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Making it on the Mainland

The market potential of second- and third-tier cities should not be underestimated, according to sea  

The market potential of second-
and third-tier cities should not be underestimated, according to seasoned entrepreneurs on
the mainland

 
Hong Kong's Chow Tai Fook Jewellery Company knows all about branding on the Chinese mainland. The jeweller first entered the mainland market in 1998, and now has 1,000 retail outlets around the country. "Second-tier cities, including Changsha and Chengdu, are developing rapidly," said the company's Managing Director Wong Siu Kee. "Business opportunities in these places abound, as residents in these areas are open to new products and are optimistic about the future."

The Chow Tai Fook executive said the mainland's second- and third-tier cities are the best entry points for new businesses, to avoid directly competing with international brands. And to minimise the investment risk, Mr Wong advised Hong Kong companies to focus on the industry they are most familiar with.

Mr Wong shared Chow Tai Fook's experience at the High-Level Conference on the Mainland Domestic Market, a one-day forum organised by the Hong Kong Trade Development Council (HKTDC). The Hong Kong event, 26 May, drew

  Stick with what you’re familiar with is Chow Tai Fook Managing Director Wong Siu Kee’s advice to Hon
 

Stick with what you're familiar with is Chow Tai Fook Managing Director Wong Siu Kee's advice to Hong Kong retailers considering the mainland market

about 600 business people, eager to learn more about tapping the mainland market. With mature markets abroad still in the doldrums, the focus continues to be on how best to penetrate the massive consumer market next door. 

Representatives from Hong Kong and mainland commercial sectors, as well as mainland officials, attended the event. "As Hong Kong companies shift their focus from export to exploring the mainland domestic market, they must keep learning how to develop their brands," said HKTDC Assistant Executive Director Benjamin Chau. Many Hong Kong businesses, he noted, are setting up mainland retail channels through franchising, by opening a shop within a shop or through consignment.

Confidence Sells

Following trends is key to mainland success, says Kampery Group Chairman Simon Wong  

Following trends is key to mainland success, says Kampery Group Chairman Simon Wong

 
The Kampery Group, which owns retail chains Dai Pai Dong Restaurant and Greendotdot Shop, a health product outlet, first opened on the mainland in 1993 as a joint-venture business. At the time, recalled Group Chairman Simon Wong, new hotels and coffee shops were just springing up in Guangdong. Following that trend, the company decided to open a coffee retail chain. Its Greendotdot health chain, meanwhile, was launched two years ago, to ride on the health-awareness trend. Along with a stand-alone shop in Beijing, Greendotdot now sells at mainland department stores and supermarkets, offering more than 600 types of products.

Mr Wong said Hong Kong brands have mainland consumers' confidence, and that, he said, is integral to successful brand-building. To further earn the trust of consumers, he said, food retailers should consider acquiring quality and safety certifications, demonstrating their commitment to top-of-the-line products.

Veteran mainland entrepreneurs at the conference, meanwhile, had some insider advice on how to break into the market. Terry Ho, Chief Financial Officer of sportswear company Xtep International, recommends enlisting the help of experts based in the market.

"With different consumer preferences and tastes in the various regions, employing sole agents well-acquainted with the local market definitely helps brand development," Mr Ho noted.

Cultural Advantage

  More than 600 people attended the mainland domestic market conference organised by the HKTDC
 

More than 600 people attended the mainland domestic market conference organised by the HKTDC

Mainland consumption habits are often unpredictable, according to Wang Jian Guo, President of appliance company Five Star Group Holding. After setting up his flagship store in the city of Nanjing in Jiangsu Province, Mr Wang said Five Star was uncertain about opening a second store in the city. But it proved to be the right call. The company now has 13 outlets in the city of four million people. He also stressed that the potential of smaller cities should not be underestimated.

"Hong Kong companies have the edge over their overseas competitors in terms of understanding Chinese culture and language," Mr Wang said. "They can also capitalise on their vast experience in brand and quality management by serving as a bridge for high-end mainland brands to make inroads into the United States and European markets."  

Precisely positioning a brand is key to the success of fashion company Eve Enterprises Group, according to company President Xia Hua.

"Retailing, which is different from the export business, is about selling apparel – one piece at a time. So the formula to success is not just in advertising, but in establishing long-term relationships with our customers." She said her business focuses on tapping into customer emotions by updating their advertising messages regularly. She also noted the importance of tapping into the local culture when advertising, to influence consumer tastes.

A series of "Style Hong Kong" shows has been organised by the HKTDC to help Hong Kong companies explore the mainland retail market. Last month's "Style Hong Kong Show in Wuhan" attracted more than 300,000 visitors. Upcoming "Style Hong Kong" shows include Chongqing in November and Shenyang, in May next year.

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