This file photo taken on Oct 18, 2004 shows retail shops on Queen's Road Central in Central, Hong Kong. (Photo provided to China Daily)
Accounting and business services firm PricewaterhouseCoopers called for Hong Kong’s new government to broaden the Individual Visit Scheme (IVS), saying the number of Chinese mainland visitors is essential in reviving the city's slumping retail and consumer sectors.
The current number of mainland visitors (to Hong Kong) accounts for just 3 percent of the country's population
Hong Kong's retail industry enjoyed a golden era from 2009 to 2013, when retail sales surged from HK$274 billion to HK$494 billion, the highest point in its 20 years as a special administrative region, PwC said in a Tuesday press conference reviewing the city’s retail and consumer market from 1997 to this year.
The boom came as the number of mainland visitors more than doubled from nearly 18 million to over 40 million following the introduction of the multiple-entry IVS for Shenzhen’s permanent residents in 2009. Also contributing to the industry's robust performance were quantitative easing measures taken by United States, United Kingdom and Europe, along with mainland's monetary stimulus policies after the 2008 financial crisis, said Michael Cheng, a PwC partner.
The downturn came in 2013 after the central government launched the anti-corruption campaign, followed by the outbreak of Occupy Central which, along with anti-parallel trader protests gravely dampened mainlanders' appetite for visits to Hong Kong. Retail sales and the number of mainland visitors dropped 8.1 percent and 6.7 percent respectively, to HK$436 billion and 42 million visitors, last year. The luxury sector suffered the most, sales in jewelry and watches sector plunged from HK$118 billion in 2013 to HK$ 71 billion last year.
Cheng noted that the current number of mainland visitors accounts for just 3 percent of the country's population; he believed Hong Kong still has great potential to attract many more mainland visitors. He appealed to the new government to renegotiate with the central government for more relaxed individual visit arrangements.
The multi-entry visa scheme was abolished in 2015 amid escalating anti-parallel trade squabbles and was replaced with "once a week" for Shenzhen permanent residents.
Cheng estimated this year's retail performance could be slightly better after a difficult year last year. He was optimistic about the future, saying the industry would start to resuscitate next year as social conflicts calmed down and the yuan stabilized. He forecast the sector would see a 6 percent to 7 percent year on year increase next year.
"But at first, the new government should start to do something," Cheng stressed.