Possible sale of ParknShop affects all in Hong Kong

PUBLISHED : Thursday, 25 July, 2013, 12:00am
UPDATED : Thursday, 25 July, 2013, 1:39am

No business touches our lives as much as a supermarket - which means that tycoon Li Ka-shing's ParknShop chain, which holds an estimated 35 per cent of the grocery market in Hong Kong, is a necessity for many of us. The announcement that it may be up for sale is, therefore, a matter of deep interest and perhaps concern for its customers as well as 13,000 staff here, in Macau and on the mainland. Perceptions are rife that the tycoon is not in favour with the government, prompting speculation that politics is at play and a push is on to exit our city. In so politicised an environment, such conclusions are easy to be jumped to - in the process ignoring that it may simply be a commercial decision.

ParknShop is, after all, only a small part of the Li family's business empire. Compared to other assets, its profit margins are low, especially when compared to the star performer of its retail interests, AS Watson health and beauty outlets on the mainland. If migrating to higher-margin businesses is the goal, divesting the supermarket chain would make sense for the Li-controlled conglomerate Hutchison Whampoa and investors. The 286 stores in Hong Kong are hugely visible but selling them does not in any way mean that our city is being abandoned by its wealthiest citizen.

Of course, there are those who would prefer it if Li was less influential or his companies had a smaller Hong Kong footprint. Others contend some of his firms stifle competition. ParknShop in particular has been at the centre of claims of price-fixing and collusion with fellow supermarket giant Wellcome. A competition law presently before legislators would go a way to ending such perceptions but selling the chain in pieces to more than one buyer would also presumably help.

Opportunists are too prone to politicising events in Hong Kong. Commercial and shareholder interests will determine ParknShop's fate. Whatever happens, the rights and interests of staff have to be protected and taken care of.