Claw crane shops, where customers lower a grabber to try to pick up a prize from a glass box, have seen a surge in popularity in Hong Kong.
Some of these shops offer premium prizes such as iPhones, and others operate around the clock.
Running claw crane arcades can be very profitable. The machines typically bring in traffic by themselves. They don’t need to be in prime locations, and that means huge rental savings for operators.
Since these shops have change machines and cameras, they can remain unmanned and open for 24 hours. That means cost savings and higher efficiency.
Based on the experience of operators in Taiwan, claw crane shops can have a gross margin of over 80 percent.
Given the gaming nature of such shops, operators have to obtain two licenses, Places of Public Entertainment Licence and Amusements with Prizes Licence. These licenses are approved by different government departments.
The business must also obtain approvals from the Buildings Department, Fire Services Department and Electrical and Mechanical Services Department.
Such licenses and approvals are difficult to obtain. Which is why many claw crane shops are operating without proper licenses. If caught, operators pay fines, which they consider as part of the basic costs of running the business.
The most common type of prize is stuffed toys. While most people know they can get these things from Taobao for only a few dollars, they still want to try their luck and skills at in these shops, largely for the thrill of winning. It’s almost like lottery.
Lots of youngsters are attracted to these shops, but fans are not limited to young people. Even those who shun gambling may have no problem with claw crane shops.
This article appeared in the Hong Kong Economic Journal on May 8
Translation by Julie Zhu
[Chinese version 中文版]
– Contact us at [email protected]