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Tuesday, 8 January, 2002, 11:51 GMT
Hong Kong shoppers take fright
Hong Kong skyline
Shoppers are spending less in Hong Kong's glitzy malls
Hong Kong's slowing economy recorded a fall in retail sales in November as shoppers remained fearful for their jobs.

Three years of falling prices have failed to induce shoppers to spend as unemployment remains at an 18-month high of 5.5%.

A surge of visitors from mainland China helped to moderate the downturn in spending, a Hong Kong government spokesman said.

Retail sales in November 2001 fell 4.2% to $HK13.8bn ($1.7bn) compared to the same month the previous year.

Hong Kong's economy is struggling with the collapse of global export markets for high tech goods and faces competition from mainland China as a base for low-wage manufacturing jobs.

Bad memories

Many people have been forced to take pay-cuts, property values have dropped and personal bankruptcies have risen.

The slowdown has been swift and among consumers it has sparked memories of the 1997 financial crisis.

Hong Kong's economy grew 10.5% in 2000 but is expected to have shrunk in 2001 - by about half a percent, according to the Asian Development Bank.

"We have to improve Hong Kong's business environment to attract more foreign investors...we must be proactive instead of lamenting for lost jobs," said cabinet member Raymond Chi-en.

Even in the financial services sector jobs have begun to migrate to the mainland.

Hong Kong's manufacturers have faced increasing competition from cheaper imports from China.

And the weaker yen - which has cut the cost of Japanese exports - has also created more competition from Japan.

Industry in pain too

Manufacturing orders for November also reflected the economic crunch, dropping 15% year-on-year and beating the previous month's 14% decline.

Orders for electrical and electronic goods fell most steeply, down 36% and 22% respectively, while clothing and textiles orders were down by 11% and 9%.

Clothing sales in the shops suffered least and food sales actually rose as shoppers focused on necessities.

The retail sales figures showed clothing sales fell by 2.7%.

Sales of cars and fuel tumbled 20% while furniture and fixtures, footwear and clothing accessories were down by about 6%.

After adjusting for price changes, overall sales volumes in November fell 1.7%, an improvement on the 3.8% decline registered in October.

See also:

10 Dec 01 | Business
Hong Kong bankruptcies surge
09 Nov 01 | Business
Bleak outlook for Asian growth
07 Sep 01 | Business
Hong Kong shares at two-year low
31 Aug 01 | Business
Hong Kong recession fears grow
21 Aug 01 | Business
Hong Kong warns on economy
23 Nov 01 | Business
Hong Kong prices keep falling
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