21 October 2016
Hong Kong needs to find a sustainable growth model for its tourism sector, looking beyond mainland visitors. Photo: HKEJ
Hong Kong needs to find a sustainable growth model for its tourism sector, looking beyond mainland visitors. Photo: HKEJ

Why HK needs to think beyond the quick fix in tourism

China has given a boost to Hong Kong and Macau economies by putting in place the Individual Visitor Scheme in 2003.

The scheme, which allows mainlanders to visit Hong Kong and Macau on an individual basis, has been applauded by retailers and tourism-related sectors, but not by Hong Kong people as a whole.

As a tourist influx led to shortage of some items in shops and also caused various other problems, including a rise in living costs in Hong Kong, there have been clashes between visitors and locals.

Compared to Hong Kong, Macau has benefited more from mainland visitors, given the city’s overwhelming dependence on the gaming industry.

A surge in Chinese visitors boosted Macau’s growth and the government reaped more tax revenues from the gaming industry. Local residents also gained from the thriving tourism industry.

However, a gaming-led tourism sector has sparked a moral controversy, even in a society where gambling has deep cultural roots. The rapid expansion of the gaming industry is set to make the issue more noticeable.

To make things worse, some mainland gamblers are associated with corruption.

Meanwhile, Hong Kong has been focused on the boost from shopping and consumption behavior of mainland visitors.

Mainland shoppers accounted for more than one third of Hong Kong’s total retail sales in recent years. The visitors are becoming critical for the city’s retail industry, but they have affected the life of local residents.

Hong Kong retailers certainly welcome mainland customers. However, frontline workers at stores have been complaining about the shopping habits and uncivilized behavior of some mainlanders.

The visitors are also blamed for rising property prices, deepening the internal economic frictions in the city.

Some mainland travelers deem themselves to be superior as they feel they are contributing to Hong Kong’s development. They overlook the fact that they themselves benefit much from shopping in Hong Kong. This has led to growing frictions between mainland visitors and local residents.

The overwhelming growth of the tourism sector has triggered various social issues.

With mainland visitor numbers falling recently after years of strong growth, it is time now for a debate on two topics.

First, what’s the role of tourism for a city’s economic growth? Second, are mainland visitors really helping promote greater ties between mainland China, Hong Kong and Macau?

Hong Kong has focused more on tourism following an economic downturn in the wake of the 2003 SARS crisis. Excessive capacity in retail and hotel sectors was sought to be absorbed by attracting mainland tourists.

Over the years the city has marked up prices to maximize profits instead of adding more facilities, even as the mainland tourist numbers rose to levels beyond what the territory can cope with.

Hong Kong shopping malls are actively luring high-spending mainland travelers, while ignoring the needs of the locals. The profit-driven business model coupled with the government’s failure to adjust the guidelines has fueled confrontation between local residents and visitors.

Both Hong Kong and Macau have been grappling with cooling tourism sectors. This stems partly due to the fact that governments and private businesses have failed to understand the full picture of the tourism sector and find a suitable tourism model.

In response to social issues, cuts were sought earlier in mainland visitor numbers.

But now Hong Kong wants to re-open a big door for mainland travelers in order to shore up retail sales.

Looking upon mainland tourists as a means to adjust local economic growth, without paying attention to fundamental issues surrounding the retail and tourism sectors, is not a sensible approach.

Authorities have failed to provide a consistent policy roadmap and there has also been a lack of forward-looking vision. There seems to be limited knowledge about the make-up of mainland tourists and their shopping model.

In fact, many of the visitors are from Pearl River Delta, and their shopping demand can be easily satisfied by parallel traders.

Meanwhile, wealthy mainland shoppers are switching to other overseas destinations, spending their money in regions and countries like Europe and Japan rather than in Hong Kong.

More importantly, what’s the main purpose of the development of the tourism sector? Boosting retail sales? Improving mutual understanding between the two sides?

In recent years locals have had fragmented impressions about mainland visitors, basing their judgment on whether the visitors have come for sight-seeing or shopping or business.

While business travelers are welcomed, there is a tendency to blame the ordinary mainland tourist for all sorts of problems. And then there are accusations of poor manners and bad behavior.

While some of the criticism is justified, what Hong Kong people must realize that tourists cannot be seen as just economic resources that are ready to come and go at one’s beck and call.

The visitors must be treated well, instead of being seen as entities that can generate income. For their part, the mainland travelers should not deem themselves as selfless givers.

Only with changed attitudes can we have a win-win situation for both sides.

This article appeared in the Hong Kong Economic Journal on Sept. 8.

Translation by Julie Zhu

[Chinese version中文版]

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Researcher, China Business Centre of The Hong Kong Polytechnic University

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