CRI听力:Hong Kong Sees Signs of Improving Retail Sales

Retail sales in Hong Kong have been suffering through a year-long contraction, the longest decline since 1999.

Overall retail sales are down around 10 percent in March compared to a year ago.

However, March's figures are far better than the 20-percent drop in sales registered through February.

Through the first quarter of this year, retail sales in Hong Kong have fallen 12.5 percent compared with the same period last year.

The Hong Kong government attributes the severe drag on retail sales to the slowdown in inbound tourism.

However, there are some signs of life for the struggling city.

The just-concluded three-day May Day holiday saw tourism numbers from the mainland come in 10 percent higher than most observers had been forecasting.

At the same time, cosmetics firm Sasa has registered a slight growth in same-store sales.

Cheng Wai Hung, Head of Hong Kong's Retail Management Association, says even though there are signs of improvement, retailers still need to do more to keep people buying.

"Retailers know it is hard to run businesses this year, so stores will start promotions earlier than usual to make up for the losses. It is likely that we will see sales starting from this month. Even some big brands will follow suit."

However, Banny Lam, co-Head of Research at Agricultural Bank of China International Securities, believes retail sales in Hong Kong are not likely to pick up in the short term.

"I believe the rate of decline will narrow a little bit, but it won't be a significant change, and sales won't get back to positive territory any time soon. The current economic environment is rather weak, which has led to a sluggish overall retail performance. Another factor that's worth noting is that the Disneyland in Shanghai is going to open soon. So the question is, is this going to affect Hong Kong's tourism? "

At the same time, Deputy Director of Hong Kong Department Stores and Commercial Staff General Union, Tung Cheong Sing, says retailers in Hong Kong have to transform their business models to appeal to the changing demands of mainland tourists.

"For example, stores should be selling middle or low-range priced watches, rather than luxury ones. Despite a decline in rents, many stores may have to close down some of their branches to adapt to the new environment."

Even though times have been tough for Hong Kong retailers, some are performing better than others.

One store selling Japanese products has witnessed a 30 percent spike in sales through the first three months of this year.

Store Manager Chuang Tin Chi says they've been able to keep their finger on the pulse of what's been trendy this year.

"There have been a number of movies released over the past couple of months which have featured a wide range of digital, video products or cell phone accessories. So to capitalize on that, we order in these products right away into Hong Kong from Japan, which has significantly increased our sales."

One bright spot for Hong Kong retailers has been the recent rise in the value of the renminbi to the US dollar, as the Hong Kong dollar remains pegged to the value of the greenback.

This means mainland shoppers are getting a more favorable exchange rate when converting from the yuan into Hong Kong dollars, which may prompt more shoppers to cross the border.

For CRI, this is Li Jing in Hong Kong.