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Honking Harvey Norman’s Hong Kong Threat
Recent statements from Harvey Norman’s Director, Katie Page, makes it clear that the retailer is fed up with Australian attitudes, writes Chris Morley. Perhaps it’s time to show it the door?
Today, Harvey Norman Director Katie Page is quoted in mainstream media as saying that running a business in Hong Kong would be easier and if Harvey Norman did so it would be successful and other retailers would follow suit.
Page went on to attack the government about the GST low value import threshold (LVIT) stating that the GST, tariffs and compliance laws are holding local retailers back. One quote from Page in particular is guaranteed to raise a few eyebrows.
“How would you like it if overseas competitors could ship into this country and have costs of up to 50 percent less than yours, because the government hasn’t dealt with this issue?”
Is the Australian Government to Blame?
This statement appears both desperate and drastic. Are we really to believe that if our government doesn’t change the law, Harvey Norman will just pick up its bat and ball and go to Hong Kong?
Of course, governments need to stay abreast of changes in global situations and have an obligation to protect local jobs, promote local industries and ensure adequate collection of taxes to provide necessary services, but generally speaking government should stay out of the businesses’ way.
The GST’s application on items over $1000 purchased from overseas is not the prime cause of retail woes and I am always amazed at the attention this one issue receives. Online sales in Australia amount to six percent of total retail, and of that six percent, less than 30 percent goes overseas (according to the NAB Online Retail Sales Index). This means a total of less than two percent of retail is going overseas – is this really crippling the industry like we are being told?
Current Factors Affecting Australian Retail:
- AUD is currently trading above parity, making overseas items cheaper
- The internet has created many options for consumers
- Local service is still preferred than buying offshore
- Many consumers will research online then buy in store
- Online retail is best accompanied by in store offers as well aka ‘omnichannel’
- Service and engagement are still vitally important to retail success
- Collecting GST on imports under $1000 costs more than it would collect
There’s the Door…
Harvey Norman’s recent advances in online is to be commended, but the latest comments in the media appear extreme, and unlikely to win public support after announcing a net profit of $172.5 million recently. The current government and the coalition would also be unlikely to touch this issue given the financial strains already on households; a perceived extra cost on households never goes down well before an election.
Does Harvey Norman really want the government to step in and would it actually move operations to Hong Kong if there’s no intervention on GST? Even if the government amended the legislation (which I doubt they will), it wouldn’t solve retail’s woes.
What will the consumer reaction be to these outrageous statements from Harvey Norman? I can’t help but wonder if the brand’s tagline, ‘Go Harvey, Go!’ is soon to be used against it.