Money manager thinks out of the box
'Small is beautiful,' said British economist E.F. Schumacher in the 1970s, and whether he set about doing so deliberately or not, wealth management planner Danny Cheung has now joined those putting the famous saying to the test in Hong Kong.
Taking a leaf from the economic innovator's book, Small Is Beautiful: Economics As If People Mattered, the 28-year-old wealth manager has set up miniature 'shop fronts' of just 30 cubic centimetres in Kwai Chung Plaza.
Reasoning that budding small entrepreneurs had wares to display but not the means to set up their own stores, Mr Cheung took a lease on a 100 square foot retail outlet in the plaza and turned it into a 'super mini-mall' of 192 glass display cases.
He now rents the display cases to start-up entrepreneurs at between HK$180 and HK$850 a month depending on their location in the mini-mall and says he has half of the cases already signed up with 'tenants'.
Start-up costs for the tenants - who get to enjoy a good location with high traffic since it is next to the Kwai Fong MTR - amount to a few hundred dollars a month, Mr Cheung said, and the rental compares with up to HK$20,000 a month charged for a small shop in the area.
Lease terms are flexible and tenants can quit without penalty by giving a week's notice.
'Because it is such a small amount of money people can afford to take a gamble. They can keep their full-time jobs and give their dreams a chance to see if they can make some extra income.
'About half of my tenants are doing business for the first time,' he said.
He pays HK$20,000 a month on his lease and also pays for staff to man the site and manage sales on behalf of tenants. Tenants get e-mailed sales reports twice a month.
Goods on sale in the boxes are items likely to appeal to impulse buying by young shoppers such as sunglasses, lipstick, skin-care products, coloured contact lenses, and wigs.
With the extremely flexible lease terms, budding entrepreneurs can gain entry to the market quickly and easily instead of having to incur the HK$50,000 to HK$60,000 costs usually needed to open a more conventional store. This figure is inclusive of rental and investment in buying goods.
Whether the tenants come out on top has yet to be seen, but the venture could prove a winner for Mr Cheung.
Based on 50 per cent 'occupancy' he calculates he has achieved break-even in the first month after he opened his store last month and covered his rental.
'For now we are already making a small profit. But competition is growing,' he said.
Mr Cheung opened for business one-and-a-half months ago and the number of similar operations in the area has now risen to about a dozen compared to just a handful a few months ago.
'Recently, a shop opposite was offering its display boxes at HK$200 to HK$300 cheaper to attract tenants. There are now too many of these shops in one centre and I think those that are not well located will be squeezed out of the market,' he said.
To help his tenants generate more sales - and stay open for business and pay their rent - he has now offered to pay for the gifts that are given to customers who make purchases of more than HK$100.
Leasing of such retail-boxes catering to young entrepreneurs first grew popular in shopping centres in Mong Kok and Causeway Bay two years ago, and later extended to other locations.
Raymond Lee, an agent at Wealth Estate Agency, which focuses on leasing and sales of residential and commercial properties in Kwai Fong, said there are 1,000 retail outlets at Kwai Chung Plaza, which is known for selling trendy clothes, cosmetics and accessories at cheaper prices compared with major retail outlets.
'There are still clients looking for vacant shops and subleasing them in boxes in Kwai Chung Plaza,' Mr Lee said.
Kwai Chung Plaza is in a transport hub, which has a high concentration of workers between the ages of 20 to 30 as it is surrounded by offices, factories and even schools, he said.
'It has similarities with shopping centres in Mong Kok and Causeway Bay which draw heavy traffic of potential shoppers. That is why the concept is successful in this centre,' Mr Lee said.
Box of dreams
Budding entrepreneurs can get a start in business with an initial cost of, in HK$: $180