Bloomberg Businessweek - USA (2020-01-27)

Hong Kong

B U S I N E S S

14

Edited by

James E. Ellis

BloombergBusinessweek January 27, 2020

The Protests’

Collateral Damage

HoSiu-ying,76,who’sbeenpilotinghertire-ringed,

wooden sampanto theiconicJumbo Floating

RestaurantinHongKong’sAberdeenharborfor

35 years,hasneverseensuchhardtimes.Normally,

ferryingdinersbackandforthnetsher$13to$

fora day’swork—enoughtolivemodestlyinpublic

housingwithherdaughterandeventakeanocca-

sionalleisuretriptotheChinesemainland.Butwith

a catastrophicdropintourismcausedbyseven

monthsofcivilunrest,shefrequentlygoeshome

empty-handed.“AlotofdaysI’mworkingforno

pay,”shesays,withanunusuallycheerfullaughthat

causesthewrinklesaroundhereyestocreaseand

concealsherconcern,whichshesharesina quieter

voice.“I’mhonestlyveryworriedrightnowbecause

I’musingupmysavings.”

InearlyJanuary,Jumbo—whichhasbeenvis-

itedbynotablesincludingTomCruiseandQueen

ElizabethII andwhoseredandgold,MingDynasty-

styledexteriorhasappearedinmanymovies—dis-

missedabout 60 employees,oralmosthalfitsstaff.

It’s cutbackitshoursandis nowclosedonMondays.

AlloverHongKong,restaurants,retailstores,

andhotelsareshuttering,shorteningtheirhours,

andlettingemployeesgo.Everyone—fromgovern-

ment officials to labor unions to business owners

struggling to make rent and payroll—expects the sit-

uation to get worse, especially after the Lunar New

Year holidays, which begin on Jan. 25.

Visitors from mainland China usually throng

the city at this time of year. Their numbers

reached an all-time high of more than 5.5 million in

January 2019, but there’s little chance that will be

surpassed in 2020. The number of tour groups arriv-

ing from China plummeted 90% in the four months

throughDecemberfromthesameperioda year

earlier,accordingtotheTravelIndustryCouncil.

Visitorsaredeterrednotjustbypro-democracy

demonstrations, which have at times closed the

Hong Kong airport and subway system and forced

As free-spending travelers avoid embattled

Hong Kong, its tourism-dependent workers are losing jobs

businesses to shut their doors. Depreciation of the

yuan also made Hong Kong 10% more expensive for

Chinese tourists last year. And concerns about the

Wuhan virus could discourage visitors in 2020.

The local economy was already suffering from

the effects of the China-U.S. trade war before the

protests began in June. The recession that started

in the second quarter of 2019 looks set to deepen

as more businesses succumb to the decline in tour-

ism. Hong Kong Financial Secretary Paul Chan has

described the situation as an “economic typhoon.”

Retail sales have declined for 10 straight months,

falling 25% in November alone—the latest available

data. Both Prada SpA and LVMH’s Louis Vuitton

have plans to close their locations in the Causeway

Bay shopping district, home to the most expen-

sive commercial real estate in the world, after the

Lunar New Year holidays. Employees at both stores

say they have no idea whether their employers will

move them to other locations in the city or fire

them—and they may not be told until their final day

atwork,a commonpracticeinHongKong.

Chow Tai Fook Jewellery Group Ltd. and

cosmetics chain Sa Sa International Holdings Ltd.

have announced closures of about 15 and 30 stores,

respectively. Some tenants at Horizon Plaza, a lux-

ury mall in southern Hong Kong, report a 60%

decline in foot traffic and revenue, and several shops

there have closed, according to local district coun-

cilor Kelvin Lam.

For employers, there’s a strong temptation to

postpone layoffs until after the Lunar New Year,

because the bonuses that companies traditionally

pay out then can be counted toward severance,

which is required by law. The Hong Kong Retail

Management Association forecasts that 5,600 jobs

will be lost over the next six months, a situation

Chairwoman Annie Tse called the “worst ever in

history.” Already, official unemployment statistics

show joblessness in the retail industry and food