Date
26 September 2017
Lam Wai-chun has been called the bad boy of Hong Kong retailing because of his aggressive business strategy but some of his rivals are picking up his ideas. Photo:HKEJ
Lam Wai-chun has been called the bad boy of Hong Kong retailing because of his aggressive business strategy but some of his rivals are picking up his ideas. Photo:HKEJ

How a communist factory boss became Hong Kong king of snacks

In his office, a portrait of Chairman Mao Zedong adorns the wall.

If that’s not enough to underline his communist leaning, he proudly admits to being a follower of Mao’s early teachings.

That aside, Lam Wai-chun took the capitalist high road to become Hong Kong’s king of snacks.

Lam is founder and chairman of CEC International (00759.HK).

He used to run a factory that counted Nokia as one of its clients.

When the 2008 global financial crisis struck, he was forced to downsize, cutting his manpower more than half to 4,000 workers.

The experience made him realize he needed to go into another line and retailing came to mind.

He had a ready-made sales force and was eager to help his employees find opportunities.

“If they had retail experience, it would be easier for them to find other jobs,” he said.

Lam moved quickly. The decision was made in April 2010 and by July that year, the first shop was up and running.

The staff adapted fast. Rather than designing industrial systems, IT guys switched to creating retail systems. The purchasing department that was handling industrial materials was now dealing with snacks.

Today, Lam’s 759 Store chain sells everything from cosmetics to personal care products and snacks.

The group has 230 Hong Kong outlets, some of which are specialty stores selling specific lines.

Lam built the business on price advantage — he is able to undercut rivals by cutting out the middleman, directly sourcing products from Japanese wholesalers.

“I’m a rule breaker. I will keep on revolutionizing,” he told HKEJ Monthly.

In a sector dominated by a few local tycoons, 759 Store had a rough start.

“Just a few wealthy guys serve Hong Kong people’s daily needs,” he said.

“They own most of the shopping malls and shops.”

Against a backdrop of competitive price fixing in the industry, Lam wanted to create a niche by selling goods at cheaper prices.

Lam figured that his margins could go up to 40 percent if he imported directly from wholesalers. “I became pretty sure my operation would be profitable,” he said. 

The Fukushima nuclear disaster in March 2011 was a turning point for 759 Store.

Lam said many snacks importers turned to Taiwan and East Asian countries for supply because of fear about radiation.

Instead, Lam bet on Japanese food, convinced die-hard fans would continue to buy regardless of radiation concerns.

Sales surged and the business rapidly built market share two months after the tsunami.

Lam is expanding into household products and toys. Other new offerings, including wonton noodle soup, baby products and bakeries, are in the pipeline.

But at the top of his game, Lam is more cautious than excited.

“My employees are becoming more ambitious with the success of the company. They keep asking me to expand. It’s a dangerous time when everyone thinks  running a business is easy,” he said

“We have to keep innovating, so that we won’t be carried away by our success.”

The group’s latest strategy involves selling rice and cooking oil online.

“These are big markets. Customers can order them online at a discount and save all the hassle of carrying home these heavy groceries.”

The aggressive pricing strategy has earned Lam the nickname “bad boy of the retail industry” but his rivals are picking up a few of his ideas.

Supermarket chains Park’n Shop and Wellcome are doing more direct sourcing rather than relying solely on local agents.

Lam is applying Mao’s successful fighting tactics to his business and learning more as he goes, albeit with a little more deliberation.

“I don’t want to be overwhelmed by success,” Lam said.

If all goes well, he plans to retire in four years when he is 60.

– Contact us at [email protected]

RA

EJI Weekly Newsletter

Please click here to unsubscribe