Date
22 October 2017
Expensive rentals and labor shortage issues are challenges Haidilao’s Hong Kong operation has to overcome. Photo: Facebook
Expensive rentals and labor shortage issues are challenges Haidilao’s Hong Kong operation has to overcome. Photo: Facebook

Can Chinese hot pot chain Haidilao repeat its success in HK?

Only a few Chinese brands like Xiaomi, Taobao and WeChat have managed to break into the Hong Kong market, where people are still quite skeptical about the quality of products or services of mainland origin.

Haidilao, a famous hot pot chain in China, is planning to open its first shop in Mong Kok despite such negative impressions.

I’ve been to Haidilao restaurants a dozen times and I’ve had a wonderful experience every time.

In addition to its high-quality ingredients, sauces, and even utensils, its service, in my view, is almost unrivalled.

For example, in the entrance of a Haidilao restaurant, there is always an entertainment area where customers can enjoy internet access, board games and even manicure and massage services.

After being seated at the table, customers can easily find a designated, attentive waiter nearby.

There are also different types of shows, including the famous “noodle dance”, during which performers stretch dough into 10-foot-long ribbons with sweeping motions around their bodies.

Average spending for dinner is about 150 yuan (US$21.85) per head, which is on the expensive side, but many find it worthwhile for the good food and the VIP treatment.

Starting as a humble shop selling soup in Sichuan in 1994, it now boasts 150 locations in China, mostly in first and second-tier cities. The company’s sales revenue hit 5.1 billion yuan in 2015.

Haidilao started to expand overseas in 2010 and has made its way into places such as Singapore, Tokyo, Taipei, Seoul and San Francisco.

Overseas business generated 1.8 billion yuan of revenue in 2015. Average revenue per shop is seven times that of its local store.

The company listed its hot pot soup flavoring and dipper sauce unit — Yihai International Holding (01579.HK) — in Hong Kong last year. The unit reported a 45 percent profit gain in the first half of 2016.

Haidilao even became a textbook case for the Harvard Business School.

But can it clone its business format in Hong Kong, where rental costs are high and waiters are not exactly known for being helpful and friendly?

This article appeared in the Hong Kong Economic Journal on Feb. 17

Translation by Julie Zhu

[Chinese version 中文版]

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RT/RA

Hong Kong Economic Journal columnist

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