HONG KONG - Whether they sell fur coats from Rome or farm hens from Mississippi, a surprising concern is occupying a number of corporate executives this earnings season: Hong Kong's protests.
The far-reaching impact of the protests speaks to the outsized role that Hong Kong has hitherto played as a thoroughfare for Chinese shoppers. Buyers have flocked to the city for its zero consumption tax and variety of global imports, whether luxury handbags or infant formula. Whatever the outcome of the protests, the blow to Hong Kong's role as a consumption hub for the region is likely to be lasting, some executives said. The city's economy has already been plunged into a technical recession and full-year growth is very likely to be negative.
Retailers and hotel operators have been hardest-hit as clashes between protesters and police bring the city to a near-halt every weekend. Retail sales by value fell 18.3 per cent in September, compared with a decline of 22.9 per cent in August. Hotel occupancy rates were 63 per cent in September, 23 percentage points below the same period the year before, according to data from the Hong Kong Tourism Board.
Industries away from the consumer front lines have also felt the heat. Recruitment consultancy PageGroup PLC said on Oct 8 that social unrest in the city was having an impact on its clients' confidence. "We've been very, very aggressive as much as we can be as a tenant in Hong Kong to try to get some rent reductions," said L'Occitane's Hoffmann."Landlords have not been very forthcoming with a few exceptions. We will continue to engage with them to try and see what support they can give us, but it's not been particularly effective at this point."
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