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Hong Kong Luxury Sales Explode on Mainland Tourism

HONG KONG ( TheStreet) -- Canton Road sounds like the name of a commercial hub in old southern China before it was renamed Guangdong and the roads began turning into flyovers. You could imagine people crowding around for steaming pork buns, squawking chickens and chilling chats with fortunetellers.

Canton Road is in Hong Kong, a reservoir of Cantonese culture with an overlay of British laws and city planning. But most of the people who shop there come from mainland China. They throng the outlets of Burberry (BRBY.L), Christian Dior (CDI.PA), Gucci (GUCG) and Louis Vuitton (MC.PA). It's not just window-shopping.

As a result, fast-rising rents in Hong Kong's Causeway Bay shopping magnet have surpassed those of former top-ranked Fifth Avenue in New York, per findings released this month by property consultancy Cushman & Wakefield.

Who but the world's leading brands could afford to sustain there?

Tourism is all but synonymous with shopping when it comes to mainland Chinese in Hong Kong. With China on a campaign to double people's incomes from an average of $4,940 by 2020, the city that already sits comfortably as an Asian financial center is just going to grab even more money from its bigger-than-big brother to the north.

Put simply, the brands sold on Canton Road will rake in more from Chinese tourists. The Nielsen Co. says those shoppers tend to have above-average incomes and ration out their spending with an average trip bill of $1,548. Of that, 59% goes to shopping that's so intense that the last purchase may be an extra suitcase.

I spent part of an evening on Canton Road earlier this month to see how this works -- and why, given that you can get the same stuff all over mainland China.

Mandarin Chinese was the only language I heard along the festively lit street near the harbor of Kong Kong's vast Kowloon district. Groups of 20-some friends and families with infant children lined up 10 to 20 apiece, and in high spirits, at Hermes and Prada, which apparently don't want their fashion shops to get overcrowded.

I also met a storybook family patriarch who leaned against a post outside the shops with a flotilla of shopping bags. The women in my family are all inside, he said, smiling with pride that they could afford it all (consider China's legacy of poverty).

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