Published: 20:20, May 23, 2024
Tycoon: Changing HK consumer habits bring ‘considerable challenges’
By Liu Yifan

Victor Li Tzar-kuoi, chairman of CK Hutchison, speaks during a press conference in Hong Kong on March 16, 2018. (PHOTO / AFP)

Changes to Hong Kong consumption patterns driven by an increase in travel to the Chinese mainland have brought “considerable challenges” to the city’s retail sector, CK Hutchison Chairman Victor Li Tzar-kuoi said on Thursday.

Li told the group’s annual general meeting that its retail division — which includes health and beauty chain Watsons and PARKnSHOP supermarket — is responding by adjusting the product mix of its stores in tourist areas and adding more health products that appeal to mainland tourists.

PARKnSHOP has ramped up efforts to source a wider range of goods from around the world and the mainland. It is also offering discounts to Hong Kong residents to keep prices affordable and eliminate the need to travel elsewhere for the types of products they want

The Hong Kong Special Administrative Region government has also sought to boost the city’s post-pandemic recovery by staging a vast array of mega events. Chief Executive John Lee Ka-chiu this week announced plans to hold more than 100 events in the latter half of year, including entertainment expos and fashion weeks. The events are projected to contribute HK$7.2 billion ($923 million) in consumer spending and generate an additional HK$4.3 billion in economic value for the city.

However, officials’ ambitions have been somewhat tempered by Hong Kong residents’ enthusiasm for northbound travel. Hong Kong Immigration Department data showed that 310,000 travelers left the city for the Chinese mainland last Saturday, compared with around 120,000 mainland tourists who came down south.

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“The changes in Hong Kong people’s consumption patterns have brought considerable challenges to Hong Kong’s retail businesses,” Li said.

As part of the CK Hutchison response, PARKnSHOP has ramped up efforts to source a wider range of goods from around the world and the mainland. It is also offering discounts to Hong Kong residents to keep prices affordable and eliminate the need to travel elsewhere for the types of products they want.

Li also reiterated the group’s global vision and diversified business strategy as he laid out its investment ambitions.

“We do not choose investment locations, we select projects. As long as there are high-quality assets with ideal returns, we will consider them, whether in Hong Kong, the mainland, or overseas,” he said.

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He cited as an example the retail division’s expansion from just a few hundred Hong Kong stores to an international business with 16,800 stores worldwide.

“Had we only stayed in Hong Kong, the best we could have achieved might have been 800 stores, given that the Hong Kong market was already saturated. With investment overseas, the local and overseas markets can complement each other,” Li said.

As a multinational conglomerate, the group has globalized and diversified its businesses in over 50 countries, investing in various sectors including retail, infrastructure, ports and telecommunications.

According to Li, its ports division is expanding in places with enormous development potential — emerging countries such as Egypt, Saudi Arabia, Mexico and Pakistan.

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Concerning the issue of Kwai Tsing Container Terminal land use, Li said it is a fact that the throughput of Hong Kong’s terminals continues to decline.

Shipping data provider Alphaliner reported in April that Hong Kong had fallen out of the world’s top 10 busiest container ports for the first time.

However, Li said that whether there should be a change of land use for container terminals goes beyond the group’s control and such decisions are for the government.

He added that the group will continue to communicate and cooperate with the government and industry to find a path for the development of Hong Kong’s container terminals.