Mainland Chinese are still traveling to Hong Kong, but their appetite for shopping there has diminished.
Reports by the Hong Kong Retail Management Association show that visitors increased by 20 percent in March and April of this year, but retail spending fell by almost 10 percent.
Want China Times reports that while an estimated 80 to 100 thousand mainland shoppers visit the city every day, high-end retail purchases of items like jewelry and watches have plummeted by nearly 40 percent. Sales of usually favored items like phones and electronics have also seen a fall of 10 to 20 percent.
Caroline Mak, an association chairperson, says that mainland tourists are no longer looking to splurge when visiting the city. Instead, they come with lower spending allowances and plans to buy more essential items like pharmaceuticals and cosmetics.
Mak says that average consumer spending has decreased to just US$260, and that visitors are no longer taking overnight trips.
The declining flow of mainland cash has begun to take its toll on retail operations in Hong Kong.
Daniel Wong, CEO of Midland IC&I real estate agency, says that properties in popular retail neighborhoods like Tsim Sha Tsui and Causeway Bay are seeing more and more vacancies as businesses can no longer afford their high rent.
Wong’s agency found that vacancies in Causeway Bay have increased from 4 to 7 percent in the last six months, with some locations remaining empty for up to two years.
The whole rental economy in Hong Kong has also taken a nosedive as a result of consumer spending habits. The Hong Kong Rating and Valuation Department predicts that commercial rent will fall at least 10 percent by the end of 2014.
image credit: chris