George Chen

By George Chen
The opinions expressed are the author’s own.

When you walk around Hong Kong’s Central commercial and business district these days, you may notice a number of stores are holding “removal sales”, which means they can no longer remain in the same location. The reason? In most cases, just blame soaring rents.

Many analysts have forecast declines in residential and commercial property prices in Hong Kong for next year, although at a stable pace rather than a sharp drop. This may be true for some suburban areas where purchase options are more plentiful than those in downtown areas, but until that happens, prices are likely to keep rising, at least for the rest of the year.

A couple of years ago, mobile phone industry leader Nokia took a moderately sized space on Russell Road in Causeway Bay just opposite Times Square, one of the busiest shopping districts in Asia, for its flagship store in Hong Kong. Local media said the store used to be one of Nokia’s busiest in Asia, thanks to mainland Chinese travelers. But the good old days are going to end soon.

The Hong Kong Economic Times reported on October 27 that British luxury brand Burberry had signed a new lease with the owner of a site currently occupied by Nokia. Burberry is said to have agreed to pay HK $6.5 million (about US $836,600) per month for the two-floor 5,200 square foot space,versus the HK $1.8 million that Nokia is paying.

When the news came out, the reaction from the market was quite naturally, “Wow”. One reader on Sina Weibo, China’s most popular micro-blogging service, wondered: “How many coats and bags will Burberry need to sell to cover the monthly rent?” In Hong Kong, a coat or bag at Burberry usually sells for about HK $10,000-15,000. You can do your own calculations.

Burberry is not alone.

Bidding wars for prime retail locations in Hong Kong have been heating up in recent months. Some analysts call this a typical “changing hands season” for Hong Kong’s high-end property market. The only key to victory is price.

Asia’s leading fashion brand Shanghai Tang opened its first shop in the mid-1990s on the ground floor of the historic Pedder Building on Central’s Pedder Street. The same location will soon be home to a new name.

U.S. fashion brand Abercrombie & Fitch, known for welcoming customers to its flagship store on Fifth Avenue in New York City with muscular male models, will reportedly pay about $1 million per month for the location, 2.5 times more than the rent Shanghai Tang paid.

Despite the surprisingly fast rising rents in Central, Shanghai Tang, now owned by Richemont, one of the world’s leading luxury goods groups, is keen to stay in the Pedder Building, but has decided to move upstairs where rents are cheaper, local media reported.

Luxury brands are rushing into Hong Kong to tap the fast-growing demand from middle-class consumers from mainland China who swarm to Hong Kong to buy luxury products at prices far cheaper than in mainland China. U.S. upscale bag maker Coach is said to be planning to float shares in Hong Kong in the wake of Prada’s successful listing in the financial centre.

Local Hong Kong people and even some government officials and legislators in the former British colony have already complained about the quantity of money flowing into Hong Kong from the mainland, pushing property prices higher than the city’s towering skyscrapers.

Perhaps, the fast-growing retail rents willingly paid by global luxury brands can also be blamed on the luxury-loving mainland consumers who are becoming their best customers.

George Chen is a Reuters editor and columnist based in Hong Kong.

Photo: The closing Shanghai Tang store in Central, Hong Kong, seen on Oct. 26, 2011. REUTERS/George Chen

By George Chen
The opinions expressed are the author’s own.

It could be the perfect story to show how China Inc and its American partner can work together for a win-win result, but Chinese consumers are having second thoughts on this.

Earlier this year, upscale U.S. handbag and accessory maker Coach said it planned to list in Hong Kong to reflect the growing importance of China’s luxury market. Coach didn’t give a timeframe for the IPO plan, but one thing is fairly certain – before Coach launches its IPO, its local partner in the small city of Dongguan, near Hong Kong, will aim to rise $200 million first.

The company, Sitoy (Dongguan) Leather Products has hired Bank of America-Merrill Lynch for a Hong Kong listing by the end of November. In IPO marketing materials distributed to potential investors, Sitoy described itself as the largest handbag OEM (original equipment manufacturer) in China, although it didn’t name any of its clients.

