A taste of America in Shenzhen
THE prospect of 1.2 billion mainland Chinese getting a taste for American-style pizza is enough to make any businessman's mouth water. So Huang Powen must be licking his lips at the success of his first pizza venture in China.
When the Taiwanese-born businessman arrived in China more than 20 years ago, after obtaining his doctorate in liberal arts from Yale University in the United States, he had never thought of running a pizza restaurant.
Today, he has his sights set on a chain of up to 30 restaurants across China.
Mr Huang is chairman of Matrix Enterprises Limited, which holds the China franchise for Los Angeles-based pizza restaurant Numero Uno.
The 55-year-old entrepreneur opened the first Numero Uno in the Shenzhen special economic zone two months ago. He is now planning to spend about US$78 million (HK$602.9 million) to set up outlets all over the mainland in the next two to three years.
Becoming boss of a mainland business was not easy. Mr Huang's past experience taught him about the complex personal relationships with mainland authorities and the rules of the game before he was to land a slice of the lucrative Chinese market.
In fact, the problems of poorly trained staff and quality control faced on the mainland by fast food giants such as McDonald's and Pizza Hut have never bothered Numero Uno.
Mr Huang said he believed incentive was the answer to getting quality staff and service. He therefore paid higher salaries than other fast food shops and a monthly bonus.
He said it was fortunate he, rather than his Chinese partner, had picked the waiters and waitresses.
And thanks to the flexibility of Numero Uno, it is possible to serve mainland-produced food such as bread and vegetables in the restaurant. Mr Huang said the quality of locally made food met the firm's exacting standards and much money and effort had been saved because fewer materials had needed to be imported from the US.
The Shenzhen restaurant is an US$800,000 joint venture between Matrix, a local investment partnership holding an 80 per cent stake, and its Shenzhen partner. Although the company is planning to open at least two outlets this year in Shanghai and Beijing, the expansion plan has been held back by high rents in those cities.
Mr Huang said he had searched for a site for nine months until he clinched the Shenzhen deal, which was just a few steps from a Wendy's restaurant.
''I want to have a busy site where you can see people walking around the place 24 hours a day,'' said Mr Huang. ''The rent is so high in Shanghai. It is even more expensive than here. I was offered a site but then declined it because the rent was just too high.'' Although Matrix has received invitations from mainland authorities to set up in less populous towns and cities such as Foshan, Zhuhai and Chongqing, Mr Huang said the company was earmarking the big cities for expansion.
For the smaller towns and cities, the firm is contemplating a spread strategy by selling the franchise to companies. According to Mr Huang, this would allow swift market penetration without involving a huge capital injection because the franchisee would finance the outlets.
Mr Huang said he was confident of quality control once the first restaurant was operating smoothly.
''What we have to do is to maintain quality. Once we have ironed out problems at the start and have settled problems with importing the machinery and ingredients, it won't be difficult to operate the stores,'' Mr Huang said.
But he stressed a good site was not enough on its own. Guanxi , or the art of dealing with people, also played a key part in successful business dealings in China, said Mr Huang. ''You need to have a good partnership, especially with the provincial government, in order to smooth things out,'' he said.
A good partnership in China ensured obtaining a good site and settled trivial matters such as getting approval from bureaucratic authorities. MR HUANG said he enjoyed bringing a taste of American culture to the mainland. The teething problems were annoying but unavoidable in China.
''I remember once we brought the posters for the purpose of decoration from the US and were stopped by cultural bureau officials who asked us to take photographs of all the posters,'' said Mr Huang.
After all the obstacles, it was an emotional occasion for Mr Huang when the restaurant was finally up and running. He said he had burst into tears when the first customer paid his bill after the outlet opened on March 26. ''I was watching the first customer as he pulled out the notes from his wallet. I was so happy,'' he said.
He said he was satisfied with the Shenzhen business since it was opened and had noticed many young couples aged between 20 and 30 were attracted by the American-style look of the restaurant.
Next week, Numero Uno launches a series of promotional activities such as giving out souvenirs to visitors which Mr Huang hopes will help boost the pizza restaurant's image.