18 July 2018
As the shopping habits of mainland visitors to Hong Kong change, the economic benefits of the influx diminish even as the social costs rise. Photo: Reuters
As the shopping habits of mainland visitors to Hong Kong change, the economic benefits of the influx diminish even as the social costs rise. Photo: Reuters

Individual Visit Scheme benefits decline, but social costs rise

In the past few weeks, protests against parallel traders and mainland tourists broke out in several districts of Hong Kong and turned increasingly ferocious.

It has become clear this might turn out to be another political time bomb if the government fails to handle it properly.

Although Chief Executive Leung Chun-ying affirmed Monday that the administration will work with the mainland authorities promptly to review the Individual Visit Scheme, it seems the government is focused only on finding ways to ease the problem of overcrowding rather than reviewing the scheme’s overall policy direction.

The time is certainly ripe for reviewing the scheme, not only because the public’s discontent with the problems it has brought about is about to reach the breaking point, but also because the contribution of individual visitors from the mainland to our economy, especially the local retail sector, has continued to shrink, as the retail sales figures for 2014 show.

Government statistics show retail sales in Hong Kong topped HK$493 billion (US$63.6 billion) last year, 0.2 percent less than in 2013.

It is noteworthy that it was back in 2003, when the city was plagued by the epidemic of severe acute respiratory syndrome, that retail sales in Hong Kong last declined.

On the other hand, Hong Kong Tourism Board figures show that the number of tourists visiting Hong Kong rose 12 percent last year from the year before to 60 million.

Among them, visitors from the mainland accounted for almost 80 percent, their number growing 16 percent to nearly 47 million.

But that growth was largely fueled by visitors who did not stay overnight.

The fact that local retail sales figures fell last year while the number of mainland tourists continued to rise suggests their spending habits have changed and their expenditure per capita has gone into decline.

It appears the orthodox theory that mainland tourists are the key driver of retail sales growth in Hong Kong no longer applies.

If we take into account the other social costs associated with the Individual Visit Scheme, such as the overcrowding of our main streets and the growing cultural conflict between locals and mainlanders, we might end up finding that the incremental economic benefits of the scheme can no longer offset the social costs it brought about.

Since visitors that don’t stay overnight are growing at the fastest pace, the government’s focus on the overcrowding issue as its policy response won’t be enough to address a more fundamental problem — mainland visitors are increasingly competing with locals for daily commodities and posing a threat to their way of life and their living space.

More and more Hongkongers believe the change in the spending habits of mainland tourists has already taken its toll on local communities in districts close to the border, such as Sheung Shui and Tuen Mun, as these areas now have to serve a large population of visitors in addition to local residents.

It’s certainly not true that mainland tourists have made no contribution to our economy.

However, after more than a decade since it was implemented, the Individual Visit Scheme has turned out to be a double-edged sword, and the side effects that come along with it have grown too big to ignore.

This article appeared in the Hong Kong Economic Journal on Feb 24.

Translation by Alan Lee

– Contact us at [email protected]


Research Fellow at SynergyNet

EJI Weekly Newsletter

Please click here to unsubscribe