Hong Kong protests deepen retail gloom as China visitors stay away

Mon Sep 29, 2014 5:47am EDT
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By Donny Kwok

HONG KONG (Reuters) - Increasing civil unrest in Hong Kong is scaring off Chinese tourists, heaping further pressure on retailers which are already grappling with a protracted slowdown in sales.

Pro-democracy protesters are in a tense stand-off with police in Hong Kong's financial district, in the worst unrest since the territory's 1997 handover from Britain.

With mainland Chinese travelers likely to avoid Hong Kong over the long National Day holidays this week due to the protests, downward pressure on retail spending could persist in the former British colony despite signs of a modest rebound.

Retail sales in August rose 3.4 percent from a year earlier, in value terms, reversing six months of decline, helped by improved spending on jewelry, watches, gifts and an earlier start to the Mid-Autumn Festival this year, the government said on Monday. At least three economists had expected a slight fall.

Already hurt by Beijing's anti-corruption campaign, which has led Chinese visitors to tighten lavish spending in the city renowned as a shoppers' paradise, Hong Kong businesses are also facing a slide in the number of tour groups.

Added to which, those who traipse across the border each day are now more interested in basic household products and infant milk formula than luxury handbags and high-end fashion, data shows.

Travel agents said the number of Chinese tours has dropped by up to 30 percent, boding ill for the busy Golden Week holiday that starts on Oct. 1, usually a busy period that retailers rely on for a boost to their sales.

Central Hong Kong descended into chaos on Sunday as activists defied volleys of tear gas and police baton charges to stand firm in the center of the city. The civil disobedience is part of a series of protests that will culminate in an "Occupy Central" blockade on Oct. 1. At the heart of their demands is the right for Hong Kong people to choose the city's next leader, rather than a leader pre-selected by Beijing.   Continued...

A mock tank, covered with photocopies of the "One country, two systems" white paper released earlier by Beijing on Hong Kong's control, is displayed by local artists to symbolize its threat to the city's autonomy at a shopping district in Hong Kong in this June 19, 2014 file photo.REUTERS/Bobby Yip/Files