Keeping shifting customers in the frame
China-HK Photo sees diversification and quick response to market changes as key to survival
As photographic film gradually heads towards becoming a museum item, film sellers need to diversify into other types of merchandise.
China-Hongkong Photo Products, which has distributed Fujifilm products in Hong Kong and Macau since 1968, has ventured into skin-care products and televisions in recent years.
The listed company’s deputy chairman and chief executive, Stanley Sun Tao-hung, says diversification and quick response to changes in customer tastes are of utmost importance if the company is to survive for another 45 years.
Sun’s grandfather, Sun Chieh-yeh, set up the company in 1968 and secured the sole distribution rights for Fujifilm in Hong Kong. He hired eight employees to ride bicycles around the city, selling black-and-white film.
Stanley’s father, Dennis Sun Tai-lun, joined the company in 1975 and expanded the range of wares to other Fujifilm products – from colour films to cameras and medical products.
Stanley took over the management of the company after he graduated with a degree in hotel administration and a master’s in business administration from Cornell University in 2005.
Stanley told the South China Morning Post how he led the transformation of China-Hongkong Photo from a film distributor into a company with multiple business lines.
When did you find your company needed to diversify into businesses other than selling films?
Starting in 2003, we found that the number of photos we were asked to print from digital images was higher than those from film. This was about the time we decided to make the change.
Our company is no stranger to changes in technology and market trends. When people shifted from black-and-white film to colour film, we changed our product lines.
Likewise, when people started to use smartphones and digital cameras to take pictures, we spent millions of dollars to establish an online ordering platform where customers can order prints from their computer or mobile phone.
We also diversified our business through acquisitions. In 2001, we bought Fotomax, a chain of photo-processing shops, from Li & Fung.
In 2010, we expanded into the skin-care business by selling products developed by Fujifilm, which itself also needed to diversify.
Last year, we took over certain businesses from YCY, which had 13 stores selling high-end television and audio electronic equipment.
Why did Fujifilm enter the skin-care business?
Fujifilm has responded reacted quickly to the digital age. Besides developing its own digital cameras, the company has its own research team, and it has used film-making technology to make skin-care products in Japan since 2007. We have been bringing those products to Hong Kong since 2010.
The technology of film-making is strongly related to skin care. This is because a major component of film is collagen, taken from cow skin, and collagen is also widely used in many skin-care products.
The technique used during photo processing to prevent the colour from fading is a technique that can be applied to slow the ageing of skin.
Three years after you introduced skin-care products to Hong Kong, how are sales going?
We started with one shop in Central, and now we have eight shops across the city. We have built up our customer base from local customers to mainland and overseas tourists.
I believe the skin-care products will continue to sell well given the growing number of tourists who like to shop for cosmetic products here.
With many people taking photos with digital cameras or smartphones, has it hurt your photo printing shop Fotomax?
Sales of film have dropped substantially, but that is not the case with photo printing. Many customers still like to print their photos on paper or use the images to make various photographic products.
Fotomax has 72 stores now, a slight drop from the peak of 80. The shops still print about 50 million photos a year, which is below the peak of 70 million.
In the digital era, people do not need to worry about running out of film, and they tend to take many more photos nowadays than during the film era. At present, about 10 per cent of all photo printing orders come online, while one-third come from smartphones.
The majority of orders still come at our stores, as customers like to have staff serve them.
Digital photo taking also has advantages, as it is easier than with film to make other photo products from the image, such as calendars, cups, notebooks, photo books, and even event banners.
The biggest victim is film. Nowadays, 98 out of 100 photos printed by Fotomax are from digital images. At the peak, we sold 300,000 rolls of Fujifilm a month. Now, it is only a few thousand a month.
Instant film, however, has become more popular, and sales of instant film are 10 times those of traditional film.
Why did you study hotel administration but end up working in the photo business?
The hospitality programme taught me how to run a business from a service industry point of view. Our company is not about selling products but services. Products can go out of fashion, but good service will never be outdated.
Managing customers’ expectations is important. Many customers don’t mind paying, but they want service that is value for money.
Customers come back to you because you offer a good service that they want and need.
When customers use film to take photos, I provide them with film and a camera.
When they shift to digital, I offer them a digital camera and a website to order photos online.
When many customers came to Fotomax asking if we had photocopying services, we installed a photocopier.
Now printing company documents and annual reports is also part of our business.
In the family business, what did you learn from your father and grandfather?
They taught me not to forget those who helped us in our business, particularly those in the very early days. This is important. We have many distributors and retailers who have worked with us for decades.
We also believe we should never chase short-term money but keep our eyes on a long-term relationship and business development.
Would you like your daughters to be the fourth generation to work at the company?
They are only four and two, so it is too early to say. But they do like me to buy instant cameras designed for children. Luckily, their father is in this business.