A business that thrives even in these dark days

October 02, 2019 10:52
Wawa Planet has closed a deal to rent a three-storey property on Percival Street in Causeway Bay. Photo: Wawa Planet/Facebook

The start of the National Day "Golden Week", normally a time when mainland tourists pour into Hong Kong's shopping districts in full force, saw 30 shopping malls and 47 MTR stations shuttered on Tuesday.

Instead of the tourists, anti-government protesters and riot police filled the streets, turning them into one big arena of violence, enmity and rage.

And with an 18-year-old student shot in the chest by a policeman at close range, the anger and anxiety gripping our city will most likely persist in the days ahead.  No one can say when all this turmoil will end.

Businesses from retail to dining are facing their biggest challenge in decades. But ever the optimist, we always see a silver lining on the dark cloud.

Last week, for example, claw machine operator Wawa Planet closed a two-year leasing deal for a three-storey, 11,600-square-foot prime property on Percival Street in Causeway Bay.

The monthly rent of HK$480,000 is 60 percent more than fashion retailer Bauhaus paid for a short-term tenancy but 40 percent lower than the HK$800,000 Fortress agreed to pay back in 2011, according to Hong Kong Economic Journal.

It will be the third outlet of Wawa Planet, which claims to be the largest toy crane operator in Hong Kong. The arcade game firm first opened in Mong Kok, then launched a second store in Tsim Sha Tsui at the end of last year with 100 claw machines.

There are several reasons why the arcade game has been a booming business in Hong Kong. First of all, it is a popular pastime among youngsters, thanks to its promise of giving out big and colorful dolls, and sometimes even an iPhone handset, to lucky players.

Players, of course, believe they will get something back – especially in front of their friends - after about 10 attempts, but many actually try many more times than that without success.

Even if they end up with nothing, the thrill of anticipation and the thought that they'll be lucky the next time are enough for them to come back again and again.

In a way, it's gambling, which is why an operator must have a gaming and entertainment license. But business is so good that claw machine owners are willing to pay more than HK$15,000 per day for rental.

Second, unlike, say, a jewelry store or a pharmacy, the business doesn't rely on tourists. After all, tourists would probably find it hard to carry a big doll back to where they came from.

Third, one doesn't need a huge staff to make it run, which means an operator doesn't need to worry about rising labor costs. The top three items on the cost list are rental, prizes and electricity.

To enhance the investment yield, some operators would sublet the machines to others, thereby reducing their business risks as well.

In these difficult times, Wawa Planet has shown that money can be made with a simple business model. It's not the end of the world, after all.

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EJ Insight writer