Hong Kong retailers selling jewelry, watches and other luxuries view the Chinese Golden Week as one of the main events in the trade. The Golden Week starts in the first week of October, when China celebrates its major holiday - the National Day of the People's Republic of China. This is the time when the Chinese go travelling and shopping to the duty-free shopping Mecca, Hong Kong.
This year, people in China had as many as 8 days for tourism and purchases, since their public holidays began on September 30 and lasted until October 7. Hong Kong attracts buyers by lower prices on branded goods and jewelry.
According to Chinese sources, gold and gold jewelry in Hong Kong can be purchased at 10 percent cheaper than in China due to the absence of duties and taxes. However, sales during the Golden Week were affected by several negative factors.
Fewer tourists
Festive sales were fist of all hit by a lower tourist foot traffic from Mainland China to Hong Kong. In fact, statistics on the number of tourists in this period provided by various sources differ so much that to get to the truth you probably have to count personally all the people crossing the border. Let us rely on average figures and the main trend, which prove that the flow of tourists to Hong Kong dropped significantly.
"Consultations with jewelry stores show that they are concerned about the fall in consumer traffic by 10% -20%," China News Service was told by Zhang Dexi, Chairman of the Chinese Gold and Silver Exchange Society of Hong Kong.
According to CNN, Hong Kong's Travel Industry Council executive director Joseph Tung Yao-chung told Mingpao, a Chinese-language Hong Kong newspaper, that a total of 250 Chinese tourist groups registered to come to Hong Kong, 30% fewer than last year.
The Council’s latest data say that Hong Kong was actually visited by 191 Group, which is 44% less than last year.
On October 1, 2013 China enacted a new law on tourism aimed to prevent “uncivilized” tourist activities and thus promote sustainable growth in this industry.
The law includes measures to resist unfair competition making tourists shop in stores that pay commissions to tour operators. The standard scheme in this case involves tour operators selling tours cheap just to recoup their costs from commissions in partner stores, where they bring their tourists compulsorily.
Having lost the opportunity to earn money in this way Chinese travel companies inflated their prices for tours, according to a report from Xinhua. Certainly, this reduced the flow of those willing “to go shopping” to Hong Kong and sales went down.
Save on purchases
Another alarming signal for the industry came from reduced consumer spending. Average spending on shopping declined by HKD 3,000 to 5,000 ($ 387 to $ 645) per person. "If earlier the average shopper spent HKD 12,000 to 15,000, now this amount decreased to HKD 8,000-10,000," Zhang Dexi commented.
“Mainland tourists may be tightening their belts due to the economy,” said Brenda Yeung of the Hong Kong Retail Management Association.
Sales
“Watch and jewelry sellers recorded single- and even double-digit percentage declines in sales values compared with 2011,” said Ms. Yeung.
The period before the Golden Week was also not extremely dynamic and even was marked by a decrease in trading activity. According to the Hong Kong Census and Statistics Department, sales of jewelry and watches in August decreased by 5% compared to last year.
Hong Kong's two largest jewelry chains, Chow Sang Sang and Luk Fook reported that their sales during the Golden Week increased helped by Macau, another autonomous region of China, a tourist business competitor to Hong Kong.
“While sales in Hong Kong probably increased by more than 10 percent during the Oct. 1 to Oct. 7 Chinese holiday, Macau stores posted gains three to five percentage points higher,” Lau Hak Bun, Chow Sang Sang’s sales operations director, said in an interview.
Still, even if the Hong Kong jewelry majors will be able to demonstrate sales growth during the Golden Week, the overall results for the industry are likely to be lower than last year.
Last year, Hong Kong was visited by 770,000 Chinese tourists, who spent $ 10 to $ 13 billion on their purchases there.
Dasha Platonova, Editor in Chief of the Asian Bureau, Rough&Polished
