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- The Young Post inancid MARCH 2017 ま年年 年事時書 5 ---- MONDS 40% THE NUTTER THE NUTTER Peanut Butter C NUTTER 0 COMPANY COMPANY ale Chocolate & Cocoend MP NY Natural Handcrafted Nut Buttery Natural Handerafted Nut Buttery ral Hande rafted Nut uttery & Proudiy Handeralt ABC Spread Hazelnut / Almond Almax■.Brasil lana Coskew with Dark Chocolate ■npaoou uga ■8专？ gten free COVER STORY Weekend markets boost local food sales
圜银泰城 糯米滋 CONTENT COVER/LOCAL FOOD Weekend markets boost local food sales 4 RETAIL Chinese e-tailers turn to offline market amid slowing growth 7 LOGISTICS Shadow Express taps into express industry from university 10 SERVICE ..... Postnatal care service in demand while lacks regulation 12 RE-INDUSTRIALIZATION Hong kong on its re-industrialization way to diversify growth 14
FOREWORD
Local handmade food is gaining
popularity in Hong Kong. Not
only the getting healthier eat-
ing habit of citizens, weekend
markets which offer discounted
rents also help boost the sales of
healthy local food.
Young people love to shop online
and lifted the growth of express
services. Founders of Shadow
Express tapped the niche market
by providing students special-
ized express service with deliv-
ery stations in eight university
campuses in the city. Their ideas
added new possibilities to the in-
dustry.
E-commerce platforms need a
new boost to grow further. 1'hey
are now stepping into offline
market amid the 020 trend and
mainland e-commerce giant Ali-
baba has already led the move by
acquiring offline stores.
The demand for postnatal con-
finement nannies is high in the
city. Young couples usually ex-
pect these nannies to have expe-
rience and professional knowl-
edge. However, Hong Kong has
no rules to regulate trainings
and the quality of these service
providers, bringing up certain
problems.
To diversify the local economy,
the government has put rein-
dustrialization into its agenda.
Before enjoying the benefits in-
cluding creating job opportuni-
ties, small-sized firms are facingobstacles during the process of
reindustrialization. The govern-
ment has to optimize its policies
to facilitate the development.
Finally, welcome to The Young
Financial Post, and let’s enjoy
our stories in this issue.
Koey Yip
Sector Representative
Sector Representative
Koey Yip
Art Director
Theresa Yan
Nancy Ping
Copy Editor
Theresa Yan
Nancy Ping
Photo Editor
Jasmine Zhou
Advisors
Alison Leung
Jenny Lam
Robin Ewing
Financial Editor
Koey Yip
Publisher
Alice Lee
Editors
Koey Yip
Theresa Yan
Nancy Ping
Jasmine Zhou
Suki Kwan
Wendy Cheung
Katie To
Cindy Wong
Fion Tsui
Joyce Law
Jasper Ng
Doris Wang
Watson Tan
Pamela Lin
Emilie Chan
Kyle Tang
Suki Sin
Reporters
Annie Qiu
Jenny Zhang
Trista Shi
Howard Liu
Jimmy Ding
Only He
Jeannie Tang
Lisa Wang
Shuen Chow
Kayee Cheung
Cindy Wong
Fion Tsui
Joyce Law
Jasper Ng
Jessie Kwok
Winnie Lee
Vicki Yang
Printer
Department of Journalism
School of Communication
Hong Kong Baptist University
Email
youngfinancialpost@gmail.com
FaceBook Website
LAST ISSUE
J^{ancicilF&st
The cover story of last issue
discussed how the toys, which
act as an ’unusual invest-
ment’, bring high returns for
investors in Hong Kong.
