Hong Kong hit by double whammy
Last year’s anti-government protests and now the coronavirus deal a heavy blow, Bloomberg writes
Awalk down Hollywood Road shows the devastation wrought by the one-two punch of coronavirus and last year’s anti-government protests. Empty shops dot the once-bustling strip long popular with expats and tourists — steel grates drawn and “For lease” signs plastering the shutters.
“There are days when we don’t even have one customer,” said David Choi, a manager at Friendship Trading Co, whose antique shop sells porcelain vases and mahogany chests.
It’s the worst crisis he’s faced in almost 40 years in the trade. Sales are down 90% and even before the deadly outbreak, Friendship Trading was struggling as protests that drew tear gas and water cannons kept shoppers away.
“It’s a double whammy,” Mr Choi said. On a recent Wednesday afternoon, the street in Sheung Wan, just a 15-minute stroll from the city’s central business district, was almost deserted. Generally, this is prime tourist territory, thronging with people sifting through trays of jade trinkets.
Now, a handful of shopkeepers stare blankly out of doorways and potted plants droop on front steps.
Hong Kong’s economy has been in recession for the past two quarters, leaving it fewer resources to battle the pandemic. The benchmark Hang Seng Index last week entered its second bear market in as many years, and the city’s jobless rate surged to the highest level in almost a decade in February.
Companies big and small are cratering: Cathay Pacific Airways Ltd lost more than HK$2 billion (8.3 billion baht) last month alone and has asked staff to take unpaid leave.
For the city’s sole traders and family-run outfits, however, survival is even tougher. Many don’t have the luxury of cash buffers and deep-pocketed corporate landlords willing to offer financial relief.
An index measuring receipts for small- and medium-sized enterprises — those with fewer than 50 employees — slumped to the lowest on record last month, government data show.
The retail sector was the hardest hit with the gauge tumbling from 45.1 in January to 16.6 in February. A reading above 50 indicates that business conditions are generally favourable; below 50 indicates the opposite.
Hong Kong has about 340,000 small and medium enterprises that account for around 45% of the private-market labour force.
“It’s never been so miserable,” said Fung, the elderly owner of Dragon Arts Gallery, a tiny antique shop down a narrow alley off Hollywood Road. “There are no customers at all. I open the shop every day only because I don’t want to pay the rent for nothing.”
Mr Fung sports a blue face mask as he gazes out to the empty street. Sometimes, no one stops to inquire about the price of an artifact for days on end, he said, leaving his Chinese scrolls and vintage watches untouched.
Restaurants in the area aren’t faring much better.
While Hong Kong hasn’t gone as far as locking its citizens down, schools have been shut for months and many employees are working from home either because their company has mandated it or to look after children.
Kim & Co Cafe, a Western-style coffee shop, had just three tables occupied during what should have been a busy lunch hour.
It’s located just across from the heritage Man Mo Temple. The tiny shrine with its incense whorls hanging from the beams is usually a magnet for tourists; they’ve not returned since a visitor last month tested positive for Covid-19.
“The news spread easily and people who live here have been scared to come out,” restaurant manager Resard Valdejueza said.
French fine diner Bibo, meanwhile, closed in mid-February after six years. The restaurant was a popular gathering spot for media types and finance executives, drawn by the Damien Hirst and Jeff Koons artwork displayed on its walls.
Flying Elk, once a hot spot for Nordic food, has also shuttered. Other restaurants are limiting their opening hours.
The government last month announced some relief measures in its budget. Small- and medium-sized businesses will be offered low-interest loans and have their tax reduced and registration fees waived.
But with those plans still pending legislative approval, many companies are demanding more help, especially considering Hong Kong has the world’s most-expensive retail rents.
The Hong Kong Small & Middle Restaurant Federation, which represents more than 100 eateries, has urged the government to make an example for other landlords by offering reduced rents at its properties.
Some Hollywood Road tenants have exited recently for that reason, according to Tracy Zhang, an account manager at Midland IC&I
Ltd who’s trying to lease some shops along the stretch.
With sales plunging and labour and other costs fixed, going out of business may be the only option unless rental relief is available.
Mr Choi, for his part, doesn’t hold out much hope. Now that the coronavirus has spread globally and international travel has effectively shut down as countries close their borders, he expects even fewer visitors.
“Hong Kong is an international city that profits from foreign trade,” he said. “When no one comes, there’s no business.”