INTERVIEW: Hong Kong catering industry faces difficult times until 2003

HONG KONG (AFX-ASIA) - The catering services industry is likely to continue to operate in a difficult environment until 2003, with the prospects that more restaurants will go out of business, Hong Kong Catering Industry Association chairman Tommy Cheung said.	    "Turnover was not too bad in January but it dropped again in February and March," Cheung said, adding that first quarter sales will likely show a high single digit, or even possibly a double-digit, year-on-year decline.	    "Under the current conditions, I don't expect the industry to recover until 2003.	    "Over the past 50 years, I've never seen the situation as bad as the current one, with a weak economy for such a long time since 1998. Generally the bad times last for about 10 months," Cheung said.	    Cheung, who also represents the industry in the Legislative Council, told AFX-ASIA that the economic slowdown in Hong Kong, the launch of the Mandatory Provident Fund and the increasing tendancy for people to go to Shenzhen and Guangzhou for their shopping is underming the whole retail sector.	    "No one single factor stands out ... all are contributing factors," he said.	    Since the official launch of the MPF in December, about 20 bln hkd has been effectively taken out of the consumer market as compulsory pension contributions cut disposable income, Cheung said.	    "That's a big hit to the consumer market, especially when many employees do not have any rises in their salary, or for most, a less than 5.0 pct increase (in salary)," he said.	    Unlike 1998 and 1999, landlords are now quite reluctant to reduce rentals, which adds to the industry's problems, he noted.	    In addition, Cheung said he is raising funds for a consultancy report to assess the potential impact caused by the proposed mandatory prohibition of smoking in public areas.	    "We don't know how big the impact will be. That's why we want ... research on that subject," he said. 

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