THE STREET-FOOD TONG CHONG ST MARKET- Weekendm local fo Reporter |Jessie Kwok Editor |Koey Yip iscounted rents at weekend food markets and getting healthier eating habit of Hong Kong people drag up sales of small local handmade food vendors,who mostly operate online as they can- not afford high rents of regular physical shops. Despite of the age,more and more people desire a quality dining made with natural ingredients. However, Hong Kong people seldom know where to try or buy those products. In cooperation with Swire Property, Janice Leung Hayes, a delicacy blog- ger,said they would like to provide a showcase for locally made food and organic products by attracting ven- dors to Tong Chong Street Market. Hayes is the founder of Honestly Green, a co-organizer of the week- end market and social enterprise platform advocating local food prod- ucts and food sustainability. Weekend markets,like Tong Chong Street Market,offer a venue for local healthy food makers and sellers to gather and promote their products. “The daily sales amount has been doubled or even tripled after join- ing these markets compared to only sell my products online,"said Scott Tsue,general manager of BAGOES, an online bagels vendor, who has set up booths in Tong Chong Market and Sai Kong market. 4 tyfp.journalism.hkbu.edu.hk
OLUTION STARTS HERE arketsboost od sales The entrance of Tong Chong Street Market on Sunday morning. Tsue believed instant free tasting was one of the major advantages for joining the markets. This is espe- cially true for his bagels,which have various unique favours to choose from. He said, “Customers can try different favours and decide which bagel they like most before buying.” Tasting is impossible on online sales platforms. Another local food maker, The Nut- ter Company that sells handmade nut butters online, also participat- month in Hong Kong.Its co-found- er, Simon Yuen, pointed out that pop-up markets allowed the com- pany to collect feedback by talking to its customers. This is important for natural goods producers to im- prove their recipes. “Based on our online order plat- form, we knew that some custom- ers have purchased our products online after coming to the market,” said Yuen. New trend of local natural food Markets for handmade products are not uncommon in Hong Kong but more and more local organic and natural food makers and sellers are participating in weekend food mar- kets,especially in Christmas and Lu- nar New Year holidays.During last Christmas,there were more than 12 street markets in Hong Kong.Most of them were a once-a-time market while some of them were seasonal outletssuch as Tong Chong Street Market,which lured a few thousand visitors every weekend. tyfp.journalism.hkbu.edu.hk 5
6 tyfp.journalism.hkbu.edu.hk Weekend markets target green food lovers Weekend street markets can be found across Hong Kong. Every district has unique groups of customers, allowing vendors to choose their location of stores. But still, foreigners are the most common group of customers as they love green and organic food and are willing to pay more. Levain, a local natural bread seller, targets high-income customers with its no additive bread pricing at $70 to $200 per loaf. Owner of Levain said he chose markets located in the areas with a lot of office ladies, high-income residents and visitors, such as the Central and international school fairs. Its average daily sale at weekend market is about $20,000, depending on the popularity of the market. The Levain owner added, the bakery required three to four extra workers from Thursday to Saturday for preparing the weekend market sales. Low rents attract local premium food vendors High rents in Hong Kong discourage local food makers to open physical shops, but weekend markets with lower rents provide them an opportunity to join the physical retail market. For instance, the discounted daily rent of Tong Chong Street Market is $200, as organizers aim to promote healthy food by offering local makers a venue with affordable rents. Due to high rents and the lack of sales outlets, people could hardly buy quality local food in stores, said Hayes. Expansion of food market The Tong Chong Street Market could accommodate 40 vendors each time but demand was much higher than supply, leaving a long waiting list behind, Hayes added. Honestly Green aims to be an incubator of environmental friendly startups to nurture more local food manufacturers. It hopes to extend the opening days of the market from only Sundays to also Saturdays. But when asked about its plan to extend the market to other districts in Hong Kong, Hayes showed her concerns about the high cost. She believed such project is a big investment for property firms although her partner, Swire Property, shares the same vision of promoting food conscious in Hong Kong. I Owner of Levain with his freshly-made bread at the market.
