For a long time, Hong Kong was the place to go for visitors from the mainland, but the resentment against mainlanders in Hong Kong grew, says retail analyst and author Shaun Rein in Todayonline, and as Chinese got more travel alternatives, Hong Kong sees sales of luxury goods drop dramatically.
Chow Tai Fook, the biggest jeweller in the world by market capitalisation, is seen as a bellwether for mainland demand for Hong Kong’s luxury goods. Its sales in Hong Kong and Macau fell on an annualised basis by 22 per cent in the three months to the end of June. Other companies, such as handbag retailer Coach and watchmaker Jaeger-LeCoultre, which viewed Hong Kong as a cash cow, have been closing stores.
Even Hong Kong’s humble tea shops have seen a slide in sales of their cheap noodles and milk tea. At Tsui Wah, a popular chain, profits for the year to March fell by more than half to HK$72 million (S$12.6 million). Mr Shaun Rein, who runs China Market Research in Shanghai, warns that the slump in retail is not simply the result of the Chinese slowdown or the crackdown on extravagance and corruption by President Xi Jinping. “There is a deep-seated animosity to mainlanders in Hong Kong,” he says. “So why would they want to go somewhere they are not welcome when there are so many other choices?”
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