However, Chinese netizens quickly found out from the company’s website (www.sitoy.hk) that one of Sitoy’s OEM clients is Coach, a  New York-based brand popular among China’s fast-growing middle-class. In China, Coach prices are far lower than those for top-tier brands such as Louis Vuitton and Gucci, although it is still considered a luxury brand among consumers in the world’s No.2 economy.

“Why not buy expensive Caoch bags directly from the Dongguan factory? I believe the cost must be very cheap,” said one Sina Weibo user in response to the news. Foreign brands — not only luxury fashion brands but also consumer electronic makers — have many OEM partners in China, although they are often reluctant to identify them to avoid such unsatisfaction from local customers.

In a company newsletter dated May 31, published on Sitoy’s website, the top headline is about senior executives of Coach visiting the factory and expressing satisfaction with Sitoy’s products for Coach. It’s now seems likely that at least some of Coach’s handbags are designed in New York but manufactured in Dongguan.

Coach was already in trouble after Chinese media pointed out that Coach handbags are much more expensive in China than they are in the United States, sometimes with a difference of hundreds of U.S. dollars. When the news about the OEM factory in Dongguan started circulating on China’s Twitter-like micro-blogging service Sina Weibo, some consumers felt they had been cheated after spending thousands of yuan on a bag that was probably made in Dongguan, a city whose reputation is usually linked with cheap labor costs.

On Sitoy’s website, the company expresses pride in being an example of the small city’s success as the world’s factory for shoes, garments and so on. Sitoy is in a position to list in Hong Kong, largely thanks to cheap labor costs and strong OEM demand from global clients such as Coach. But the case of Sitoy and Coach that is causing such frustration among Chinese consumers also raises the question of how luxury brands can keep selling at high prices while reducing costs.

Other fashion and leather brands including Salvatore Ferragamo and Burberry have said they do not plan to manufacture products in China, although Burberry has chosen other countries such as Turkey to make some low-end products such as T-shirts.

George Chen is a Reuters editor and columnist based in Hong Kong.

Photo: A Coach store in Hong Kong’s Central financial and business district, seen on Dec. 6, 2008. REUTERS/George Chen

By George Chen
The opinions expressed are the author’s own.

There’s a new problem with the “one country, two systems” policy for Hong Kong and mainland China — the appreciation of the yuan can ease inflation in mainland China but not in Hong Kong.

In Hong Kong, the former British colony that returned to Beijing’s hands in 1997, things unfortunately work the other way round.

Peter Wong, HSBC’s Asia-Pacific top boss (and widely considered the most handsome banker in Hong Kong) said at a forum in Shanghai last week that because the Hong Kong dollar is pegged to the U.S. dollar, whose value is falling almost every day, food prices in Hong Kong are set to increase as Hong Kong needs to pay more to import food products from the mainland.

Former Hong Kong central banker Joseph Yam, now a senior representative of a Beijing-backed financial academy, added that he believed the Chinese government would let the yuan rise further and relax some policy restrictions.

So, a stronger yuan is in no doubt, and food prices in Hong Kong are certain to rise.

You may not care much about Hong Kong. When big investors are keen to trade stocks and make deals in mainland China, they of course pay more attention to Beijing’s monetary policy. Hong Kong? It’s more like the naughty child of Uncle Beijing these days.

But the naughty child can be a challenging problem and it’s becoming more rebellious. One of the world’s leading financial centers, these days it is also known as a city of protests, especially at weekends. In 2012, we will see a transfer of power in Beijing as well as in Hong Kong. And we will see elections in Taiwan and the United States. What a year!

Some investors think the potential for H-shares is much greater than A-shares, but political risks for H-shares could be greater if Hong Kong loses its political stability and thereby financial stability, thanks to a stronger yuan.

And if Hong Kong becomes unstable, Beijing will become naturally nervous.

George Chen is a Reuters editor and columnist based in Hong Kong.

