THERE is a sashay to Hong Kong that any city would envy; an indefinable halo of worldliness, a surefootedness in what it wants and has to offer, and a hedonistic glorying in being consumerism's poster girl.

Sitting at Cova Caffe at Harbour City on a Saturday afternoon, I watched Hong Kongers enter the brand-name shops. The same shops that normally languish at Singapore's Ngee Ann City.

I watched them try. I watched them buy. And buy some more.

Maybe it was the frenzy. Maybe the prices. Maybe peer pressure. But overnight, I was converted from a mid-priced to a high-end shopper.

In just three days, I had bought a Prada bag, a couple of Hugo Boss shirts, and an Agnes B carry-all. My excuse: They were all on sale.

But then everything in Hong Kong is on sale. Every corner and crevice into which a cash register can be jammed is yet another shop.

About 60 per cent of the products in supermarket chains such as Wellcome are on sale. Every store sign, display and promotion is a contrivance to make you feel you are about to score an unbeatable deal.

At 121ha, Hong Kong Disneyland is just one per cent of the size of Florida's Disney World and Disney's smallest theme park, but it boasts one of the biggest selections of merchandise.

Space is a powerful metaphor in the tiny island of 6.8 million people, who mostly live in 'shoe boxes' of about 600 sq ft each.

As shopping districts go, Causeway Bay recently leapfrogged the Champs Elysees in Paris to charge the world's second-highest rentals after New York's Park Avenue.

Rents, which sank into a funk together with the Hong Kong economy in 1997, have shot up twofold in the past two years. Sai Yeung Choi Street in Mongkok, famous for high traffic and electronics shops, fetches rentals as high as HK$800 (S$168) per sq ft per month - more than three times the price of a top spot on Orchard Road.

Yet Hong Kong retailers are rarely heard whingeing about labour and rental costs, or the copycats next door.

Most, like Mr Vincent Fang, 62, owner of garment manufacturer Toppy and retailer of brands such as Jessica, Episode, Colour 18 and Weekend Workshop, just get on with it.

A Hong Kong legislator representing the retail functional constituency, a professional and special interest group, he says the only way to win is by running faster.

'Because designs are so easy to copy, you've got to keep ahead of the curve. You can't go to a lawyer to sue everybody. You can only go to your design house to ask for more designs,' he says.

These stacked odds have only made young designers like Kathy Mac, 25, fight harder to peddle their wares in ever-shrinking, cubicle-sized shops in the Island Beverley shopping centre at Causeway Bay. Just three walls of mirrors, two racks of clothes, and a sheet that doubles as a changing room costs more than HK$20,000 in rental each month.

That is probably why Hong Kong, long used to such high stakes, is still holding its own, despite living beside the world's biggest bargain basement.

Despite China's rise and rise, Hong Kong has defied doomsday forecasts by growing its retail pie.

Last year, it recorded 23 million visitors, an increase of 7.1 per cent from the previous year, and a 6.8 per cent surge in retail sales.

TRADING UP

IT HAS done this by refusing to low-ball on price and by going decidedly upmarket.

Hong Kong Tourism executive director Clara Chong says: 'There's a recognition we're no longer the cheapest in the neighbourhood. We're now focusing on value for money.'

Throughout the city, trading up is the new game.

Hong Kong budget brands like Giordano, U2 and Baleno, have all spun off classier, pricier, more-adult versions of themselves - Giordano Ladies, UWomen and Baleno Attitude. Moving up with their target customers, who have started working and can afford better fabrics and cut, these step-up stores offer well-cut, monochromatic working clothes starting from about HK$200 for a blouse to HK$1,000 for a dress.

Besides protecting their own market share, trading up has also allowed these retailers to transcend the 'cheap-items, no-service' business model to offer better service for moderate price items.

The Giordano Ladies store at Pottinger Street, for example, is as chic and minimalist as DKNY down the road.

When a pair of trousers we want is out of stock, the salesgirl sprints to another branch to get a pair without our having to ask and returns, panting, five minutes later.

