For Hong Kong, a chill sets in as rich China tourists shop elsewhere

Chinese tourists are rapidly deserting Hong Kong, leaving retailers who built businesses around once insatiable demand from mainland neighbors with emptier stores and squeezing the whole city’s visitor-dependent economy. With cross-border tensions exacerbated by pro-democracy Hong Kong protests, tour groups visiting Hong Kong from China plunged about 80 per cent in early March. The net effect is a tourism slowdown that leaves a gaping hole in an economy where Chinese visitors - 47 million last year, about 40 per cent of them from areas beyond border zones - account for about a third of retail spending.

The old shops are squeezed and replaced by chain stores…and other popular shops for them (mainland buyers).

Yu, a 22-year-old Hong Kong shopper

Chinese travelers with cash to burn are honing in on places like South Korea and Japan. Like Japan, South Korea is a big beneficiary thanks to its currency weakening even as the strength of the U.S. dollar eroded competitiveness in Hong Kong - its currency is pegged to the greenback. More than 6 million mainland Chinese visited South Korea last year, up 42 per cent from 2013, spurred by an easing of visa rules. In Hong Kong, observers are bracing for a chill settling over the city’s stores for some time.

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