By George Chen
The opinions expressed are the author’s own.

First, we were worried about inflation in mainland China. Now it seems Hong Kong’s inflation situation in coming months looks no better. I blame the worsening problem partly on the city’s first-ever minimum wage law, effective May 1.

As I study international political economy at the University of Hong Kong, my professor and classmates do know I am a free market fan and don’t believe a minimum wage will help Hong Kong’s economy and boost employment, as some Hong Kong lawmakers assert.

The sad truth is I went to buy my favorite Pearl Milk Tea on May 1 and found it was 2 Hong Kong dollars (about US$0.26) more expensive. Then I went to check out McDonald’s — prices for some of its burgers and drinks have also risen about 2-3 percent. And last night, local media said taxi and tram fares were going to rise in the former British colony too!

A friend of mine reported that the property management fee for his apartment building was going to increase about 30 percent, mainly because of the minimum wage law. Otherwise, the tenants may have to decide whether to lay off some staff to keep the management costs unchanged.

Local media said some small and medium-sized enterprises also planned to reduce headcounts in response to the minimum wage law. If so, Hong Kong’s economic growth may also take a hit.

Before the minimum wage law went into effect, some pro-democracy Hong Kong lawmakers insisted it would protect grassroots workers and help them fight inflations, but they may have forgotten that workers are also consumers.

Today they work and are slightly better paid, at least HK$28 per hour now. Tomorrow, they are going to buy food, ride the subway, and so on, and the price levels of all these services and products are apparently going to rise even faster than before, partly thanks to the rising human cost.

Why do I care about this? In short, I believe that what is happening in Hong Kong could happen in mainland China.

We’ve learned that several state-owned enterprises plan to increase staff wages in response to a call by Beijing for “redistribution and balance of social wealth” and to help the working class become more prosperous. Will people actually feel poorer in terms of individual purchasing power even though they are better paid?

About 450,000 people working for local restaurants in Wuhan, a second-tier Chinese city, now expect to see pay rises after recent tough negotiations between the local government and the city’s workers’ union, the official China Daily reported. If successful, those restaurant workers will earn at least 1,170 yuan (about US$180) a month. I hope the food prices on the restaurant menus won’t change too much.

If mainland inflation really climbs to 6 percent or more in the coming months, as some analysts have warned, I don’t think a national pay rise can match the pace of inflation growth. Meanwhile, we face the risk of seeing retail prices rise because of rising costs, including staff pay.

If consumers offer the final solution for companies to cope with the pressure from pay rises, will you be happy to see such pay increases take place? The dilemma between pay raises and worse inflation may be worth some serious consideration for investors’ money-making decisions.

George Chen is a Reuters editor and columnist based in Hong Kong.

Photo: A cabbage seller smokes a cigarette as he waits for customers at a fruit and vegetable market in Beijing in this December 17, 2010 picture. REUTERS/David Gray

By George Chen
The opinions expressed are the author’s own.

We’ve been talking about accelerating inflation for some time, and it has resulted in another tough issue for the government to address — with much care — the growing income gap between rich and poor.

Income disparities in some affluent cities such as Hong Kong have apparently reached a critical point, with frequent protests in the former British colony. Last weekend, a group of the so-called post-1980 generation of young people went to Central to protest the wealth imbalance. They even attempted to break into Cheung Kong Centre before the police arrived and stopped them.

They viewed Cheung Kong Centre, home to many large banks like Barclays Plc and BNP Paribas, as well as the offices of Li Ka-shing, Asia’s richest and also the city’s most powerful man, as a symbol of the imbalance. I was told by friends in mainland China that a similar anti-rich atmosphere is also brewing fast in big cities like Beijing and Shanghai, where relatively poorer people are complaining about inflation, especially rising property prices and rents.

When investors feel more confident about returning to the Shanghai and Hong Kong markets as the economic impact of the Japan earthquake and nuclear crisis eases, some people predict the income gap issue may change the whole game if the central and local governments fail to address the increasing social unrest.

