Higher duty-free limit in Hong Kong draws lukewarm response among mainland shoppers
- Leader of trade body for retailers remains pessimistic due to high rents and salaries, says new threshold won’t stanch sector’s decline
A higher duty-free threshold in Hong Kong for mainland Chinese tourists drew a lukewarm response on Monday when it took effect, with an industry leader expressing pessimism on its effectiveness and warning of shops shutting down.
Annie Tse Yau On-yee, chairwoman of the Hong Kong Retail Management Association, the city’s biggest trade body representing retailers, said the measure would not provide much of a boost to the ailing industry.
“Business is declining rapidly, but the costs of rent and salaries are increasing significantly. Everyone will continue to suffer for quite a long period, and some retailers might not be able to withstand it,” she said.
“If they cannot balance their books, they will need to shut down, this is what we expect.”
The central government raised the duty-free threshold from 5,000 yuan (US$688) per trip to 12,000 yuan for mainland residents aged 18 or older. The limit could be further increased to 15,000 yuan, or HK$16,100, if they shopped at duty-free stores at border crossings.
Tong Miaomiao, a 40-year-old shopping centre operator from Guangzhou, said the new threshold was not as attractive as Hainan’s annual limit.
“We have an allowance of 100,000 yuan there, so I will definitely choose Hainan for shopping,” Tong said at West Kowloon station before boarding a train leaving the city.
She said she spent about HK$1,000 on shopping and daily necessities during each of her two recent stays in Hong Kong.
A mainland visitor surnamed Liu, in her 30s, visited the K11 Musea shopping centre in Tsim Sha Tsui with two friends and bought a new designer handbag that cost more than 12,000 yuan.
But she said the newly raised tax threshold had not been a specific incentive, only that she had “happened” to see a bag she liked and decided to buy it.
“Shopping here isn’t cheaper than in Japan,” Liu noted, saying that her purchase had already exceeded the 12,000 yuan threshold and would not be attractive to people looking to buy high-end luxury goods.
“Maybe people who want to buy electronics could benefit,” she added.
Most mainland visitors the Post spoke to at K11 Musea were not aware of the new duty-free limit, saying they had not planned to go shopping but were there to have a stroll or take pictures.
“We don’t have enough money to spend,” said a 27-year-old tourist surnamed Wei, who was visiting from Guangzhou with a friend for two days. The Disneyland resort on Lantau Island and local bakery Bakehouse were among the places on their itinerary.
Lin Zhihui, a 27-year-old Foshan homemaker accompanied by her husband, had bought cans of baby milk formula and shoes in the city.
“The HK$12,000 limit will cover what we need to buy,” said Lin, who was in Hong Kong for the first time. “But [the higher duty-free limit] won’t attract us to shop here in the future.”
Lin said her experience in Hong Kong had been poor. “The transport is not convenient, the service is rarely good. I may choose Hainan instead if I want to go shopping.”
Chen Haoyue, a 24-year-old university student from Beijing who left Hong Kong on Monday, said she spent around HK$10,000 during her last visit to the city five years ago.
However, she did not spend nearly as much on shopping this time around, saying things were cheaper in Macau.
“Whether the allowance is enough really depends on individuals’ spending habits. If you want to buy a luxury bag in Hong Kong, HK$12,000 is not enough,” she said.
But she added that the increased limit was good for mainland visitors “in general” as it might encourage them to spend more freely.
Li Qin, a 34-year-old trading company employee from Fujian who also departed the city on Monday after a weekend visit, said she had spent less than HK$5,000 – within the previous limit – as she had not even known of the increased threshold.
“If I had known earlier, I might have spent more” said Li, but added that she still preferred Hainan as a shopping destination.
Unlike Li, Shanghainese tourist Bao Wenting said she was partial to Hong Kong and hoped the allowance would be raised to HK$30,000 in the future. She had spent HK$20,000 on a recent visit to the city – thrice as much as on her previous trip.
“The allowance is generally enough for me as I shop for different things each time,” the 36-year-old housewife said.
“I still prefer Hong Kong to Hainan, as the attractions here like Disneyland and Ocean Park cater more to those like me who travel with their children.”
On June 29 and 30, 107,545 and 85,600 mainland visitors arrived in the city respectively. But far more people left the city, with 553,511 and 483,517 residents departing on the same dates.
Chief Executive John Lee Ka-chiu previously said the increase in the duty-free threshold highlighted the central government’s support for Hong Kong’s economic development. He expected the new measure would benefit the city by attracting more mainland visitors and diversifying its tourism offerings.
