23 July 2019
Mainland consumers will demand better-quality and more personalized products as they become affluent and more sophisticated. Photo: Internet.
Mainland consumers will demand better-quality and more personalized products as they become affluent and more sophisticated. Photo: Internet.

How entrepreneurs find opportunities in a slowing China

While analysts are debating China’s slowdown and arguing whether the country will experience a soft or hard landing, the thoughts uppermost in the minds of entrepreneurs are quite different: How to navigate the macro challenges and identify the still promising parts of the economy.

Good times or bad times, big tech firms are always pushing the boundary.

Alibaba, for instance, has done very well as it ventured from e-commerce to new areas like internet finance. Elsewhere, real-estate titan Dalian Wanda is actively pushing into new growth areas such as sports and entertainment.

In Hong Kong, it is this same logic that is driving appliance maker German Pool and its boss Edward Chan.

Chan says he remains upbeat about the mainland market.

“As living standards improve, mainland households may no longer be satisfied with entry-level products. They will start to look for better quality alternatives,” Chan told Hong Kong Economic Journal Monthly.

“Just like in the past, we were happy with Nokia handsets, but now people want Apple and Samsung.”

Looking beyond the headline GDP number, we can see why Chan is so confident.

Although China’s growth rate fell below the 7 percent level last year for the first time since 1990, spending of the 1.3 billion consumers grew at a double digit pace, a very encouraging big picture.

Consumer spending topped 30 trillion yuan last year, a huge number by any standard and making the market an irresistible prospect for any overseas manufacturer.

Growing incomes and rising consumption are expected to underpin the retail sector in coming years.

Consumers will want better, more personalized products. They will also be more brand-sensitive.

Other than products, services like travel, dining, entertainment and education are seen as particularly bright, high-growth spots. Health and culture-related offerings will also be in demand.

Chan believes the quality perception of “Made in Hong Kong” products is his best calling card.

His business in China got off to a slow start, but the 2009 global financial crisis offered a big break to German Pool.

Given the weak overseas demand during that time, Beijing urged makers to focus on the domestic market. Meanwhile, a number of food safety scandals also broke out at the same time. All this helped Hong Kong-made products become much sought after.

Chan’s business is now fast expanding in China. As a trial, German Pool joined the Alibaba Singles’ Day carnival for the first time last November. Sales reached several million yuan that day, reinforcing his optimism.

Chan went to great lengths to protect his brand allure. His company provided franchisees intensive training in product features and sales techniques in order to ensure a standard service to customers.

The company has invested heavily in a new plant in Foshan’s Shunde district to ride the consumption wave.

“Sales in China are now less than half the size of that in Hong Kong, but I am hoping one day they will be ten times larger,” Chan says.

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EJ Insight writer

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