Does this make sense? Income gap is considered by some political scientists as one of the key causes to the recent popular revolt in the Middle East, the “Jasmine Revolution”, which already made Egypt a difference.

Local media reported that some Hong Kong lawmakers and businessmen joked that Hong Kong was “a city of protests” — in addition to the unexpected protest at Cheung Kong Centre, there were at least two other high-profile public protests in the city last weekend, potentially damaging Hong Kong’s image as a stable global business and financial centre.

If global investors lose confidence in Hong Kong, it would be certainly a lose-lose result for both the rich and the poor. Last night, former U.S. Treasury Secretary and ex-Chairman and CEO of Goldman Sachs Henry Paulson gave a talk at the University of Hong Kong. In response to a HKU student’s question, Paulson acknowledged that the income gap in the United States was also something the government needed to focus on.

Income gaps in different regions may need different solutions, said Paulson, adding that skills training and education were needed in the U.S.

However, he didn’t offer any specific advice for China. I wonder if Paulson just wanted to be diplomatic, or he may not really have an answer. He did say China’s economy was a very complicated matter and was becoming more complicated as it expanded.

The bigger the economy, the larger income gap? That doesn’t sound like a win-win deal for anyone.

George Chen is a Reuters editor and columnist based in Hong Kong. He’s also a part-time post-graduate student, studying international relations at the University of Hong Kong.

Photo: A protest sticker seen on the poster of Henry Paulson’s talk about global economy and U.S.-China relations at the University of Hong Kong on April 11, 2011 Reuters/George Chen

By George Chen
The opinions expressed are the author’s own.

These days I’m increasingly convinced that inflation is not just a China issue but a global problem and one that is becoming worse.

Yesterday when I posted a photo of rice noodles on my Chinese Twitter-like mini blogging account, I didn’t expect it would lead to quite such an active online discussion. I paid HK$16 (about US$2) for the bowl of noodles in the canteen of the University of Hong Kong (HKU). My friends from Geneva to New York to Shanghai “complained” that the price was way too cheap.

Well, the University Canteen is intended for students and I am indeed a HKU post-graduate student, part-time.

My friends in Shanghai told me a bowl of beef noodles costs about 30 yuan (US$4.6). In New York’s Chinatown, you might be charged US$4, according to a colleague, who is trying to break her daily Starbucks coffee addiction to save money in the Big Apple. Let’s face it — In many cases, a pay rise you receive won’t keep up with inflation these days. To address the problem, central bankers around the world — except the U.S. Fed — are apparently coming to a common understanding: that increasing interest rates is becoming a more realistic option.

The European Union is joining China to become the latest member of the international community to fight inflation via rate increases. The European Central Bank raised interest rates for the first time since the 2008 financial crisis on Thursday, signaling it is ready to tighten policy further if needed to help balance rising prices.

Given the big picture for globalization nowadays, the rate rise in Europe will certainly have an impact on a variety of domestic sectors in China. I believe your inbox will soon be full of research notes from investment banks helping you analyze the impact, so I won’t elaborate here.

But I do have a question for China, and maybe for Europe, too. Can rate increases really help China and the world solve the inflation problem? What we learned from the G20 meetings is that a key problem to solve  is global imbalances and there are some “imbalance indicators” that China already rejected. From a microeconomic perspective, such imbalances refer to the income gap, which rate increases don’t really help.

According to a Reuters poll of leading economists and analysts in China this week, the country is expected to see at least one more rate increase and the central bank is likely to raise banks’ required reserve ratio three times this year, possibly as soon as this month. Nevertheless, most analysts polled said it would still be a challenge for Beijing to keep its pledge and stop inflation rising above 4 percent.

This week is certainly a very busy week for China and the global market. Just one day after China’s central bank increased its benchmark lending and deposit rate on Wednesday to help curb inflation, the government announced it will raise gasoline prices by 500 yuan per tonne and diesel by 400 yuan per tonne from Thursday.

