Hong Kong jewellery giant looks to Japan to offset losses at home

Chow Tai Fook, the largest jewellery retailer in Hong Kong, is shifting its focus to Japan as the number of visitors from mainland China plummets at home.

Hong Kong jewellery giant looks to Japan to offset losses at home

The brand will open a shop on the premises of Laox, a duty-free complex in Shinjuku that is a prime destination for Chinese tourists in Tokyo. Sales in Hong Kong have shrunk steadily in recent years and fell by nearly 26 over a six-month period to September, due largely to a 4.5 percent fall in tourism last year. The dip is the largest since the Sars outbreak in 2003.

Chow Tai Fook operates 19 stores outside Hong Kong and mainland China. With an emphasis on gold and somewhat ostentatious design, it looks unlikely to appeal to the Japanese market. That should not be a major problem considering the continuing growth of inbound tourism to the country and relatively high spending of visitors, although Chow Tai Fook has low awareness among non-Chinese groups.

Annual visitors stand at just over 24 million, and the Japanese government is aiming to hit 40 million by 2020. Chinese visitors made are the most plentiful and lucrative. Last year, 6.3 million visited, spending nearly 228,000 yen on average, more than twice the average tourist, according to one report.

Ray Wong, CEO of the media agency PHD in Hong Kong, said the move makes sense considering that Chinese tourists spend considerably more in Japan than in Hong Kong. Hong Kong is also Asia’s most expensive city for retail rental, he said, meaning Chow Tai Fook’s margins would be more favourable in Tokyo.

Wong noted however that mainland Chinese shoppers are “very, very savvy in comparing prices, especially when it comes to gold”. “Because gold prices will be the same wherever they buy it, Chow Tai Fook should have differentiated gold designs,” he said. “If they put out Japan-only gold products not found in Hong Kong and vice-versa, then the brand may be able to maintain the sals momentum for each day without cannibalizing itself.”

This article has been updated to include commentary from Ray Wong.

Source:
Campaign Japan

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