Dropping student rolls slash profits for firms

PUBLISHED : Monday, 27 September, 2010, 12:00am
UPDATED : Monday, 27 September, 2010, 12:00am

Many teachers and principals are scrambling to salvage their livelihoods as Hong Kong's falling student rolls threaten to make them redundant - but they are not alone. Businesses that traditionally thrived on a large student population are also being forced to look for new ways to make up the sharp fall in profits.

Firms that produced school uniforms are diversifying, turning to workers' uniforms and even party costumes. School bus operators are increasingly transporting tourists and wedding guests. One textbook publisher is turning some of its staff members into teaching specialists.

The Education Bureau estimates the city's Form One population will fall from 75,400 in the past academic year to 53,900 in 2016-17. Across six forms, the drop of 97,600 students by 2016 will mean a big chunk sliced off the business pie.

Teachers will bear the brunt of the shrinking enrolments: 2,500 in secondary schools will be surplus by 2012, the Hong Kong Federation of Education Workers estimates.

But the falling school rolls are also creating 'fatal' shocks to other trades, according to businesspeople involved. Fast-diminishing profit margins are squeezing small players out of business.

Ben Mak Ka-lung, deputy regional director of Oxford University Press China, says the industry is reeling from these grave blows. 'The number of senior secondary publishers has been reduced from 48 a decade ago to 16 this year,' he said. 'Education reform has brought a change in emphasis from rote- to inquiry-based learning. We need to make a heavy investment to produce supplementary teaching materials to nurture students' critical thinking.

'But the bigger investment is not matched by an expanding clientele. You need to spend more money to produce a product that is bought by fewer people.'

The publisher has a third of the textbook market share, specialising in major subjects including languages, maths and science. Although it sells to about 900 secondary and primary schools, Mak says the profit margin has been cut by 30 per cent from a decade ago.

The publisher expanded its revenues by rolling out a new programme in 2007, sending staff members to Oxford University in Britain to take training in teaching English phonetics. Schools that subscribe to the programme benefit by having them help out in their classrooms.

'A package costs HK$150,000 to HK$200,000 for two years,' Mak said. 'The number of primary school subscribers rose from two in 2007 to 24 this year. Ten staff specialise in doing this now. They go to school to train teachers and co-teach with them.'

Another adjustment to offset the slump in profits, he said, is to tap into the vast mainland market. 'We foresaw the dire population trend as early as 12 years ago. We began to provide content to textbook publishers in Jiangsu in 2003. We share royalties with them. The results have been quite good over the past few years. As the local market is dismal, we are exploring the feasibility of extending this royalty-sharing model to other parts of the mainland.'

Michael Ng Chi-wah, general manager with Excellence Publication Company, which has been in the trade for 25 years, says it has frozen hiring. 'We have to produce more supplementary exercise books and develop online, interactive educational games as alternative sources of revenue,' he said.

Lam Chong-poh, the owner of 50-year-old Kam Lun Tailors, which makes school uniforms for 200 schools, says it has accepted more orders from companies like department stores for staff uniforms. 'In the 1980s and 90s, when business was really good, we couldn't accept companies' orders as we didn't have enough time to fulfil all the school orders,' Lam said. 'Now we do even small orders for children's choirs, university student committees, study tours and partygoers.'

While its flagship store in Prince Edward Road, Mong Kok, has not suffered a sharp business fall due to the prevalence of top-band schools in Kowloon, the outlet in Fanling, Northern district, has not fared as well. 'It's lucky that we own the land for the two shopfronts. Otherwise, there's no way we could maintain the business,' Lam said.

Shek Hon-kei, the manager of the 40-year-old Hon Wing Book Company in Nelson Street, Mong Kok, says it survives only because it does not have to pay rent for the prime-site shop. Another problem facing the wholesale and retail company, he said, is that 'publishers were willing to give us refunds for unsold books in the past. They can't do that now, as they are also in dire straits.'

One school bus company has looked across the border to shore up sagging revenue. Kwoon Chung Bus Holdings set aside 12 of its 700 school buses to ply cross-border routes about three years ago, a spokesman said. 'While the local student population keeps shrinking ... there are more and more local kids living on the mainland. We can also charge more fees for cross-border services.'

The number of cross-border students studying in local schools rose from 6,297 in 2007 to 8,060 last year, according to a recent survey by the Planning Department.

For its part, City School Bus Service has turned to transporting tourist groups and wedding entourages to take up the slack in its traditional business, spokesman Andrew Leung said. The company, which has 70 buses serving 24 schools, began feeling the pinch in 2003, when the change from half-day to full-day primary school sessions cut the demand for buses from four trips to two. 'A bus could run four laps, serving the morning and afternoon primary schools per day,' Leung said. 'Then two of the laps were cut due to the dominance of whole-day schools.'

Chan Chi-hung, the principal of AD & FDPOH Leung Sing Tak School in Yuen Long, said they stopped offering school coach services in 2004, after a series of bus operator closures in Yuen Long over the past decade pushed up prices. 'It's difficult to find coach services around Yuen Long now,' he said. 'The transformation of primary schools to whole-day institutions ... spelled their demise.'

More than 100 out of 563 primary schools have closed in the past eight years because of falling enrolments.

The wave of closures began to hit the secondary sector in 2006, and 12 high schools have been closed over the past four years. The Education Bureau said 11 secondary schools failed to reach the minimum enrolment of 61 students this year.

Classes dismissed

The city's Form One enrolment will fall, by 2016-17, from 75,400 in the past academic year to: 53,900

Across six forms, the drop in the student population by 2016-17 will reach an estimated: 97,600


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