hkieca Hong Kong Internet and e-Commerce Association logo of HKIECA(Hong Kong Internet and E-commerce Association) Chinese e-tailers turn to offline market amid slowing growth Reporter | Only He Editor |Watson Tan hina's e-commerce companies have been expanding its offline sales networks by major acquisi- tions in recent years amid slowing growth in online sales. Analysts say,e-commerce companies need to develop their brick-and-mortar business,instead of replacing it, and contend for offline resources in the future as online and offline sales are inseparable. Already holding a 28 percent stake in mainland retailer Intime Retail Group (1833.HK), China's e-com- merce giant and Nasdaq-listed Al- ibaba Group (BABA) aims to take full control of the department store operator through privatiza- tion. In January, Alibaba offered HK$19.8 billion in cash to take the Hong Kong-listed Intime private to expand its offline business.The group's statement said it was help- ing transform offline retailers with Alibaba's large consumer popula- tion and abundant data and techni- cal support. However, it might be the slowing down in online busi- ness that urged e-tailers to secure offline resources,which they have been competing against. “Online sales have reached a peak years ago, so it is normal to see the growth rate slow down,suggest- ing customers' enthusiasm in shop- ping online may have declined,” said Luke Chu,chairman of Hong Kong internet & Ecommerce asso- ciation. tyfp.journalism.hkbu.edu.hk
8 tyfp.journalism. hkbu.edu. hk E-commerce needs a new boost It is not the first time Alibaba reaches out to retailers to open up sales channels. On Singles’ Day in 2015, Alibaba partnered with over 180,000 offline stores to get through both online and offline sales channels. The gross merchandise volume for Alibaba’s shopping platform TaoBao surged 32 percent on Singles’ Day in 2016, but the year-on-year growth still lagged behind 2014 when it jumped 59.7 percent. Last November, the Hangzhou-based e-commerce giant bought 32 percent shares of supermarket chain Sanjiang Shopping Club. What Alibaba valued were the retailer’s widespread store net- works and rich operation experience, it said in a statement. With over 160 physical stores, Sanjiang would share its large supply chain with Alibaba to provide more fresh food in return for the financial and technical support from the e-commerce giant. Moves of e-tailers developing offline business happened in rapid succession over the past few years as e-commerce companies saw signs of saturation in online sales. The growth of online sale of all Chinese e-commerce slowed continually to 23% in 2015 from 26.7% in 2012, data from the mainland consulting company iResearch showed. “Offline and online sales are like two halves on either side, thus isolating them will not work,” said Wu Yiran, an account executive at iResearch. The corporation with offline stores does not mean e-commerce companies are walking backwards, instead, it shows the balance of an ecosystem in the business world. “The corporation not only improves online stores traffic, but acts as an inevitable process of offline retailers to be digitalized,” Mr. Wu added. Offline stores may share its customer information with e-commerce companies that will channel its offline customer stream to online platforms and expand sales. HI A streetscape of Nanjing street in ShangHai, many real stores with high visitors flow rate. Stock Price of ALIBABA (BABA) ‘StockPrice (USD) ■ The share price of Alibaba rebounded last November and this January as it invested in two large offline retailers.
Offline shopping still dominates Over 80 percent of consumer con- sumption occurred offline, Wu said, “Offline sales accounted for about 85% last year. Even though ecom- merce is developing fast, the sales online will not go beyond 30% in the future.” Due to the mature of- fline store operating system, the predominant role of offline shop- ping may not change in a short time. Meanwhile, Chu added that customers sometimes found the online customer experience unsat- isfactory, for example, the quality of goods was not that trustworthy. Not only e-commerce giants ex- panded offline business, but young ones like Three Squirrels, the larg- est pure-play food e-tailer, found the advantages of physical stores. It decided to open more than 1000 hypostatic stores in 2017. A customer service supervisor of the company, who declined to be named, said the idea of opening of- fline stores had been around since the beginning of 2016, “because physical stores can help customers taste the products free in a way of enhancing customer experience and displaying features of Three Squirrels that cannot be easily pre- sented online.” The food e-tailer now has two existing stores in An- hui and Zhejiang province. Limitations on HK expansion However, e-commerce’s develop- ment in Hong Kong is not as fast as in mainland China, many peo- ple are quite