Better commitment needed
It is not only in Macau, quite the opposite. Luxury retailresults are feeling the pinch of the “new normal”, especially those markets that are more dependent on Chinese consumers.
As we report in this edition,Singapore’s reputationas a shopper’s paradise, which has seen investors pour S$10 billion (US$7.25 billion) into retail developments in the state city in the past five years, is takinga pummelling because of weaknesses in the local economy and a drop in spending by tourists. As Reuters clearly states, we can all see the signs of bets that have gone wrong: a bet that the domestic economy would remain robust, allowing demand from Singapore’s 5.5 million people to stay strong, and that retail splurges by visitors from the rising middle classes in China, India and Southeast Asia would keep increasing.
Recently, luxury brands have been closing stores in Hong Kong while others are struggling to cope with the incredible high rents. This is something Macau should have learnt by now, even if it’s an easier boat to manoeuvre. When forcing investors to diversify, the local government must be aware of its own responsibilities. It’s easy for the government to impose rules and force companies to launch new services and then shrug as if it has nothing to do with it. Responsibility to the city is everyone’s task, especially the government’s. A good strategy and a transparent regulatory framework are needed in all sorts of businesses. And the city must learn that it needs to impose rules and regulations on everyone, not only on the less fortunate who can’t lobby their way out of trouble, and that in moments of need, it should join as the partner that it should have always been. On the other side, investors must continue to make efforts to bring their best services and practices to town instead of immediately worrying about their profit margins and the annual dividends of their shareholders. If there’s a time to invest and show commitment, this is when the city and its businesses need it the most. It’s always too easy to find friends on every corner when the winds are blowing favorably.