The View | The speed of change in the retailing business is asking questions of Hong Kong
The rapid rise of e-commerce could force changes in the city’s shopping areas, and may even mean space becoming available for small independent retailers
A transaction at the beginning of this year provided an interesting reminder of the somewhat quaint nature of Hong Kong’s retail sector, highlighting how it operates and why it may no longer be able to operate in this way.
Marks & Spencer, the British-based retailer, sold its Hong Kong and Macau operation to Dubai-based Al-Futtaim, a long-standing franchise partner. Al-Futtaim will continue to operate under the British retailer’s name, sell its products and follow its format; in other words the usual type of arrangement for a franchise store. This transaction raised little interest in Hong Kong because retail brands tend to be better known than their owners.
Franchising of foreign retail operations is widespread in Hong Kong despite the enormous retailing expertise that exists here. But this expertise has had little success creating brands that have gone global.
There are exceptions: Dairy Farm has managed to establish a couple of its brands in nearby overseas markets, as has the clothing retailer Giordano, founded by Jimmy Lai. Shanghai Tang, the rather more upmarket Hong Kong clothing brand founded by another flamboyant Hongkonger, David Tang, only really went international once it was sold to the Swiss-based Richemont group, which last year sold it on to the Italian fashion entrepreneur Alessandro Bastagli.
Meanwhile in Hong Kong practically all the big name fashion retailers are either foreign owned or franchised by overseas companies to local owners. The biggest of these franchise operations are in the food sector.