Retail Business in Greater China vs. U.S.
This week, we talked to Johanna Chan, the Greater China distributor of Ril Creed, a Tokyo-based handbag brand. Not only did she introduce Ril Creed from Tokyo to the biggest department store in Hong Kong earlier this year, Johanna also launched their products 2 months ago in Taiwan. How did she manage to expand so quickly in such a short period of time? Having studied and worked in the US, Beijing and Hong Kong, Johanna has offered us some insights into the retail business in Greater China.
Hilton (Bindo): How did you get into the retail industry and decide to introduce Ril Creed from Tokyo to HK?
Johanna: I started as a consultant when I was in Boston so I learnt retail management when I was in the States. When I returned to Hong Kong, because my family business is in the handbag manufacturing sector, I helped them connect different handbag companies together. Ril Creed was interested in expanding outside Japan, so we negotiated with them and got the distribution rights to distribute their products in the Greater China Region – the mainland China, Hong Kong and Taiwan.
Hilton (Bindo): What’s your next step after Hong Kong?
Johanna: We started launching our products in Taiwan 2 months ago in major department stores in Taichung and Taipei. It’s been doing pretty well. Next year, we are opening a flagship store in Tokyo.
Hilton (Bindo): Congratulations! That’s great to know that. I guess this question will be interesting to our American readers. I know that you had studied and worked in a number of places. How does retail in the US, Beijing and Hong Kong differ?
Johanna: I would say the biggest difference is the customer preference – what they actually like in terms of handbag fashion, colour, size and style. They are very different across the regions.
Hilton (Bindo): What about the way the retail industry works across different regions?
Johanna: From what I know, our partners in department stores in Taiwan and Tokyo use conventional point of sale systems that connect to the department stores. For us in Hong Kong, although our store is located inside a department store, our iPad POS system (Bindo) is absolutely independent from the department store, giving us flexibility to set up our own point of sale system. The advantage of this is that it gives us a lot more room to gather more useful customer data and understanding consumer preferences better.
Hilton (Bindo): I see. What’s the difference in terms of the general trend between the US and Greater China’s retail industry?
Johanna: In the States, e-commerce is growing at a much faster pace than Hong Kong and the mainland China. And also in the US, retailers are mostly independent online stores rather than online department stores although those department stores are shifting online too. But for Hong Kong, it’s still a very saturated market for brick-and-mortar stores so we focus a lot on in-store retail rather than online shops.
Hilton (Bindo): Interesting. But do you see an increasing trend of e-commerce in Greater China area?
Johanna: Definitely. More in the mainland China than Hong Kong though.
Hilton (Bindo): Really? I didn’t know that.
Johanna: Yes. But in the mainland, people use the biggest platforms like Taobao and Tmall instead of going on independent sites to shop. In Hong Kong, I don’t think the major online fashion sites have generated traction for fashion products.
Hilton (Bindo): What do you think is the reason?
Johanna: I would say it’s because of the difference in market saturation between the mainland and Hong Kong. Think about the number of stores in a given area in Hong Kong, we have way more brands and stores in Hong Kong than the mainland. People can easily get to the stores anywhere. So, they would rather go to the store, touch and feel the products instead of finding them online. Other than that, people here in Hong Kong are not used to transaction other than Paypal and big online fashion sites.
Hilton (Bindo): I see. What are the biggest changes you have seen over the years in the retail industry in Hong Kong?
Johanna: It definitely got a lot slower because fewer Chinese tourists came to Hong Kong. Also, the Occupy Movement has really hit the retail market in Hong Kong badly. We weren’t the only stores affected by this – you can see that sales revenue of Sogo dropped 46% during those 2 to 3 months even though they said the number of tourists remained constant. But we have seen a little improvement after the movement. This year, I would say the drop in the number of tourists has hit the retail market really hard in Hong Kong.
Hilton (Bindo): Yeah, the Movement definitely had some impact. Can you offer some advice to people who want to do retail business in the Greater China region?
Johanna: Sure. Definitely get started early with finding a good location first because location is the most important in the retail industry. Then you have to find a good team as soon as possible. And finally picking the suitable technology for online and offline retail is crucial as well.
Hilton (Bindo): OK. Location, team and technology. Let’s talk about Bindo POS! How’s our point of sale system helping you these months?
Johanna: Bindo streamlines a lot of processes. We use the point of sale system for inventory management, sales, customer relationship management and human resources management. And because it’s an iPad POS, it saves us a lot of space too.
Hilton (Bindo): Cool. What about the sales reports? Do you use them?
Johanna: Yes. We read the reports on iPad and iPhone. Bindo is great because we can see the real-time reports and we don’t need to back them up because they are cloud-based. And all our board members can see the real-time reports anytime and anywhere.
Hilton (Bindo): Great! I am happy you like it. Thank you very much and I wish you and your business great success.