Despite faring below expectations, Hong Kong retail sales witnessed a strong growth in October 2006 as the Asian nation saw its retail sales jumping to US$ 2.3 Billion, up by 6.9% year-on-year, reports Associated Press on December 1 2006. Retail sales volume also increased by 5.2 % compared to last year.

Car & Car parts sectors witnessed highest growth of 27% and food, tobacco & alcohol sales rose by 14.5%. Electrical goods & photography equipment sales rose by 12.9% and footwear & related product sales rose by 8.2 %.

Current consumer boom boosted by increasing wages, lower lending rates & recent boom in stock market has been the mainstay of Hong Kong retail industry & the current scenario suggests that the consumption is likely to remain stable in near future.

However, industry watchers had been expecting even stronger retail sales in October (8%). The major setback has been 0decline in October mainland tourist arrivals. Mainland tourist arrivals decreased by 2.8 % in October year-on-year.

These tourists are considered as big spenders & have contributed to the growth of retail industry in the last two years. Main reason for decline in arrivals is believed to be ill practices that are followed by tour guides, duping tourists by offering fake tour packages.

An analyst at RNCOS, specializing in retail industry commented, "Hong Kong retail industry has shown considerable growth over the years despite the setbacks that have continued to hinder the growth of the industry."

He further added, "Major challenge has been the competition from Malaysia & other shopping destinations in Asia, which is a major factor affecting tourist arrivals in the country. Also, unemployment, govt. trade policies and fast changing legislations & market conditions are among the key factors affecting the growth of its retail industry."