What do the Chinese want? This simple question has roiled global commodity and equity markets for years. The macro answer is found in places like Newcastle, Australia, where China’s appetite for coal created a port-side traffic jam. The micro answer can be found in Causeway Bay, my neighborhood and one of Hong Kong’s busiest shopping districts.
As one of the most popular spots for visitors from mainland China, hosting some 15 million tourists in 2007, Causeway Bay is a leading indicator of what Times Square in New York, Paris’s Champs Elysees or Leicester Square in London might look like in 10 years’ time.
If my neighborhood is anything to go by, mainland Chinese want luxury watches, branded cosmetics, and skin creams. Maybe a little jewelry, and of course medicine and baby milk powder. Almost every day, shops that sell anything else are being replaced by those that cater to the mainlanders. And it's not just my neighborhood: IFC, a big shopping mall in central Hong Kong connected to two office buildings filled with investment banks, is gradually converting its tenants to stores that absorb the maximum amount of mainland money. It wouldn't surprise me one bit if the reason Pret a Manger, the UK sandwich chain that filled each day with suited financial drones, closed its convenient IFC branch recently was because a jewelry store that catered to mainland visitors could pay a higher rent.
Mainland shoppers are here to stay in Hong Kong, and they are heading overseas. As increasingly wealthy Chinese tourists fan out around the world, they will have a similar impact on the shopping landscape of big cities, just as the Japanese did before them. Already, there are lines most days outside the Louis Vuitton shop in Causeway Bay. And it's a safe bet the big luxury groups all now design with Chinese shoppers in mind.
As the Chinese shoppers head your way, here are a few things I've noticed that have changed in Causeway Bay that you might observe eventually in New York or London: signs have cropped up on cosmetics saying "fixed price" (no bargaining!), stores have started to promote payment in renminbi, stores install ropes outside to give the impression of exclusivity, and of course, every possible store gets turned into a watch or cosmetics shop.
By 2020, the World Tourism Organization is predicting 100 million Chinese will travel overseas. When they come, the Chinese will leave their mark. While they may be shy about spending at home, the Chinese are shopaholics overseas, spending $6,000 per trip to the US, more than visitors from any other country.
Tell that to the economists and politicians who complain about the Chinese not spending enough. They'd just rather shop overseas.