Hong Kong loses lustre for luxury brands

SPH Brightcove Video
Luxury brands are scaling back in Hong Kong, long seen as the gateway to Chinese shoppers, and the reasons go deeper than the city's unrest.

HONG KONG (REUTERS) - Louis Vuitton bags may be made in France, but many of them are sold in Hong Kong.

It's long been seen as a key gateway to Chinese shoppers.

But now, a new report from consultants Bain says posh brands are going cold on the city.

Hong Kong's political unrest is one reason that's caused big names like Burberry to shut stores at times.

As a result, Bain says luxury sales there will fall to US$6 billion this year - down from a peak of US$10 billion in 2013.

But a deeper shift may also be under way.

Bain says some temporary closures will probably become permanent, and that's not because Chinese shoppers have gone off luxury. They make up 35 per cent of sales in the sector, and about 90 per cent of growth.

But now they're doing their shopping in their home cities.

A weaker yuan has made it more expensive to shop abroad, and Beijing has cut tariffs and sales duties, eroding Hong Kong's advantage.

Overall, the luxury market keeps expanding. Bain predicts it will be up 4 per cent to US$310 billion this year.

But fewer of those dollars will be flowing through Hong Kong.

Join ST's Telegram channel and get the latest breaking news delivered to you.