confused about the shipping clauses of Taobao. Also, people still trust the goods sold in physical shops more where prod- uct quality is more assured. Chu said that there were two main rea- sons for the less-developed e-com- merce, "First of all, the high den- sity of physical stores in Hong Kong greatly fulfilled people’s daily needs. Also, Hong Kong is an international free trade zone so there's no necessity for local people to shop online to save tax cost.” When mentioning the difficulties in combining online and offline sales, Wu said offline sales involved interests of different parties, such as product suppliers, intermediate traders and retailers themselves. When moving business online, the distribution of profits and the maintenance of relationships need to be considered. "Because offline companies are not wholly owned by Alibaba, they may lack of trust in each other and not commit to share resources. The process of two working together is also a game course," Wu added. promoting food conscious in Hong Kong. The gate of Three Squirrels' real shop in AnHui province. tyfp.journalism.hkbu.edu.hk 9
Shhadow Expiress taps into express industry from university 咩話？酋重 yingzisudi.com 1毫hkd／kg！ 最息浜曲日期：10月1日-11月1日 商務合作： 蒙生97925703 ／ 番生51606558 Advertisement of Shadow in Tai Wai.(Provided by Shadow) Editor |Jasper NG Tith the constantly increasing a small express company is target- ing ar to tap its growth. AYAYYTN Shadow Express,a market,is modifying the service of ve price order to provide a competitive p /. and special ty students,a major crowd of China online shoppers in Hong Kong. Founded by two graduated master students from T sity of Hong Kong, Shadow hit the market with surprisingly low freight ordinary express firms like Sf-express. For the sake of re- ducing delivery costs,Shadow Ex- press set up serv ervice points in several designated locations instead of pro- viding home delivery service. Targeting at university students, Shadow Express has set up deliv- ery stations in 8 universities up till now. Bill Leung,a university stu- dent, explained why he chose Shad- ow Express rather thnan Sf-express. “It is convenient enough that I can receive my purchase in campus, so I don't neec home delivery service.And Shadow Express provides nice service i cluding receiving goods punctually every time,"said Leung. As a co-founder of Shadow,Allen Yang Yu-ren, mentioned how he started the business: “At first, I no- ticed that universities students shop online most.But they have to suffer livery serv service.Why not all students just pick up their goods on campus? It's both cheap and convenient.” Yang also revealed that their busi- ness model is quite similar to car- pooling service which provided by Didi -- a mainland-based con that recently acquired Uber's busi- ... nes The new business model cut its cost by sharing the order of one customer with others, the same as carpooling which people share their journey.Different customers' goods are first delive livered to the compa- ny's warehouse in Shenzhen,then the company re-pac ackages them as a is different from traditional express companies that every order is sepa- rated with each other. The company got their private eq- uity funds soon after Yang and his partners took part in several in- 10 tyfp.journalism.hkbu.edu.hk
novative technology competitions. All start from scratch, the founders open up t their website,employ a full- in Shenzhen and Hong Kong. It was tough at first especially I knew nothing about how to operate a lo- gistics firm. We nearly prepared started,said Yang. The business came into being ir tember 2016 and,surprisingly,active users rapid- month hs,which was beyond Yang's expectation. “I think the reason underlying is that we have an accurate target,which means we know what university students want."said Yang. “Even for myself, it was hard to be- lieve the rapidly rising amount of users."saidI Yang. Understanding students' need is one of the Shadow advantages, which allows them to provide S rvice to these customers. Meanwhile,Shadow Express has also launched a registration system. The company,then, can analyze people's buying habits based onthe CO ountless information database so as to improve its ser ervice, as well as cus e.Recently, Shadow Express found out several ral kinds of nost.The new finding leads the company to negotiate w Il the products directly with a lower price on Shadow's platform, which is be- yond its own express business and up a new business for future development. Interaction, including both online and offline, is another point that Yang emphasizes. On one hand, they use social media to communi- cate w with customers to make their customers fully aware of the pro- cess of transfer. On the other hand, when it comes to festivals, they send wishes or gifts to their custom "People expect more beyond ex- press the goods,"said Yang. In Yang's blue print, to create an ef- ficient logistics chain is the very first anta limits its customers. sity studen “For further development, based on the Shadow,we are going to develop online shopping platform. Actually e already signed a few agreements pliers whose products 4 are welcome amon students and allowing them to sell their products n our platform. By doing so, stu- dents can get a discount on buying these products,"saidI Yang. 节 暨 求创新大奖 诸葛i 年轻人的酷玩内容文化品牌 ,the founder of Shadow, in an inno- vation awards. (Provided by Shadow) The cor arehouse in Sheung Shui. (Provided by Shadow) tyfp.journalism.hkbu.edu.hk 11
