Violent protests by radicals against parallel traders in Hong Kong have made headlines north of the border.
Reports of the ill-treatment of visitors from the mainland, regardless of whether they are smugglers or genuine tourists, are beginning to make mainland travelers think twice before coming to Hong Kong.
But there’s more bad news for the city’s retailers.
The protests are not the only reason why mainland shoppers’ love affair with Hong Kong is starting to cool: sky-high rentals and a weakening renminbi are making the city less price-competitive than it used to be.
More mainland tourists now prefer to shop at duty-free stores at their home airports instead.
A young mainland couple bought a Longines watch, a midrange brand popular among China’s middle class, at a duty-free shop at Shanghai Pudong International Airport before they boarded a flight to Hong Kong for their honeymoon.
They told EJ Insight they bought the watch for 10,567 yuan (US$1,703) at Pudong airport, but they noticed the same watch for sale at HK$15,000 (US$1,934) in shops in Tsim Sha Tsui.
Operators of duty-free stores at the mainland’s major aviation hubs are stepping up their efforts to lure mainlanders to spend there before they fly elsewhere to shop.
Average prices of skincare, makeup, perfume and tobacco products sold at duty-free stores at Shanghai’s two airports, Pudong and Hongqiao, are reportedly already among the lowest in Asia.
These stores are operated by Sunrise Duty Free (日上免稅行), which also runs outlets at Beijing Capital International Airport, the mainland’s busiest aviation hub.
Sunrise allegedly has strong ties with former president Jiang Zemin. Jiang’s grandson Jiang Zhicheng (江志成) bought 40 percent of its shares in 2011.
The firm says on its website that its goods are sourced from producers for direct shipment to the airport terminals without any middleman being involved. The cost of the goods is thus lower, and Sunrise can pass the benefit on to shoppers through lower prices.
Estée Lauder’s Advanced Night Repair Kit, a product from the US makeup brand that is a hit among mainland consumers, is priced at 630 yuan at Sunrise. The same product goes for as much as HK$900 (723 yuan) in Hong Kong, Shanghai Financial News reported.
Other popular cosmetics brands, including Lancôme, Clinique and L’Occitane are also available at competitive prices.
Entry-level products (those priced below 20,000 yuan) from luxury brands like Salvatore Ferragamo, Gucci, Burberry, Coach and Bally are said to be among the best bargains at the Shanghai and Beijing airports.
Mainland netizens have been saying on online forums: “Surely, when the price difference has been substantially eliminated, who will bother putting up with all the hassle to go to Hong Kong or other overseas destinations to shop, especially when carrying a large suitcase in Hong Kong will make you vulnerable to unexpected interrogation and harassment, as locals loathe mainland shoppers?”
Sunrise offers complimentary left luggage services for airline passengers, who can collect their goods upon their return from abroad. Alternatively, they can shop at the Sunrise stores in the arrival halls.
These days, a weaker renminbi is also dampening the interest of mainland tourists in shopping in Hong Kong.
The Chinese currency has been experiencing a mild depreciation and may become weaker this year in the face of a stronger US dollar and interest rate cuts by the People’s Bank of China.
Some observers predict depreciation of 3 percent this year against the US dollar.
Since Hong Kong’s currency is pegged to the greenback, mainland tourists armed with renminbi are losing purchasing power in the city. The Hong Kong dollar has strengthened almost 2 percent in the past few months against the Chinese currency.
Pricing is not the only headwind facing Hong Kong shops that target mainland customers’ spending power.
Stepped-up law enforcement by Chinese customs officials at border checkpoints since last year is also preventing mainland tourists from indulging in a shopping spree here.
Shenzhen media has reported that customs officials at the Luohu, Futian, Huanggang and Shenzhen Bay points of entry have been told to keep an eye out for travelers from Hong Kong with large suitcases in renewed efforts to combat rampant cross-border smuggling.
Not a few mainland shoppers have been caught with goods bought in Hong Kong that exceeded their duty-free allowance. China allows its nationals to bring home goods not exceeding 5,000 yuan in value for personal use.
Shenzhen party chief Wang Rong (王榮) told reporters during this year’s annual meetings of parliament and the top national political advisory body that the city’s customs department had been “derelict in its duties”.
It is also reported that customs in other mainland cities with direct flights from Hong Kong will conduct more frequent checks on the baggage of arriving passengers.
With the option of shopping at mainland duty-free stores and faced with all that customs hassle, why would mainlanders bother going to Hong Kong?
– Contact us at [email protected]