Hong Kong jewelers rush to mainland China for survival
HONG KONG -- After suffering back-to-back blows from protests and the coronavirus pandemic, Hong Kong jewelers have drastically expanded their presence on mainland China to offset plummeting demand from tourists at home.
Chow Tai Fook Jewellery Group has opened 310 outlets on the mainland during the six months through September. Because the mainland brought the spread of coronavirus under control relatively quickly, same-store sales in the market have improved to the plus side in the July-September quarter compared with a year earlier.
The group plans to open between 450 to 500 stores in the 12 months through the end of March 2021, with a particular focus on moving into major urban areas in rural provinces.
Chow Tai Fook manufactures and sells jewelry in both Hong Kong and Macao, and the company counts on tourists from the mainland for much of its revenue. But antigovernment protests in Hong Kong and the pandemic have cut customer traffic drastically.
Between April and September, group sales dropped 17% from a year earlier. Sales in Hong Kong and Macao alone plunged 63%. The two cities accounted for just 14% of revenue during those six months, down from 32% from the year-earlier period.
Amid that hemorrhaging, Chow Tai Fook shut down five stores in Hong Kong and Macao's shopping districts during the April-September term.
Fellow Hong Kong jeweler Luk Fook Holdings also weighs its business heavily on the mainland. The company oversees 2,107 locations on the mainland at the end of September, including licensed sellers, increasing the count by 61 in half a year.
Hong Kong cosmetics retailer Sa Sa International Holdings has experienced a steep plunge in sales in Hong Kong's shopping districts. During the April-September period, the company shut down six locations in Hong Kong. Most of the affected stores had served tourists.