PosEmEal care service in demand while lacks regulation Doula Easy is one of post-natal care service agency websites. Mothers are free to find a post-natal care nanny here. The postnatal demandnannies of domiciliary remains high, even the birth rate in Hong Kong has declined since 2011 but there is no regulation to ensure the quality of these services. "Sitting the month”, is a Chinese tradition that postpartum women need to stay indoors for at least 30 days and observe a strict regimen to nourish their bodies. Postnatal nan- nies are usually hired for helping postpartum women’s body recovery and caring of newborn babies. Hong Kong's birth rate in 2014 was 8.6 births per 1,000 people below the replacement rate, indicating that the city has one of the lowest birth rate in the world. However, the demand of confinement nan- nies has been rising. Isaac Chan, the founder of “Doula Easy ", an online postnatal care service agency list- ed two reasons. One reason is that an increasing number of couples in Hong Kong prefer one child so they put all their concerns and love into that child. In this case, hiring postnatal nannies to look after their babies is a good and secured choice. The other reason is that with the improvement of people’s health consciousness, young people trust more in certificates, they hire post- natal nannies to help lactating wom- en get recovered rather than asking their parents or relatives for help. Mr. Chan said that postnatal nannies were popular because of their pro- fessional knowledge and experience. Nannies will tailor make recipes and regimes for different mothers based on their unique physiques and phys- iological status. They need to com- plete courses and tests offered by Employees Retraining Board (ERB) for certificates. In addition, nannies who charge high prices, for example around $50,000 a month, have to work for 24 hours a day while some inexperience nannies only charge around $12,000 a month for 8 hours, according to Mr. Chan. CoCo Wong, an expectant mother has pre-contracted a confinement nanny three months before giving birth. She considered experience and the number of certificates the nanny owned when she chose a con- finement nanny. "I think more expe- rienced nanny charges higher, so I plan to spend $50,000 per month to hire one,” she said. Reporter | Jeannie TANG Editor I Pamela LIN 12 tyfp.journalism.hkbu.edu.hk
for them in Hong Kong. They are free to find jobs through agencies or by personal contacts and some of them may fabricate their resume S. The validity of reference letters is one of the problems as it woul be difficult to cross check with for- mer employers if they do do not leave mothers do not call to account when they dis- cover the nanny's reference letter is fabricated. They won't bother to deal with legal issues and will just fire the nanny and find a new one. In mainland China,the administra- tion set regulations for postnatal nannies in 2015. They divided nan- nies into six levels based on their skills and experience. Nannies have ements ons and assessments to attain the highest level. “I agree to set a uni- AT0 fied regulation for postnatal nannies in Hong Kong,but it would b uld be dif- ficult,"Mr.Chan said. He thought that would be hard to investigate the misbehavior of postnatal nan- nies because some raise unreasonable complaints. Therefore, it will t tigate every complaint and affix the responsibility. Actually,people can hire 10 domes- tic workers with $50,000 monthly in Hong Kong,but many mothers,like Ms.Wong,choose to hire a postna- tal nanny for that amount c. ally,mothers will hire a postnatal nanny for one month. However,not all mothers can hire an experienced nanny, even willing to pay high price.Ms.Wong said that her friend used to hire a postnatal nanny for over$48,000 by an online forum, but the nanny's ointing. IIIA “She showed mly friend several cer- tificates and reference letters,that's why my friend hired her,"Ms.Wong said. There are no rules regulating post- natal nannies or official credential The other problem is the quality of certificates. Mr. Chan said he only es employed nannies with certificate ing Board (ERB), such as Founda- Worker Training or Found and Child Care ArT Training. Participates have ass a test after taking a 152- hour course to get the certificate. - “The test is not easy and some nan nies need to retake several times to get the certificate,"said Mr.Chan. However, there are also other post-natal care worker trainings offered by different organizations in Hong Kong. “I doubt the quality of some courses not organized by EBR.I thought some of them look like selling the certificates,"said Mr. Chan. The birt s declined as more young cou lecide to only have one child. 上／電話訂購經送貨到 tyfp.journalism.hkbu.edu.hk 13 寶通 特細相案
