Retailers billed it as the Great
Singapore Sale. Chinese tourist Zhu Liang bought it, only to
“We will never come here again to shop on purpose,” said
Zhu, a 35-year-old businessman from Hangzhou. Visiting the city
during the final days of the summer sale season in July, he
purchased a Loewe handbag for his wife, only to discover he
could have paid less in Hong Kong.
Behind the mark-up: a strengthening exchange rate, rising
labor costs and a sales tax Chinese tourists don’t encounter in
neighboring Hong Kong. A reduction in visitors from Asia’s
largest economy contributed to a sales slide of as much as 4
percent in Singapore’s annual shopping festival, according to
the retailers association.
Visitors from China to Singapore dropped 27 percent in the
five months through May from a year earlier amid slower economic
growth on the mainland and the impact of a new Chinese law that
clamped down on cut-price shopping tours. Total tourist arrivals
slid 1.7 percent, according to the Singapore Tourism Board.
Singapore’s retailers, already facing growing regional
competition, are under the biggest pressure since the Asian
financial crisis, Singapore Retailers Association Honorary
Treasurer Kesri Singh Kapur said.
“It is that grim,” Kapur, 47, said in a July 29 interview
in Singapore. “Both the sides of consumption, which are the
domestic customers and tourists, are not spending. I anticipate
that at least for the next 12 months the market will be
While China’s anti-corruption campaign against extravagant
spending by government officials and state-owned companies has
also damped spending by Chinese at home and in Hong Kong (HKRSVANY),
retailers in Singapore are grappling with the threat of a
broader decline in appeal.
Singapore’s average retail sales growth dwindled to less
than 1 percent in the two years through May, according to
government data that excludes motor vehicles. In Hong Kong, the
average was 6.9 percent in the 24 months through June.
The Southeast Asian island, home to an Asian leg of the
Formula 1 race and two casino resorts, has seen its currency
strengthen about 3 percent against China’s yuan in the past
year, the most after the won among major Asian currencies
tracked by Bloomberg. The Hong Kong dollar has gained 0.9
“If we change our renminbi to Hong Kong dollar, it seems
like we have a huge amount of money. With Singapore dollar, you
just feel like it is little money,” Zhu said last week as he
walked empty handed out of the Paragon mall on Orchard Road with
his family. Singapore retail goods are generally about 10
percent more expensive than in Hong Kong, he said.
Singapore imposes a 7 percent goods and services tax. While
tourists can claim back part of that on departure, “there is
still differential of 2 to 3 percent,” said Kapur, who is also
the Asia head of Dubai-based Al-Futtaim Group, the operator of
retail chains such as Royal Sporting House, Marks Spencer, and
Robinsons department store in Singapore.
International tourists including those from China,
Indonesia and India account for at least 20 percent of Singapore
retail sales, with Chinese accounting for about half of that,
Kapur estimated. Tourism Board data show Chinese visitors spent
S$800 million ($640 million) in Singapore in the first quarter,
of which almost half was on shopping.
Retail brands have expanded into other markets in China,
Indonesia, and Malaysia, making Singapore a less unique shopping
destination, said Kapur.
“Singapore had this aura and advantage of being slightly
different from its neighbors” five or 10 years back, he said.
“Yes we have a great Orchard Road, we have a great environment
where people can walk and shop, but availability of brands has
come at parity now.”
Al-Futtaim has closed stores for brands including Shana and
Vince Camuto in Singapore, and is closing Mango Touch, he said,
estimating front-end retail staff costs have gone up as much as
30 percent in the last two to three years.
The tourist dollar is also being stretched harder.
Sightseeing, entertainment, and gaming income from visitors rose
19 percent in the first quarter from a year earlier, Tourism
Board data showed. Shopping revenue slid 6 percent.
“Hotels are a little more expensive, entertainment is
galore in Singapore, the dollar is getting diverted into other
areas and not so much into retail,” Kapur said.
Revenue during the Great Singapore Sale that ran from May
30 to July 27 showed a 2 percent to 4 percent decline from the
2013 period, Kapur estimated. In contrast, Genting Singapore
Plc (GENS), Southeast Asia’s largest casino operator by market value,
said in May that gaming revenue from its venue on Sentosa island
rose 29 percent in the first quarter from a year earlier to
“It all adds up to a fairly bearish picture for the retail
sector,” said Selena Ling, an economist at Oversea-Chinese
Banking Corp. in Singapore. “It’s hard to see immediate light
at the end of the tunnel.”
To contact the reporter on this story:
Brian Leonal in Singapore at
To contact the editors responsible for this story:
Stephanie Phang at
Linus Chua at
Singapore"s Great Sale That Wasn"t: China Tourists Staying Away