Why HK manufacturers are better than their mainland rivals

November 18, 2015 06:05
Richard Chan, a supplier of Christmas trees and accessories, says Hong Kong manufacturers provide better services to foreign buyers than their mainland rivals. Photo: HKEJ

Hong Kong manufacturers that operate production lines on the mainland are facing tough times due to intensifying competition.

However, they still hold an advantage over their mainland counterparts, said Richard Chan, a supplier of Christmas trees and accessories. 

As long as Hong Kong industrialists stick to what they are good at, get themselves prepared for new opportunities and manage their own assets well, their prospects for making a fortune remain bright, Chan said.

"Compared to Hong Kong manufacturers, our mainland counterparts are usually sluggish in doing things. Apart from being less quick-witted than their Hong Kong competitors, mainland manufacturers are often considered less trustworthy by foreign customers, as many of them are obsessed with making quick and easy money even at the expense of quality," he said.

"For example, mainland manufacturers may sell the same products to customer A and customer B at the same time, giving customer A the impression that the products are not tailored to their needs. In contrast, Hong Kong manufacturers can always tailor their product design according to the needs of specific customers, and keep them informed of the latest market information, so that our customers always know what’s hot and what’s not in the market."

Chan insists on keeping the exhibition room for his products in Hong Kong in order to protect the intellectual property rights and interests of his customers.

“We must make sure we always hold the initiative when it comes to product design. If we allow our mainland partners to take control of our exhibition room, chances are they will just copy our design and then sell them to everyone.”

Apart from looking after the interests of customers, another key to success for Hong Kong manufacturers is innovation and creativity.

"Hong Kong-designed"

In fact, the “Hong Kong-designed” brand would never have earned its worldwide reputation if it had not been for the innovation, creativity and resourcefulness of Hong Kong manufacturers.

It’s become almost a routine for Chan to travel every November to European countries like Britain, Germany, France, Greece and Italy with some of his staff to visit major customers and discuss with them the latest market trends.

Then they decide on the main direction of the products for the following year.

He would also visit major supermarkets in these countries to get a first-hand experience of the latest customers’ taste.

“Our design is often very popular among small customers. As far as big customers are concerned, they often prefer to use their own design, since most of them have their in-house designers, and we always respect their choice," said Chan.

"However, it doesn’t necessarily mean we wouldn’t put forward our own design for their consideration, as it is a way to demonstrate our professionalism.”

According to Chan, one weakness of mainland manufacturers is that they continue to focus on cutthroat pricing, and product quality is often not given priority.

As a result, it has become such a deeply entrenched belief among foreign buyers that “if you are looking for cheap products, mainland manufacturers are the answer, but if you want to buy high-quality designer products, then you should go to Hong Kong companies”.

Therefore, Chan said, Hong Kong manufacturers must maintain their existing advantage over their mainland competitors because they are quick learners and closing in fast.

"Some mainland manufacturers have already learned the importance of customer service. They are beginning to visit their overseas customers regularly and take pictures of different products around the world for their reference in order to enhance their own design capabilities."

Customers always come first

After all, he said, "customers always come first” is the universal key to success in the business world.

“Even to this day, I am still keeping business relations with the customers that I got to know when I was still working as a junior employee. I have known many of them for over 20 years, and one reason why they are willing to do business with me for such a long time is because I don’t mind getting the short end of the stick,” he said.

Under most circumstances, European customers tend to be more loyal while Americans are usually more calculating, Chan noted.

Following the 3-percent depreciation of the renminbi a few months ago, some of Chan’s overseas customers who had already placed their orders began to ask for further discounts.

Chan said he is fine with that, as long as it would ensure a good relationship with them.

“As the RMB has depreciated, some buyers might expect a rise in their buying power, and it is understandable that they want a bigger discount. In these cases I often take the middle course in my replies. The important thing is, you must always let your customers know that everything is open to discussion and negotiation.”

Having worked in the Christmas gift industry for over 20 years, Chan basically knows everything about this business backwards.

However, the only thing that still worries him today, as it always did over the past 20 years, is weather.

If it's snowing heavily in Europe this winter, and most families there are unable to go to supermarkets due to bad weather, then the unsold stocks that have accumulated may lead to a fall in the number of new orders in the following year.

On the other hand, sales of Christmas decorations are usually good during economic downturns, because most families stay home for Christmas in order to save money.

Best food for customers

In order to make a good impression on his customers, Chan usually treats them to a nice dinner when they are on business visit to Hong Kong.

He said he often brings his foreign customers to Dragon Inn, a Chinese seafood restaurant in Tuen Mun. The restaurant has long been famous for its seafood dishes and was already a favorite dining place for movie stars back in the '70s.

Another favorite is Inagiku, a Japanese restaurant at the Royal Garden Hotel in Tsim Sha Tsui East. His European customers just love teppanyaki, or Japanese barbecue.

As for his local customers, Chan always treats them to Caprice, a Michelin two-star restaurant at the Four Seasons Hotel.

He used to bring his customers to Lei Yue Mun for seafood, but the lack of parking space and fierce soliciting from restaurants put him off.

Chan's own favorite dish is stir-fried eggs and bitter melon. Bitter melon has a special meaning for him because it is often used as a metaphor for “sweet moments that come after hard times”, which is exactly like his life story.

High-end restaurants don’t usually serve stir-fried eggs and bitter melon so he orders the dish when dining at the canteen of his own factory on the mainland.  It's both delicious and healthy.

This is the last in a two-part series on Hong Kong manufacturers. This article appeared in the Hong Kong Private Banking Journal on Nov. 18.

Translation by Alan Lee

-- Contact us at [email protected]


Raymond Young: Let the youth pursue their dreams

Chief reporter at EJ Insight