According to some research notes, after the newest gasoline price hike, retail prices for No.93 gasoline, the most commonly used type in China, is 7.79 yuan/liter, and the price level is expected to rise over 8 yuan in the coming months and may hit 10 yuan or exceed 10 yuan by the end of this year.

That is to say Chinese drivers will soon pay more for gasoline than their counterparts in the United States. Is that the price must China pay to be the world’s No.2 economy, and the price that Chinese consumers should pay for?

The news has not gone down well with everyone. One Chinese netizen on Sina Weibo, the Twitter-like mini blogging service, which is very popular in China, joked: “My feeling is that I just happened to pick up 1 yuan on the street, like a beggar, and then I was robbed 100 yuan by a policeman.”

Some analysts are starting to wonder if China’s inflation is starting to get out of control and many banks like Goldman Sachs now estimate China’s March Consumer Price Index readings will exceed 5 percent. And considering that the government felt the need to hike the gasoline price tax, April’s data may look even uglier, possibly heading toward 6 percent in terms of growth on year.

The rate hike won’t cool off growing public angers on rising property prices in China either. Most ordinary Chinese have to face the reality — if you’re not rich, you just can’t afford to buy, even if the central bank raises interest rates 10 times a year. And those who are rich don’t care how much mortgage rates are raised, they can pay in cash.

Don’t just blame China — almost the same thing is happening in the West. A friend in Paris told me prices had risen more than 50 percent from last year for some downtown properties — even faster than in Shanghai and Hong Kong.

Let’s talk about noodles again, which are certainly far more affordable to buy than a flat. If such day-to-day products are cheaper in Hong Kong than most places in mainland China, what about traveling to Hong Kong to buy your necessities if you earn Chinese currency yuan, which is growing stronger than the Hong Kong dollar, which is pegged to the U.S. dollar? If you live in the nearby southern Chinese boomtown of Shenzhen, this is already happening.

In the global battle with inflation, everybody has their own way of dealing with the situation. So I will keep going to my university for the cheap (and delicious) noodles. What about you?

George Chen is a Reuters editor and columnist based in Hong Kong. He’s also a part-time post-graduate student, studying international relations at the University of Hong Kong.

Photo: Chinese spicy rice noodles I bought in the canteen of the University of Hong Kong on April 7, 2011. Reuters/George Chen

By George Chen
The opinions expressed are the author’s own.

My readers on Reuters.com know me as a columnist who regularly writes about China and I also run a Chinese-language column, Mr. Shangkong, about Shanghai where I was born and Hong Kong where I call home now, on Reuters.com.cn, the China portal.

In fact, my day job is not just about writing columns but more about Trading China, a young and energetic Thomson Reuters project. It’s a public holiday in China today and the markets are relatively quiet, so I’d like to share something different in today’s column as I want to talk a bit about Trading China, which comprises Carmen, Joseph and myself.

Since receiving a call about a year ago from my boss North Asia Editor Phil Smith, aka “chart guru” in the Trading China community, I was quickly sent to Dubai to learn about and launch Trading China. Dubai is the place where Sex And The City 2, the movie, was not allowed to be filmed and our sister project Trading Middle East was launched smoothly.

Since then, most Trading China members know me as the man behind The Day Ahead, an email newsletter I write and send before the bell rings on the Shanghai and Hong Kong stock exchanges on every trading day. Whenever I meet our members, I’m usually  greeted with a similar exclamation: “Oh, so you’re the man who writes The Day Ahead column I see every day”. Yes, that’s me, composing about 300 emails a year if I’m not on holiday. I hope you find most of them useful. Drop me or Phil a note if you’d like to pass on a comment.

The Day Ahead is just one part of Trading China, which also consists of a real-time online forum where top CEOs and fund managers speak and a China-dedicated news site. If you ask me how we envisage Trading China, my short answer would be as a professional Facebook-like network, but by invitation only.

You may not have an opportunity to meet 150-plus trading peers together on the trading floor at the Exchange Square in Hong Kong but you can meet them all virtually with us in Trading China.

