Introduction to Economics

The Barrier-free travel scheme

Presentation outline

• Introduction of The Barrier-free travel scheme • The consuming mode• Case study of SASA• Employment situation• Comparison of Hong Kong and Macau• Social Problems• Conclusion

Introduction

• Recession period in

Hong Kong

• China Joining the WTO

China action – helping Hong Kong

• CEPA (29th June 2003 ) – Allow dwellers traveling

by their own identity

– Barrier-Free Travel

Scheme visa

The consuming mode

General condition

• Increasing quantity on tourist

• Consume HK$5,000-7,000

per tourist

• 70% mainland tourist

stay overnight

The per capita consuming mode of stay overnightmainland tourist under Barrier-Free Travel Scheme

59%

14%

14%

3%

3% 7%

Shopping

Accommadations

Meals

entertainment

Sightseeing

Ohters

Special situation

• Golden week

• National Day

• Lunar New Year

• The per capita

consumption can reach HK$10,000

The top ten consumption

• Clothes and ornaments (famous brands)• Accommodation• Jewelry• Electronic equipment• Timepieces• Cosmetic and perfume• Leather products• Computer products• Daily commodities• Video products

Barrier-free travel scheme’s impact on Hong Kong business

Case study of SASA

Case study of SASA

Basic Background:

•a listed company

•cosmetic retail, cosmetic wholesales, facial and gymnastic services

•business on Hong Kong, China, Singapore, Malaysia and Taiwan

•internet purchasing

Interim report on retail and wholesales business inHong Kong and Macau

585.9 620.8836.6

0

500

1000

2002/2003 2003/2004 2004/2005year

Retai

l and

who

lesale

sbu

sines

s in

Hong

Kon

gan

d M

acau

(mill

ion

HK$)

Analysis

Tourists

affect

SASA

Benefit form the Barrier-free travel scheme

Analysis • SASA’s strategies---1. buying behaviors of the tourists2. A larger spatial for shopping

• Real benefit from the Barrier-free travel scheme—

1. “the favorite Hong Kong brand of the China tourists” ( 中國旅客最喜愛香港品牌 )

2. “the highest vote of the China tourist” ( 國內旅客投票最高榮譽大獎

• The future of open market in the mainland--1. Short term2. Long term

Barrier-Free Travel scheme

AND

Employment situation

Unemployment rate 1997-2005

1997

1998

1999

2000 2001

20022003

2004

2005

0

1

2

3

4

5

6

7

8

9

years

perc

enta

ge

Census and statistics department/unemployment statistics/:

Graph showing the derived demand for labor

Product market Labour market

Q

P P

Q

S

D2D1D1 D2

P1

P2

Q1 Q2

The growth rate of employment between 3rd 2003 to 1st 2004 The growth rate of Employment between 3nd 2003 to 1st 2004

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

Industries

Empl

oym

ent c

hang

e(no

. of p

eopl

e)

Import and Export industries

Wholesaling, Retailing, Catering andHotel industries

Real estate and Business serviceindustries

Construction industry

Public administration Education、 、Medical treatment Other Health care、and Welfare service industries

Others

綜合住戶統計調查按季統計報告書

Private consumption expenditure

Census and statistics department/Hong Kong Statistics/Private consumption expenditure /:

Labour market (low technique’s job)Wage

P2

P1

Q1 Q2

D1 D2

S

Comparison of Hong Kong

AND

Macau

Why we choose Macau forcomparison?

Hong Kong Macau

Mark six and horse racing

CasinosEntertainment

Shopping

Theme park

Art and culture

The aims of visiting

Quality Tourism Services Scheme (QTS)

Stable exchange rate to mainland

The Hong Kong Disneyland and the Ocean Park

The Fisherman’s Wharf

Culture and arts were well promoted

Government allocated little on Culture and arts

Visiting, shopping and playing in the theme parks

Investment, entertaining in the casinos

Social Problems

Of

Barrier-free travel schedule

Disadvantages

• Illegal workers• Prostitution• Beggars

- 197 beggars in 2004

• The doubtful accounts of Hong Kong Hospital - healing patients first and then charging fees- 95 % Chinese travelers

Advantages

• Economy

• Employment

• Education

- Cantonese

- English

- Putonghua

Case Study on Disney

Positive Effect• Economy • Unemployment

Negative Effect• Hygiene

Hong Kong’s reputation

Conclusion

Conclusion

Barrier-Free Travel scheme creates prosperous tourism

increasing economic profit

Equation in accountant way:

Economic profit= total revenue – economic cost

i.e Accounting profit= total revenue – explicit cost

Comprehensive economic profit

• Considering the cost of implicit

• negative social effects derived from that scheme

• Equation:

• Economic profit= total revenues- explicit cost- implicit cost.

Other factors lower the profit

• The implement of CEPA

• HK companies expand their business in China

• Total revenue decrease

• The imposition of custom tax

• Increasing the cost of travelers

Conclusion

• Barrier-Free Travel scheme creates economic profit in the short run

• Suggestion:

• Diverse the development of various industries

The End