The popularity of South Korean pop culture and products in China shows no signs of abating, as South Korea has seen more Chinese shoppers than ever, but it could come at a cost to Hong Kong.
Erwan Rambourg, a consumer goods analyst for HSBC and the author of “The Bling Dynasty,” has seen the surge in shoppers first hand. He estimated that Chinese shoppers accounted for around 70 percent of South Korea’s duty free sales and accounted for about one third of all luxury purchases in the country, reports The Wall Street Journal.
Over 12 months, Hotel Shilla, a luxury hotel in downtown Seoul, saw its revenue from Chinese tourists rise from 40 percent of overall sales to almost two-thirds.
“Things have shifted with a speed that no one expected,” Rambourg said.
The shift could be a signal that South Korea is slowly becoming the shopping destination of choice for Chinese tourists over Hong Kong.
During the first half 2014, high-end retail purchases in Hong Kong of items like jewelry and watches plummeted by nearly 40 percent. Sales of usually favored items like phones and electronics also saw a decline of 10 to 20 percent.
Despite the fact that the number of tourists visiting Hong Kong rose 12.1 per cent to 49.87 million from January through October 2014, of which more than 77 percent were mainland Chinese, per capita spending is down. Average consumer spending by mainland Chinese has decreased to just US$260. Overall, retail sales are expected to grow at a rate of 5 percent in Hong Kong, down from 13 percent in the previous period.
The decrease in spending by mainland Chinese shoppers in Hong Kong has been compounded by high rents in the city and the “Umbrella Revolution” protests that started in September. During Golden Week, retail sales in Hong Kong fell as much as 15 to 50 percent for major retailers, and up to 80 percent for small retailers.
With Chinese spending set to hit $29 billion in South Korea by 2020, along with the infatuation for Korean pop culture, many Chinese, especially those in northern cities, may realize that it is not worth travelling to Hong Kong when they have better alternatives in Korea.
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