Hong Kong retailers capitalise on Golden Week holiday

Chinese shoppers visited Hong Kong in record numbers last week to splurge on $130,000 watches, vintage wine and diamonds, boosting sales for Sotheby s and retailers including Omega retailer Hengdeli Holdings Ltd.

Merchants sales gained as much as 30 percent from a year ago during China s Golden Week holiday, according to the Hong Kong Retail Management Association. Sales jumped more than 60 percent in the Oct. 1-7 holiday, Hengdeli Board Secretary Tan Li said in an interview.

Swatch Group AG partner Hengdeli and Emperor Watch & Jewellery Ltd. are opening shops in Hong Kong as record tourist arrivals and a stronger yuan boosted sales for 12 straight months. Hong Kong, host of the second-most expensive retail rent district after New York s Fifth Avenue, stands to benefit from China s drive to boost domestic consumption as the nation s households accumulate $16.5 trillion of assets.

The spending power of Chinese consumers is amazingly strong and the rising yuan helped a lot, Emperor Watch Executive Director Henry Chan said in an interview. What they pursue in jewelries and watches are no longer middle-priced pieces, but the expensive, sophisticated and limited items.

Hengdeli has gained 50 percent in Hong Kong trading this year, beating the 8.6 percent rise in the city s benchmark Hang Seng Index. Emperor Watch, which sells Cartier and Rolex watches, surged 85 percent in the same period.

Hengdeli rose 1.4 percent to close at a record HK$4.40 at 4:00 p.m. in Hong Kong and Emperor lost 1 percent.

Sotheby s broke its record for a jewelry auction in Hong Kong during the week, garnering HK$423 million ($54.5 million). A 6.43-carat pink diamond set in a Van Cleef & Arpels ring was sold for HK$60 million.

Mainland Chinese spending more than HK$1 million on watches today is not something unusual, Emperor s Chan said. We sold one or two every day during the Golden Week. The company s same-store revenue advanced as much as 70 percent in the first four days of the holiday, he said.

Hong Kong is the biggest market for Swiss watchmakers, purchasing 199.5 million Swiss francs ($209 million) worth of timepieces in August, almost double the amount sold to the U.S., according to the Federation of the Swiss Watch Industry.

There are a lot of mainland Chinese customers with strong consumption power, Hengdeli s Tan said.

Yuan s Rise

Visitor arrivals from mainland China jumped 21 percent to a record 662,248 during the week, from the same period a year ago, the Hong Kong Tourism Board said. The yuan advanced to the highest level against the dollar since 1993 on Oct. 14, spurring purchases in Hong Kong, which pegged its currency to the dollar. Mainland China excludes Hong Kong, Macau and Taiwan.

China s household wealth may more than double to $35 trillion by 2015, surpassing Japan to become the second highest in the world, Credit Suisse AG said Oct. 8. China is now ranked third.

Record mainland visitor arrivals are helping to keep a feel-good factor circulating through HK, said Donna Kwok, a Hong Kong-based economist at HSBC Holdings Plc. Chinese visitors offer higher-end retail outlets an easier source of demand to tap, spending on average 35% more than their American counterpart.

That s helping landlords charge retailers more in the former British colony. Rents in Hong Kong s Causeway Bay jumped 9.6 percent this year, according to Cushman & Wakefield Inc. That means the district maintains its ranking as the world s second-most expensive store-rental area, behind New York s Fifth Avenue, the broker said in its annual survey in September.

China s tourist departures may reach 130 million in 2015 from almost 50 million last year, Frederic Neumann and Song-yi Kim, economists for HSBC Holdings Plc, said in a research note today. Spending by mainland Chinese overseas travelers may grow to more than $110 billion from $43 billion, they said. Between $80 billion and $100 billion will be spent in Asia, according to the report.

Sales of Sa Sa International Holdings Ltd., which sells make-up and hair-care products, rose 13 percent in its outlets in Hong Kong and Macau during the holiday, according to a statement from the company.

China has got a huge population to support the demand for whatever they want, Tsao Shiao Tien, a Taiwanese who bought a soapstone seal from the Qing Dynasty at a Sotheby s auction for HK$5.78 million. There are so many mainland Chinese people around, and they re driving up prices.