Even at the low-end, Hong Kong's largest supermarket chain, Wellcome, has trained its staff to recommend the right wine for whatever else you buy for dinner.

At high-end stores such as Harvey Nichols and Joyce Boutique in Central, the salespeople's smiles still do not quite meet their cold, sharply assessing eyes.

But service has definitely thawed since the Sars epidemic of 2003.

Hong Kong's accreditation body, Quality Tourism Services Association, was strengthened in the same year to handle complaints of shoddy service.

To differentiate itself from its neighbour, Hong Kong has also repositioned itself as a No-Fakes haven. It has so far made more than 200 merchants sign a No Fakes pledge. At Temple Street's Ladies Market these days, there is an uncomfortable hush whenever a tourist asks for copy watches or bags.

A brave vendor confides he 'no longer dares' to display product catalogues because of constant checks by Customs and Excise officials. The only fakes you do see, notes Ms Pamela Chen, chief executive of Hong Kong's Consumer Council, are those that are 'misspelled deliberately and bought knowingly'.

FLAGSHIP FLURRY

FOR now, Hong Kong is in the business of selling assurance. The currency it banks on is trust - especially for the droves of Chinese tourists who flock there to buy daily necessities like baby milk powder and shampoo, because they have no confidence in what lurks inside the tins and bottles back home.

Mr Fang notes that these Chinese tourists even cart home Chinese medicine from Hong Kong chain Eu Yan Sang. 'They have no quality assurance in China and are afraid it's not the real thing. That has been keeping us alive,' he says.

Hong Kong is also pitching itself as an incubator of new brands and a showcase for global retailers hoping to do business in mainland China. The theme of its latest shopping festival lays out its stark ambition: Showcase Of The World.

What it wants to be seen as, Ms Chong says, is a 'land of gold', able to support, nourish and prosper new brands. It has already made some headway.

According to Mr Fang, department store owners in China now travel to Hong Kong to see a flagship store before giving the go-ahead to bring in the brand. 'If there's no flagship store in Hong Kong, it's not considered a brand,' he says proudly.

Now that most of Asia already has its own fleet of brand-name stores, Hong Kong is upping the ante by rolling out bigger, bolder, ritzier stores, flagships that offer dazzling displays, the full merchandise range and rare items.

Its array of such flagships includes Gucci, Armani, Dior, Celine, Fendi, Hermes, Prada, YSL and Ferragamo, with more to come.

MEAN MALLS

ASIDE from strategy and smarts, what props up Hong Kong's blinking billboard as Asia's premier shopping destination are Hongkongers themselves.

They are sophisticated consumers who lap up advertisements, understand brand values and embrace new products.

Ms Chong says: 'There is enough critical mass with high spending power prepared to pay a premium for the newest, the latest, the hippest. Hongkongers want to be seen with and be associated with new things. They are very forward-looking.'

To stand up to such evolved consumers, retail management has evolved to a science in Hong Kong. The retail sector pushes itself relentlessly, in terms of product range, service, added-value, training programmes and privilege cards.

Singaporean Leng Yen Thean, 33, who is assistant general manager of Harbour City, Hong Kong's biggest shopping complex with more than 700 shops, gives an insight: 'Landlords in Hong Kong are very aggressive. Our job is not just advertising and promotion but to ensure the right trade mix and to actively scout for emerging hot names to bring in.'

Competition is intense with at least five Ngee Ann City-scale, high-end malls in the game - Harbour City, Pacific Place, The Landmark, ifc and Times Square.

There are also new niche contenders such as Kwun Tong's APM Shopping Mall, an edgy spot for the young that stays open until 2am and has TV sets in the toilets. There is also a 1.2 million-sq-ft shopping arcade called Megabox coming up in Kowloon Bay next year.

Beyond roping in sought-after tenants, the malls insist they sell only the latest season, the full range of merchandise and throw in a few rare collector's items too.

'In Singapore, brands mostly sell their classic lines,' says Ms Leng, who has worked in sales, leasing and property development positions in Hong Kong since getting a land-management degree in Britain.

