At the recent U.S. Meat Export Federation Strategic Planning Conference in Tucson, Ariz., Joel Haggard, USMEF senior vice president for Asia Pacific, and a longtime resident of Hong Kong, fielded questions from producers and exporters on the volatile situation in the specialized administration region of China, where large-scale street protests have been taking place for several months.
"These protests keep going on and people are saying, 'Oh, are you getting teargassed? Is it safe in Hong Kong? Should I travel to Hong Kong? Should I cancel my plans?'" Haggard says. "A lot of activities have been canceled. Hong Kong is a big shopping city. The fashion industry has been absolutely hammered by the decline in mainland shoppers, but the protest activities are actually pretty localized because their numbers are small."
However, Haggard says protesters have been successful in disrupting Hong Kong's public transportation system, often stifling economic activity in the city's main shopping areas. The number of tourists, especially from mainland China, has declined significantly since the protests heightened, which is having a harsh impact on Hong Kong's hotel, restaurant and institutional sector.
"They're trying to disrupt logistics, just the functioning of the city and they've been successful. You shut down one public transportation station and the whole city is basically paralyzed," Haggard says. "So, what does it mean for us? Hong Kong is in a technical recession. GDP (gross domestic product) will be negative this year. Retail sales in August were off 25%; September was off 18%. If you are a restaurant operator, you have the highest rents in the world for your restaurant. Those rents are coming down. That's good, but you don't have any customers."
On the other hand, neighborhood supermarkets and taverns have seen brisk activity, as Haggard says Hong Kong residents are more inclined to eat at home or choose food and beverage outlets closer to home.
"You have a 30 to 50% reduction in HRI revenues, but then in the neighborhoods you stay at home on the weekend. We go down to our neighborhood store and we'll pick up packages of meat," Haggard says. "Retail's doing good in the neighborhoods and neighborhood F&B (food and beverage) is strong, so if you know that there's going to be a protest in that main shopping area and you go to the local bar, they're doing well."
Haggard adds that the economic slowdown is impacting Hong Kong's demand for imported meat, but it is not the only factor holding back red meat trade this year.
"It may be affecting meat imports to the tune of thousands of tons here and there, but there's two other much more significant events going on with the Hong Kong meat trade that have nothing to do with the protests — the ability of Hong Kong traders to re-export product that's been declining for the last couple of years and then you have the African swine fever impact in Hong Kong," Haggard says. "The supplies of fresh pork into Hong Kong have dropped dramatically."