To many of you, Carmen Ng is known as the lovely girl in the chatroom and on Facebook. To be more professional, she runs the Trading China members-only web portal and keeps you up to date on the latest events, whether in China, Japan or North Korea. To those of you who attend our offline events such as the Christmas party at The Pawn, Carmen is also the one behind the camera putting together memorable video clips. Watch some video clips here.

Joseph Chaney is a Reuters journalist-turned business manager and my counterpart on the business side of Thomson Reuters, making sure our members and clients are happy with our service. Joe represents Trading China at many formal business occasions. He’s always well dressed, while I often look like a post-graduate student (in fact, I am doing a part-time master’s degree in international relations at the University of Hong Kong).

Of course, Trading China is a team project, with more than just those mentioned above. Many of them may not have the chance to meet you, but they work on the project behind the scenes, providing data, technical support and so on.

“Good morning, and good luck!” How can I forget to say this at the end of this note? You do know this line if you are already a loyal reader of The Day Ahead.

George Chen is a Reuters editor and columnist based in Hong Kong.

Photo: A giant poster seen in the subway station in Hong Kong’s Central district on December 9, 2009 Reuters/George Chen

By George Chen
The opinions expressed are the author’s own.

What might you do in the next 48 hours in China? A number of things — how about rushing to nearby supermarkets to stock up on soap and shampoo if you are a price-sensitive consumer?

No kidding!

Retail prices for those products are set to rise sharply in China from next month. At least two industry leaders — Procter & Gamble and Unilever — were reported by Chinese media to have decided to lift detergent and soap prices by up to 15 percent next month.

State television on Monday showed images of empty store shelves in some cities as residents raced to hoard P&G and Unilever products before the price rises went into effect.

However, officials and statisticians in Beijing seemed less worried about rising inflation. Last month, we heard that the spokesman of powerful economic the planner, National Development and Reform Commission, said inflation should peak in February. Then Yi Gang, deputy governor of People’s Bank of China, the central bank, assured investors that the government was confident that inflation would not to exceed the 4 percent target for the year.

It’s easy to speak but difficult to act. We know your target but the question is, of course, how will you make it happen? I mean in the market, for Chinese consumers, and not just for the sake of the statistics that are rapidly losing credibility among ordinary Chinese people as real life fails to improve.

In Hong Kong, things are no easier.

We were told by the subway operator last weekend that ticket prices are going to rise soon, again. And properties, always a concern of local residents? A new project up for sale in West Kowloon is asking more than HK$15,000 per sq ft.

I was told there is a brand new segment of potential buyers these days — rich Japanese families who have fled Japan and are now seriously considering living in Hong Kong for a while.

In Shanghai, just another financial centre, the city government yesterday finally announced a plan to control property prices. It said property price rises should not exceed the city’s economic growth this year. That still means a roughly 8-10 percent increase, despite the tough measures by the cabinet and local government.

It may be too early to say whether the inflation problem in China and Hong Kong is out of control but it is certainly approaching a sensitive level that has already affected the lives of ordinary people, and will thereby cause social unrest to some extent.

What’s your say? If you live in China, let us know how inflation has affected your life.

Update on March 30: I saw an interesting report on China’s news portal Sina.com last night — economic planner the NDRC finally commented on how some multinational corporations such as P&G and Unilever are raising retail prices for daily consumer products by up to 15 percent without notifying the NDRC.

Apparently, the NDRC feels miffed. It said the government would “investigate” such price increases. Oops! Sounds like the beginning of an interesting new drama about doing business in China.

George Chen is a Reuters editor and columnist based in Hong Kong.

By George Chen
The opinions expressed are the author’s own.

Have you had breakfast or lunch yet? In Hong Kong, I’m guessing few people are choosing sushi these days.

Many restaurants in Hong Kong, even Japanese restaurants, have been quick to distance themselves from the crisis in Japan since the earthquake as concerns about food safety are growing in many Asia-Pacific cities, including Beijing, Seoul and Sydney.