'In Hong Kong, we make sure they only sell the latest, the newest seasonal collection. Our benchmark is Europe; that the stuff you can get in our store has just hit the shelves in Europe. We make sure what's on our racks is something desirable. We want people to come back at least twice a year, not just once every three years.'

The malls track their retailers' monthly sales figures - poor performers are counselled - and mystery shoppers go out twice a year to check on service standards.

There is a stringent vetting process for window displays. If the stock is not refreshed often enough or the windows are dressed the same way too long, the tenants get a pep talk. Leases are renewable upon a full-scale store renovation once every two years.

'In Hong Kong, everything is about looking new or you're yesterday, sorry,' Ms Leng says unapologetically.

It is this whole carefully calibrated frenzy and obsession with newness that makes people fling caution and money to the wind.

It makes a visit to the island a transformative experience because you start thinking about renewing your wardrobe, changing your hair colour, sprucing up. You also take temporary leave of your senses, which is what all good mall managers work towards.

Ms Leng admits: 'For people to really spend, a lot of it is actually impulse 'I-have-to-get-this-now' buying. When people become sensible, money never leaves their wallet.'

And practically everyone finds it hard to resist the fresh-faced glamour of Hong Kong. According to 2004 surveys, 83 per cent of 21.8 million visitors spent most of their time there shopping, working up an average tab of HK$4,478 (S$940) each.

That is more than Singapore's 8.3 million visitors in 2004, who spent an average of S$754 each.

These days, forget the cheap guide to Hong Kong. One of its latest marketing angles is a pampering guide, featuring the most luxurious in restaurants, spas and stores. What Hong Kong really wants is to be remembered as that giddy girlfriend with whom you had such reckless, mind-blowing fun - a little expensive, but worth it.

Its next goal is building brand loyalty with visitors.

'We want you to feel like you're here to see an old friend, not just buy something. A friend who can introduce you to a good deal,' says Ms Chong.

Ahhh. Hence my recklessness. I must have thought I was safe among friends.

WHERE TO GO

• Fa Yuen Street
  Make your first stop the nameless No. 145 shop with stashes of Abercrombie & Fitch, Hollister, Tommy Hilfiger and Polo Jeans overruns for HK$40-HK$80 (S$8-S$16) and sweaters for HK$150.
   
  Other cheap finds excavated along the street: Diesel, Miss Sixty, True Religion, Marc Jacobs, MaxMara and Seven jeans. Only hitch: No trying on, and limited sizes available.

•  

• Horizon Plaza, 2 Lee Wing Street, Ap Lei Chau
  If designer togs are your thing, make a trip to this cluster of outlets housed in flatted factory buildings.
   
  Drop in at Lane Crawford Warehouse (25F) for Kate Spade bags and Theory shirts, Space (Room 2F) for Helmut Lang and Prada clothes, and Joyce Boutique (2102) for Coach bags and Jil Sander suits.

•  

• Harbour City, 3-27 Canton Road, Tsim Sha Tsui
  Hong Kong's biggest shopping centre is a vast temple complex to the island's chief deity: consumerism. It has about 700 shops, including 50 restaurants, two cinemas, a 65,000-sq ft Lane Crawford flagship and boutiques like D&G and Burberry.
   
  There are 20 roving 'customer care ambassadors' helping anyone who is lost, a baggage drop for tourists doing last-minute buying on their way to the airport and a hotline for complaints.

EXPERT SAYS

'Hong Kong is the clear winner because it knows what it wants, which is to be a retail leader through staying relevant. Its strategic planning, aggression and innovation are awesome.
 
It does not focus on tactical issues like retailers elsewhere do, or whine about labour and rental costs. It understands competition from Asia, especially China, and chooses a strategy to set itself apart. When the big brands came to most Asian cities, it upped the ante by going bigger on flagship stores that boast store ambience, size, merchandise and service.
 
It sells only the latest merchandise because it understands the need to stay fresh and the power of impulse buys.' -- Dr Lynda Wee