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August 16, 2013
Macau opinion
Policy fog
Mainland shoppers prefer Macau, HK The two cities replace Europe and the United States as the favourite places for mainlanders to shop Tony Lai
tony.lai@macaubusinessdaily.com
José I. Duarte Economist
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odern societies produce loads of statistical data. Looking at those data is not something that one does for the pure enjoyment of it. That they would give any enjoyment is doubtful, and few people would confess to such a private pleasure. Skimming through stats is a necessary business, one that is done mostly for very practical reasons. Good stats and their careful analysis provide invaluable clues about what is going on in our societies and, as important, where they may be going. We listen all the time to the most varied and often inconsistent pieces of advice about what to do in all realms of public life. That is especially true when we deal with setting public policies that affect each and every one of us. That means advice is seldom totally disinterested. Figures, in their relative coldness and objectivity, provide necessary benchmarks against which we can judge how sound a policy or recommendation is, how much this or that course of action is viable or whether it is just wishful thinking. Summing up, careful consideration of the available statistical data is needed in all government activities. Finding out what the figures are telling us is necessary because they help us make an informed analysis and set better courses of action. We ignore the voice of figures at our own risk. As an illustration, let us have a look at something that affects us all, every day: road traffic. Just consider these few figures. Between 2004, the first year of the new casino era, and the end of last year, the number of motor vehicles on Macau’s roads increased by 67 percent. The total length of roadway, including bridges, increased by 21 percent. These two simple figures alone should be enough to set the alarm bells ringing. It is obvious this cannot go on forever. Neither can it go on for very much longer if, as is the case, you start with comparatively high figures.
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acau and Hong Kong have become the most popular places for mainlanders to shop this year, overtaking Europe and the United States, research into duty-free shopping has found. The state-run Xinhua news agency quotes a research report as saying Macau and Hong Kong account for 44 percent of spending by mainlanders on luxuries so far this year. They accounted for 26 percent last year. The report, by the governmentbacked Fortune Character Research Institute at the University of International Business and Economics in Beijing, says Macau and Hong Kong are now more popular among mainland shoppers than Europe and the United States, which together account for 31 percent of spending so far this year. Xinhua quotes the head of the Fortune Character Research Institute, Zhou Ting, as saying: “This is due to more mainlanders favouring short-haul trips this year.” About 20 percent of what mainland shoppers have spent this year was spent in the mainland. Ms Zhou said shopping was cheaper in Macau and Hong Kong because they were free ports that did not tax luxuries. Mainlanders are the driving force behind Macau’s tourism and retailing industries. Over 8.9 million visited in the first half of this year, 9.8 percent more than a year earlier, and they made up about 63 percent of all visitors, official data show.
Middle-class mainlanders like to buy cosmetics and clothes, researchers have found
Each visitor from the mainland spent an average of 2,640 patacas (US$330) here in the first quarter, more than the average of 2,046 patacas spent by visitors generally. The Fortune Character Research Institute report says mainlanders with assets of over 100 million yuan (125 million patacas), are more inclined to shop abroad than in the mainland. Their preference is for jewellery, leather goods and watches. Middle-class mainlanders go for cosmetics and clothes. The institute expects mainlanders to spend more and more money
abroad as outbound tourism continues to increase. Last year 83 million mainlanders travelled abroad, and they spent about US$102 billion, official data show. The results of a study released this month by the United Nations World Tourism Organisation indicate that tourists visiting Macau spend US$3,213 each, including what they spend on gambling – more than tourists visiting any other place. Visitors spent 14.5 billion patacas here in the first quarter, 10 percent more than a year earlier, according to official estimates.
Impossibility ensured At the beginning of 2004 Macau had 387 vehicles per kilometre of road. At the end last year the figure had risen to 521. In the first half of this year the number of vehicles increased by 3 percent. Just consider this necessary consequence: to attain again the 2004 ratio, even if no more vehicles were sold from tomorrow, we would need to build 167 kilometres of roadway. That would mean increasing the present roadway by 40 percent, and more than doubling the length built in the past 10 years. The impossibility of doing this is ensured by the obvious limitations the confines of the city impose to any big extension of the length of roadway. To make things worse, the mixture of vehicles on the road is changing and not making things any simpler. The number of tourist vehicles, which usually stay on the road for longer, is rising. The proportion of private cars is also rising. The size and weight of vehicles in general is increasing. Not a single indicator seems to be suggesting that things will get any better before they get worse. For years, then, the data on vehicles and roads have been telling us that we are following an unsustainable path. After 10 years of clear trends – growing congestion, heavier pollution, increasing strain on the infrastructure – do we have anything that amounts to a transport policy? Can the relevant government departments define a frame of reference, put forward a coherent approach, or formulate a set of guiding principles that underpin their analysis and actions – something that could give us the confidence that the authorities are aware of the problems, capable of taking the appropriate decisions and ready to carry out their duties in these matters?
SJM ‘stronger in second half’: analysts Cite improvements in table games offer at Grand Lisboa as factors
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everal analysts expect casino investor SJM Holdings Ltd to have a stronger second half to the year despite growth constraints on the firm’s current venues on Macau peninsula. Union Gaming Research Macau said SJM’s revenues would probably rise eight percent year-on-year in 2014, “likely below market average”. “…we would attribute this to three factors: firstly, SJM’s properties largely being capacity constrained, secondly that the company’s whollyowned properties are located entirely on the generally slower-growing Macau peninsula, and thirdly that a significant portion of the company’s revenues (and smaller portion of earnings) comes from its 3rd party satellite casinos, which given their age, lack of amenities, etc. should generally result in a lower growth rate,” said the
research house in a note. Union Gaming observed that SJM’s “self promoted” i.e., whollyowned casinos Lisboa and Oceanus reported first half gaming revenues of HK$2.8 billion (US$361 million). That was flat year-on-year and down 15 percent sequentially, said the research house. “EBITDA [earnings before interest, taxation, depreciation and amortisation] of HK$375 million was up 32 percent year-on-year but down three percent sequentially,” it noted. But Union Gaming added: “We believe the back-half of the year is shaping up well for SJM, particularly at Grand Lisboa. During the third quarter, Grand Lisboa put back into operation 10 VIP tables that had been taken out of service due to an underperforming junket. “In addition, the property is set to bring online between six to eight
more VIP tables in September, and then another 12 to 16 premium mass tables in the fourth quarter 2013. These tables should provide some incremental lift to the already seasonally stronger second half, and should have an even greater impact in 2014, which we do not think is reflected in current consensus expectations.” Cameron McKnight of Wells Fargo in New York noted: “SJM total second quarter 2013 market share fell to 25.3 percent from 25.9 percent in the first quarter 2013 and 27.1 percent in the second quarter 2012. We believe this is the result of the continued ramp at Sands Cotai Central, Galaxy [Macau], [The] Venetian, and City of Dreams.” But Mr McKnight stated: “Q3 and Q4 results could improve on table optimisation.” M.G.