Source:The Standard


For years, Hong Kong has courted mainland visitors for economic reasons, and has benefited enormously. But local residents increasingly worry that mainlanders are forcing up the cost of living in the territory. Many are skeptical about the economic and social rewards of the tourism invasion from the mainland. The wave of mainland tourists started to sweep into Hong Kong in July 2003, when China introduced the individual travel scheme which eventually allowed 270 million mainland residents from 49 cities to visit here multiple times.

Under the Closer Economic Partnership Arrangement, the scheme initially covered only Dongguan, Zhongshan, Jiangmen and Foshan in Guangdong, until it was broadened in 2007. The number of mainland tourists coming to Hong Kong under the Individual Visit Scheme has increased from 667,271 in 2003 to four million last year. Figures from the Hong Kong Tourism Board show that last year the average Chinese tourist spent HK$8,220 per trip, compared with HK$7,147 for a European and Middle Eastern visitor and HK$7,004 for a visitor from the Americas. More than half of the money spent by mainlanders in 2010 was on shopping, about a quarter on food and less than a quarter on accommodation, according to a poll of 1,000 travelers conducted by the Nielsen Company. Cosmetics ranked the top purchase item, followed by electronics, clothing, jewelry and watches. Spending by mainlanders has had a big impact on the economy, according to Mark Walton, senior economist at brokerage CLSA Asia-Pacific Markets. There is a strong correlation between growth in visitor numbers and growth in retail sales," he said. "Mainlanders are an important driver of retail sales, especially of luxury goods."

Since the beginning of 2008, the workforce employed in the retail sector had grown by 4.8 percent, outpacing overall employment growth, which was four percent. However, the travel scheme's sustainability is being questioned, especially as it led to 4.3 percent inflation in the territory in May this year. Tourists have been moving into the New Territories, where they have been shopping for goods including formula milk, disrupting the livelihood of residents. Average retail rents across Hong Kong have been steadily climbing over the past seven to eight years as fashion and luxury brands bet Chinese shoppers will keep spending. Average rents on Russell Street in Causeway Bay, the busiest shopping district, are around HK$20,000 per square foot, according to real estate company Jones Lang LaSalle. Also, mainland mothers-to-be have become a revenue stream, with Chinese children born here automatically receiving the right to permanent residency in the city. Nearly four in 10 births in Hong Kong last year were to mainland parents before a quota of 3,400 for births by mainlanders was set this year.

Chief executive-designate Leung Chun-ying decided not to expand the individual visit scheme in mid-June. "The mainland government made the right decision in not expanding the individual visit scheme over the past five years," said Leung. His remark was made after Shao Qiwei, director of the National Tourism Administration, questioned whether Hong Kong's infrastructure could handle a further jump in tourist numbers. Walton at CLSA expects growth in mainland tourism numbers to slow.



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