Hat firm shrugs off anti-Japanese sentiment
Mainland Headwear to cash in on trendy cartoon characters
Mainland Headwear Holdings is planning a marketing campaign for hats and accessories featuring Japanese cartoon characters in the mainland, despite the wave of sometimes violent anti-Japanese demonstrations sweeping the country.
The company has taken a 51 per cent stake in a venture with Hong Kong-based Promotional Partners Worldwide to design, make and sell products bearing well-known Japanese cartoon characters such as Hello Kitty, Shinkansen and My Melody in the mainland.
Copyrights to most of the characters are held by Japanese firm Sanrio, which has licensed global distribution rights to Promotional Partners.
Mainland Headwear deputy chairman Pauline Ngan Po-ling dismissed the recent anti-Japanese protests as temporary, saying they were unlikely to have a significant impact on its plans.
'This is a short-term problem,' Mrs Ngan said. 'We are optimistic for the long term on our Japanese business in China.'
The company has three Sanrio stores in Shanghai, Shenzhen and Beijing, said Mainland Headwear chief executive Peter Ho Hung-chu, and none had encountered problems.
'Hello Kitty is popular in China.'
Other Japanese businesses in the country have not been so lucky.
Nine Japanese companies, including Asahi and Ajinomoto, have been blacklisted by the China Chain Store and Franchise Association, which accuses them of supporting an alleged downplaying of Japanese atrocities against Chinese citizens during the second world war.
Nonetheless, Mr Ho predicted that the Sanrio business, which started this year, would contribute 5 per cent of Mainland Headwear's turnover by the end of this year and would break even in two years.
The company's turnover grew 18.6 per cent to $557.47 million last year while net profit increased 24.9 per cent to $83.66 million.
There were plans to open four more Sanrio stores in the mainland this year, Mr Ho said. The company would invest $30 million in the joint venture.
The company's business is dominated by the manufacturing and trading of hats, which accounted for 99.3 per cent of revenue last year.
However, retailing would account for 10 per cent of the firm's revenue this year, said Ngan Hei-keung, chairman of the company.
In the Kitty
Mainland Headwear Holdings
2004
Net profit: $83.66m
Revenue: $557.47m
EPS: 29.4 cents
Turnover by business segments in 2004 (2003):
Trading of headwear and other products: 55.4 per cent (57.8)
Headwear manufacturing: 43.9 per cent (42.2)
Retail: 0.7 per cent (n/a)
Year ahead:
Opening four more Sanrio stores in the mainland, including in Shanghai and Beijing.
Will invest $30 million in joint venture to design, manufacture and sell Sanrio products in the mainland.
The Sanrio venture is expected to break even in two years.
