Former Colony’s High Per Capita GDP, Increased Tourism From Mainland Continue To Attract Luxury Retailers
10 years after its return to China, Macau remains a highly unique city, retaining a great deal of its colonial Portuguese past while incorporating global and Chinese cultures and attracting billions of dollars in foreign and Chinese investment since opening its gambling industry up to foreign investment in 2001. Over the past several years, as Macau has relaxed its visa policy (though often changing this policy on a moment’s notice) and more casinos and resorts have opened, there has been a major push by global luxury brands to gain a solid foothold in the city. Attracted both by the free-spending Mainland tourists as well as the comparatively wealthy residents, luxury brands have congregated at shopping venues like the Cotai Strip’s Shoppes at the Four Seasons.
Following the setbacks dealt to Macau by the global economic crisis, will Macau pick up steam as a luxury destination? Or will it always be overshadowed by its neighbor, Hong Kong? Macau already has a lot going for it — lower taxes on luxury goods, more open and relaxed investment policies, an excellent location near Hong Kong and Shenzhen, and favorable weather virtually year-round — but based on recent events that have shown the overall fragility of the Macau tourism market, two main developments need to happen before Macau can be taken seriously as a hub for luxury shopping: Continued GDP growth (obviously) to fuel more buying by locals, and increased multiple-day tourism by Mainland Chinese.
From figures recently released by the Macau authorities, it appears that the first requirement is being met. As the Beijing-based newspaper the Legal Times reported this week, Macau now has the second-highest per capita GDP in Asia, second only to Japan. From CCTV:
Zhang Xiaoming, deputy director of the State Council’s Hong Kong and Macao Affairs Office released the figures at a symposium in Beijing, marking the 10th anniversary of the Basic Law of the Macao Special Administrative Region (SAR), which took effect on Dec. 20, 1999.
Thanks to the “one country, two systems” policy and the Basic Law’s implementation, Macao has seen steady economic growth since 1999 – it has enjoyed an average annual GDP growth of 13 percent over the past decade despite of the impact of the Asian financial crisis and the global economic downturn as well.
The second requirement — enticing Mainlanders to stay longer, spend more on cultural activities and shopping, and venture outside the casino — is somewhat more difficult. As we recently wrote, despite aggressive efforts by casinos and resorts in Macau to provide more family-friendly activities and events, and to promote Macau as a more inclusive Las Vegas-style destination, Mainland tourists still by and large head to Macau to do one thing: gamble.
If Macau casinos can somehow entice visitors to stay longer (or, at the very least, bring their families), luxury retailers in Macau will likely be able to entice those families to hit the shops while Dad hits the baccarat tables. However, this won’t be easy, and will probably take several years of dedicated marketing in more distant Chinese cities like Beijing on the part of Macau tourism officials.