Market leaders adapt to a slower tempo

PUBLISHED : Saturday, 24 March, 2007, 12:00am
UPDATED : Saturday, 24 March, 2007, 12:00am

HONG KONG IS a fast-moving place where people have fast-changing tastes. To keep this fickle crowd happy, karaoke bars not only offer the latest, trendiest songs, but also the latest sound equipment, online video games and designer furnishings.

'Hong Kong people are into fads,' said Nicholas Wan Kwok-leung, director of human resources at Neway Karaoke Box, a leading karaoke chain, with 21 branches across the city.

'Customers constantly want new things, new songs and new games. We even invite Japanese designers to give our branches a facelift every two to three years to make sure people keep coming.'

Besides trying to keep up with the changing tastes of its customers, the industry had a tough time keeping up with government regulations, Mr Wan said.

The smoking ban introduced in January, for example, has meant slower business for the industry.

'We've had a fall of around 10 per cent in business since the smoking ban was introduced,' said Mr Wan.

Another leading karaoke chain, California Red, has also noticed a drop in business.

'It's hard to quantify, but we've certainly lost customers because of the ban,' said regional manager Chung Yok-ling. 'Many people like to drink alcohol and smoke when they come to karaoke, and we've lost a chunk of that crowd to bars and other places where they can smoke.'

A Japanese invention, karaoke first arrived in Hong Kong more than a decade ago and has since become a favourite pastime among the masses.

According to Anthony Lock Kwok-on, the chairman of California Red, business peaked in the mid-1990s and has been slipping ever since.

The worst blow was struck in 2003 with the onset of Sars, when people stayed away from crowded and confined space - including karaoke bars - and took to outdoor activities such as hiking and biking instead.

Although the episode is now history, the karaoke industry has never recovered and market turnover has nearly halved since its heyday.

The 2003 downturn also saw the closing of three of the five main karaoke chains at that time. 'Then it was basically a race to open as many shops and as quickly as possible,' said Mr Lock, referring to his group and Neway. California Red has 17 shops compared with Neway's 21.

Neway and California Red have been following similar strategies in more ways than one. Both choose to provide two types of products: one for the supposedly richer, working crowd, and the other for the thriftier, younger bunch.

And both companies are expanding outside Hong Kong - to Malaysia and Guangzhou.

'We are starting with Guangzhou because that market is the most similar to Hong Kong,' said Mr Wan.

The Chinese karaoke market has also stirred interest in players from other sectors. In January this year, China Motion bought 49 per cent of Grand Promise, a karaoke content administration system operator in China, for HK$240 million.

The telecommunications provider believes the purchase will serve 'to broaden its income source' and that the Chinese karaoke industry in the mainland is developing 'very quickly', according to the firm's circular to investors to justify the purchase.

Customer service is becoming increasingly important in this business to meet customers' high expectations. Gone are the days when it's enough for frontline staff to just say 'welcome' and 'goodbye', said Mr Lock.

'Now customers expect our people to proactively identify and cater for their needs.'

As for employment opportunities within the karaoke industry, a multitude of different jobs exist, from frontline and floor staff, such as receptionists and cooks, to managers and sound engineers.

Mr Wan said the company was looking for suitable candidates to fill vacancies in all areas to add to its current headcount of about 1,500.

General requirements include an outgoing personality, willingness to work hard, an ambitious mind and responsible character.

And for managerial positions, Neway asks for those with a tertiary education - a qualification in hospitality or hotel management is preferred but not essential.

California Red is also hiring and is about to launch a big employment campaign for its 'Yo Parks', a recently launched venture described as a 'new concept playground and performing platform tailored for young people'.

Karaoke employees typically stayed only for a year or two, so annually there was a staff turnover of between 20 per cent and 30 per cent. This meant the industry was continuously recruiting, Mr Lock said.

The karaoke chain planned to open more shops in residential areas across Hong Kong, such as Ma On Shan and Wong Tai Sin, he said.

The new branches aim to introduce new measures to cater for the elderly by, for example, adapting their equipment by installing remote controls with bigger buttons and a larger range of Cantonese opera songs. The firm also aims to cater more for children's parties.