Some politicians have called for a new law to control commercial rent to help small to medium-sized enterprises survive the projected hard times in 2019 when Hong Kong’s economic prospect is clouded by a slowdown in global growth and the trade war between the United States and the Chinese mainland.
The proposal is, of course, scoffed at by landlords who noted that rent control is anathema to the long cherished free market principle. In practice, rent control would only distort the competitive environment and limit the choice of consumers.
The closure of some retailers and eateries, especially those which have been around for a long time, is usually blamed on high rentals. Indeed, commercial rentals in some of the busiest districts are among the highest in the world. But those successful entrepreneurs have factored high rentals, which apply to everyone, as part of the cost of doing business in Hong Kong.
Many businesses failed not because of rising rents but because they have failed to deliver the products and services that appeal to the consumers. They include retailers which have lost touch with the latest consumer trends and eateries that were unable to cater to the changing tastes of the younger patrons.
Many people have expressed their regrets in social media about the imminent closure of a wonton noodle shop which claims to be one of few eateries that have maintained the most authentic taste of this iconic Cantonese fast food. Consumers who visited that eatery in recent years were turned off by the most uncomfortable seating and the indifferent service.
Some businesses have found that nostalgia is not a guarantee of success in this digital age when the younger consumers are more interested in innovations that can wow their taste buds.
The change in demographics in many old neighborhoods that are going through rapid process of gentrification has pushed out many small retailers that are shunned by the middle class families who are moving in to the new housing estates. Rent control can give the old shops a temporal reprieve. But it is not going to help them win new customers while their old customer bases will continue to shrink.
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