new attractions is also deterring some tourists.
“Same-day visitors shop for staples, pharmaceutical products and other groceries,” said Adrienne Lui, an economist at Citigroup Inc. in Hong Kong. “I can’t see any special element that Hong Kong could offer to attract repeat visits by Chinese overnight tourists. Perhaps we will no longer see jewelry and watch stores filling up a whole street.”
Monthly jewelry sales in the city plunged an average 12 percent from the year-earlier period in 2014, after jumping an average 22 percent in the eight years through 2013 as China eased controls on outbound tourism. Sales of pharmaceuticals and cosmetics climbed an average 9 percent last year. Chinese arrivals in Japan doubled in November from a year earlier, surged 67 percent in South Korea and rose 41 percent in Taiwan, as the currencies of all three fell against the yuan.
Day-trippers spent an average of around HK$2,700 ($350) per capita in Hong Kong in 2013, compared with about HK$8,800 by overnight tourists, according to government data. The surge in mainland visitors traveling by train or bus is straining Hong Kong’s infrastructure and prompting complaints from residents about overcrowding, especially in districts bordering China.
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