Thinking small pays off big time
What started as a way to revitalise an abandoned factory by an unemployed young man not only changed the fate of both, but also gave birth to Hong Kong's largest mini-storage operator. It now has 35 locations across the city, with a total floor space of more than 700,000 sqft.
Kevin She, winner of this year's Young Entrepreneur Award and CEO and founder of SC Logistics, returned to Hong Kong in 1995 after finishing his studies in Canada and took up an IT job. In 2001, he was made redundant when the dotcom bubble burst.
While looking for another job, he helped his father, the owner of a plastic materials factory in Yau Tong, to look after a factory which was abandoned as much of the business and production had moved across the border.
One day, at a gathering of factory owners, She asked an owner what he was doing with his vacant factory and was told that the owner used wire mesh to divide the factory into smaller units and rented them out to nearby hawkers for storing goods.
She did the same and put up posters on the streets, and the first few units were rented out within a week. He created more units and rented them out quickly and, by the end of 2001, he had created 60 to 70 units within the 12,000 sqft factory.
Seeing the strong demand for mini-storage and realising that it is a sizeable business overseas, She decided to run it as a full-time business. 'We are the first in Hong Kong to run mini-storage as a business, whereas other operators only see it as a way to collect rent for their empty factories,' he says.
The timing to start a mini-storage business could not have been better, She recalls. 'After the dotcom bubble burst in the late 1990s, Hong Kong's economy was hard hit by the severe acute respiratory syndrome scare in 2003. Some offices scaled down their operations and moved to smaller offices, and they needed storage space for their documents and equipment. Some families moved into smaller flats, and they need storage space for their furniture and household items.'
The recession provided a golden opportunity for She to buy more factories as his business expanded.
The company now owns about one-third of its storage capacity, and this has enabled it to have the upper hand against competitors who joined the market at a later stage.
'Factory prices have gone up fourfold since 2005, and this means that the cost of our competitors is four times what ours is,' he says. 'If we can keep our price rises down to the minimum, our competitors won't have any profits. In addition, decoration costs are now much higher, and it is more difficult for new operators to get loans from the banks.'
She believes SC Logistics will enjoy a cost advantage for years to come. Apart from increasing storage, the company will also develop new products, such as bicycle storage, and recently introduced cold storage.