Friday, 13 June 2014

Voices of Reason

Are the good old days of lineups in front of luxury brand boutiques over?
It's good that an economist has crunched the numbers to give the conclusion that cutting the number of mainland travellers by 20 percent will hinder Hong Kong's economic growth, but only in the short term.

Locals have had it up to here (above their heads) with mainlanders flooding the city and snapping up all kinds of goods, while retailers and desperate for their business.

Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, projected through simulations that if the government reduced the number of individual mainland tourists coming in by 20 percent, Hong Kong's gross domestic product "will immediately drop drastically" in the worst-case scenario.

However, the economist said the impact would be reduced after two years as "tourism only contributes to a small part of the city's economy".

Tourism accounts for less than 4 percent of the GDP
He says the GDP would drop 1.4 percent to 3.3 percent if there were 20 percent less individual mainland travellers, but eventually the economy would pick up.

So much for the government constantly stressing that tourism is a major industry pillar and that its GDP is 4 percent. How can tourism be considered such a strong economic driver when it's less than 10 percent?

Kwan seems to think the drop would have a minimal impact because the tourism industry is so small. How can that be when we have 40 million mainlanders visit each year and it is projected to reach 100 million by 2020.

What are these people spending on then? Doesn't seem like enough to justify us bending over backwards for them!

Bank of East Asia's chief economist Paul Tang Sai-on agrees with Kwan.

"The total economic value-added of [mainland travellers] was only 1.3 percent in 2012," he said, and cautioned a reduction in the number of mainland tourists would affect those with low skills.

Professor Terence Chong Tai-leung at the department of economics at Chinese University says the drop in the GDP wouldn't be drastic if 20 percent of mainland visitors were cut.

"The unemployment rate was also about 3 percent several years ago when we did not have so many mainland visitors," he says. "So the worst case of cutting the number of mainland tourists would be going back to that situation, which is actually not too bad."

There you have it, folks -- the voices of reason. So ignore groups like the Hong Kong Retail Association trying to scare you into thinking unemployment is going to go through the roof because retail sales have plunged for the third month in a row.

Already retail outlets, including luxury brands are starting to downsize their shop spaces, slowly bringing rents down to some kind of reality though they still could drop further.

Some say the good ol' days are gone and probably for a while. Locals have had enough of the obscene spending by mainlanders and want to reclaim our city back.

And now with the release of the State Council's white paper on Hong Kong, we definitely want the city to be ours!

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