Hong Kong on its Re-industrialization way to diversify growth Reporter | Jimmy DING Editor I Enzo LI The economy of Hong Kong, an international financial cen- ter, has been dominated by its ser- vices sector that accounts for more than 90 percent of the city’s gross domestic product (GDP), while the government is promoting reindus- trialization on hopes to diversify its economic development. However, “Hong Kong government still focuses more on developing property industry instead of rein- dustrialization. They need to put more efforts on high technology in- dustry such as making more appeal- ing policy to attract professional staff, provide free-facilities for hightech companies to use,” said Dr. Monique Wan, associate professor of economics in Hong Kong Baptist University. “Reindustrialization in Hong Kong still has not been really implement- ed. Policies should be taken into action from the government,” she added. The government has provided a to- tal of HK$8.2 billion to expend the Hong Kong Science Park, construct a data technology hub and develop an advanced manufacturing center, as Financial Secretary Paul Chan reiterated the plan in the Budget 2017-2018. "The structure of Hong Kong’s economy is simple, and reindustrial- ization can increase its real econo- my," said Jimmy Ng Wing-ka, mem- ber of Hong Kong’s Legislative Council. Manufacturing industries only ac- counted for 1.2 percent of Hong Kong’s GDP in 2015, down from 2.7 percent in 2006, according to gov- ernment data. This sector contrib- uted almost 30% to Hong Kong's economy in 1970s before most local factories relocated to mainland Chi- na for cheap land and labour. According to an executive of Hong Reind ustrialization would diversify eco- nomic growth Kong Science Park, the city’s rein- dustrialization process would focus on the development of new and technological sectors. As former Obama administration economist Gene Sperling said, the increase of one manufacturing job can bring 1.6 jobs in other indus- tries. With the setting up of new technology companies, people who are good at technology, industry de- sign, engineering would be in great demand. “High skilled manufacturing should be led by professionals in technol- ogy and science fields,” said the science park executive. “The gov- ernment’s policy is good for compa- nies to make profits. Hong Kong re- spects intellectual property, and has a stable financial market extremely suitable for trial production in a small scale.” 14 tyfp.journalism.hkbu.edu.hk
Challenges for fresh tech companies Although the advantages of rein- dustrialization are obvious, there are still obstacles for small enter- prise and new set-ups to expand. "Though the government subsi- dized a part of our renting fees, we still need to pay a lot,"said Lv Shuy- an,PR practitioner in the Realmax Technology Ltd, producer of aug- mented reality products and Apps in Hong Kong Realmax is currently facingwith high cost. “The rent and advertis- ing cost are really expensive. The investing environment is also tough for technology companies to sur- vive,"said Lv, "Investors still main- ly focus on traditional industries and hesitate when considering new industries investment." Besides those existing problems, Ng said that “how to allocate talented people,optimize policies and put resources reasonably in order to re- duce the cost of reindustrialization" are things that government needs to think seriously about. Hong Kong Science Park would re- build two Industrial Estates located in Tai Po. Meanwhile, it has raised capitals for providing equipment in its data center and companies in Tseung Kwan O Industrial Estate, making things on the reindustrial- ization track. "Reindustrialization is a way that Hong Kong government must take. With the slow recovery of global economy, developed countries are in favor of protectionism,"said Ng. “Hong Kong's businessmen need to make good use of mainland's re- sources and mainland market.” “In addition, Hong Kong govern- ment needs to follow one belt,one road policy,lending a hand to these countries. Reindustrialization is a global trend,and Hong Kong needs to fit in. How to diversify our local economy? That is one of the most concerns for us,"he concluded. ■(Top) Kwun Tong Industrial Centre Phase td0 3 is loca nwun long Road. The main business is printing. 3期 ■(Bottom-left) The inside sight of Kwun Lase. Tong Industrial Centre Phase (Bottom-right) Hong Kong Science Park located in Pak Sh the boundary of Sha Tin District and Tai Po District. tyfp.journalism.hkbu.edu.hk 官塘工業中心