Urgent cure sought for retail pain

The news that health-product chain CR Care will close all its branches next month is a wake-up call and a reminder of how difficult the local retail business environment has become.

A number of Main Street businesses have been pulling shutters recently.

Before the CR Care, the closure of local gym chain Physical was the most high profile.

Its closure captured a great deal of public attention because there was no prior warning as the gym was reported to be still selling vouchers just before the closure and hundreds of customers had to approach the authorities for assistance.

CR Care's imminent closure touched a nerve for different reasons.

The health-product chain is a subsidiary of a major state enterprise, owned by China Resources Pharmaceutical Group under the China Resources mammoth.

A general understanding of state enterprises had been that they would never shut down due to their state-ownership background. It is also because of this that employment at a major state enterprise is often likened to the civil service - that is, secured and risk-free.

In this current development, it will no doubt surprise quite a few to suddenly realize that changes do occur at state enterprises these days.

CR Care is a very small unit of the group and, while the group is committed to preserving the tradition of job security, the incident serves as a reminder that even state enterprises need to evolve in accordance with the market.

When all CR Care stores close on November 8, it may be viewed more as a milestone of adjustment than an end of the journey.

Still, it confirms that the operational environment is getting increasingly tough for local retailers as Hong Kong's economy fails to pick up as anticipated after the pandemic as the city and the mainland continue to reel from factors that are both external and internal.

Latest government statistics show the total value of retail sales in August was more than 10 percent lower than a year ago. Total sales for the first eight months were also 7.7 percent lower than the corresponding period of last year.

Not many took it seriously when a leader of the catering sector predicted that over 3,000 restaurants would close after this year's Lunar New Year but the warning is turning out to be correct. Let us hope the tide of closures ends soon.

Executive Council member Tommy Cheung Yu-yan did raise some eyebrows yesterday when he said the alarm bells were ringing as early as the middle of last year and that both he and the government were powerless to do anything about the situation.

Wait a minute! As early as the middle of last year? Were government officials not rather upbeat about the economy around that time?

Nonetheless, I totally with Cheung that it is vital for the government to create an environment suitable for doing business and avoid legislating to the contrary.

As long as there is a business-friendly environment, business-minded people will be able to pull a rabbit out of the hat.

Although digital transformation to selling online is an alternative, it is not the only option.