The Japanese authorities announced this week that they would widen a ban on exports of a wide range of food products from areas surrounding the earthquake-hit Fukushima Daiichi nuclear power station. In fact, even before the official ban, the health authorities in China, Hong Kong and South Korea were already monitoring all such imports from Japan.

I’ve seen a number of sell-side analysts recommend Chinese food and beverage stocks, including some fisheries, which are now expected to benefit from the Japan crisis as people turn to locally produced seafood. Australian and New Zealand seafood companies should also benefit. It sounds like a perfect time for banks such as ANZ to expand, helping Australian and New Zealand farmers and fisheries extend their reach beyond their domestic markets, turning a crisis into an opportunity.

Some Chinese brokerages called such stocks “post-earthquake concept stocks”. Have you read the story about how Chinese truck maker Sany sent to Japan their innovative truck that can shoot wet concrete several meters into the air? Sany is likely to be a typical post-earthquake star pick, as are construction companies in Japan.

It’s not a fun idea but it does make sense. After all, investors can’t just sit in front of television screens feeling sad but doing nothing. What’s your say about the post-earthquake era in Japan from the economic perspective?

George Chen is a Reuters editor and columnist based in Hong Kong.

By George Chen
The opinions expressed are the author’s own.

While the rest of the world is trying to help Japan deal with the aftermath of its earthquake and tsunami, some parents in China and Hong Kong are on a single-minded quest to buy up as much made-in-Japan baby formula as they can.

On my way to work on Monday morning, I saw a long queue of anxious-looking people in front of a grocery store. Over the following three days, the queue got longer and longer and more and more anxious.

They were all after the same thing – baby formula from Japan. This is simply because some Chinese parents believe their babies are accustomed to drinking Japanese milk and they are concerned that radiation may affect the quality of exports from Japan in the coming months.

Hong Kong media reported that retail prices for some Japanese baby formula have risen more than 30 percent this week. At present, the market price is about HK$250 (US$32) for a standard container (200g / 7oz) and some retailers are reportedly limiting purchases to six per person to avoid angering latecomers.

In this case, parents called on relatives, even elderly grandparents, to join the queue on their behalf (which works if you have many relatives and friends who are willing to help). Of course, Hong Kong parents are not alone in this concern. A fast-growing number of parents in mainland China are on a similar quest and they don’t mind paying HK$2,000 (US$256) for a round-trip ticket from major mainland cities to Hong Kong to buy made-in-Japan products.

Meanwhile, people in Hong Kong, may have to face an even bigger disappointment soon as a result of Japan’s earthquake – the possibility of property prices rising even further and faster.

Local property agents say they have noticed some landlords want to increase rents, especially in downtown areas such as Admiralty and the Mid-levels, which are within minutes of Hong Kong’s Central financial and business district, where many international banks have their regional headquarters.

Global financial firms including Blackstone, BNP Paribas and Royal Bank of Scotland are relocating foreign staff, especially senior executives, from Tokyo to neighboring bases to avoid the possibility of radiation exposure. These executives are typically asked to head to Singapore, Hong Kong and Beijing, with most apparently happier to choose Hong Kong, if not Singapore.

Rents in Hong Kong are already make the city one of the most expensive places in the world in which to live. The government has been trying to cool prices since late last year. With more rich but timorous bankers being relocating to Hong Kong from Tokyo and so far no indication of when they might return to Japan, the outlook for the property market in Hong Kong looks bullish.

I’m not saying this isn’t a positive  trend, but given what is happening to the lives of ordinary people in Hong Kong and China, the crisis in Japan is becoming a crisis for Asia, if not the rest of the world.

If the nuclear crisis cannot be contained and people lose confidence in crisis management and post-crisis protection, a chain reaction may be seen in many areas beyond dairy and property prices.

George Chen is a Reuters editor and columnist based in Hong Kong.

Photo: Policemen maintain order as customers wait outside a store called “Japanese Milk Powder” before it opens in Hong Kong March 16, 2011. REUTERS/Bobby Yip