Two young entrepreneurs take on plastic bag use in wet markets
Two young entrepreneurs hatch a plan to sell biodegradable plastic bags to wet markets and make businesses payfor it through advertising, writes Bernice Chan
Former Chinese University business student Hanley Li Chin-nung was startled to see how many plastic bags Egyptian vendors handed out while shopping in the markets during his three-month internship in the country. "I'd buy three items in a shop and they would put them in three separate bags," he says.
Li, 23, arrived in the country last year to work as a creative consultant for an advertising agency, just as Muslim Brotherhood leader Mohammed Mursi was elected president. "Egypt has a lot of culture, and even though the situation was kind of risky I liked being there and met a lot of nice people," he says.
But the heavy use of plastic bags niggled Li to the point where he wanted to find a solution. Unable to find anyone in Egypt to work with him, Li turned his attention back to Hong Kong and a plan began to take shape. He would encourage wet market vendors to buy biodegradable plastic bags at reduced prices, while the production of the bags would be paid for by advertising on them, hence the name CarryAD.
In July 2009, the Hong Kong government implemented an environmental levy scheme on plastic shopping bags that forced retailers to charge 50 cents for every plastic bag used in supermarkets and shops. However, the authorities stopped short of extending the levy to wet markets, citing hygiene concerns. CarryAD, Li says, will support wet market vendors by selling the biodegradable bags to them for much less than the price of conventional plastic bags, as low as a half or even a third of that cost.
Li recruited fellow Chinese University business student Lettie Sin Wing-han, 21, as his partner. "I am an ideas person," he says, "but I don't know how to implement things because I don't have much discipline and resilience. I knew I would need help so I got Lettie to help me."
Sin had never thought of becoming an entrepreneur, but she believed in Li's idea and decided to give it a shot.
Biodegradable bags are not a new idea in Hong Kong. In 2006, Hong Kong's largest catering business, Maxim's Group, switched to them, as did restaurant chain Fairwood, bakery chains Yamazaki and Arome, HSBC, Standard Chartered and Towngas.
Sin says the pair did a lot of research on the different kinds of biodegradable bags. Some are made using corn starch and others are produced with a technology called EPI that helps accelerate the process of degradation when the bags are exposed to oxygen and sunlight; ParknShop's bags are made this way. However, Sin and Li found that bags made of corn starch are vulnerable to humidity and heat, while bags using EPI technology have yet to be internationally certified.
In the end they decided to go with the internationally recognised P-Life Oxo-Biodegradable Plastic Technology from Japan, which is produced by a Hong Kong manufacturer in Shenzhen and Dongguan. The plastic bags are made with a chemical catalyst that uses sunlight, heat and oxygen to help break down the bag to the point where microorganisms can "eat" the plastic within six months to a year. Sin says companies such as Ikea, Hung Fook Tong and The Peninsula Hong Kong are using this kind of bag.
Although the pair were confident the initiative would be successful, they felt they needed to learn more. Then Li found out about a course aimed at business students.
Held at the offices of Credit Suisse, the course was the brainchild of Jan Metzger, managing director and head of Asia-Pacific technology, media and telecommunications investment banking with the Swiss bank. The 39-year-old is keen to help students avoid the trials and tribulations he went through when he was 21, when he was part of a group that developed a voice-recognition program that enabled people to talk to computers. Applications included making it easier for pharmacists to read prescriptions and helping the disabled to communicate.
However, the group had no business or marketing experience and the venture eventually fell through, causing Metzger stress from debts and heartache from seeing his idea fail.
Now, Metzger wants to share his experiences with students so they can learn from his mistakes.
Ninety teams armed with business plans vied for the chance to join Metzger's eight-week course. Only eight were chosen, among them Sin and Li's partnership. For three hours every Saturday morning they gathered to learn the basics of entrepreneurship, from how to sell and set up operations to marketing and business planning from both Metzger and his friend Chris Truax, a California-based lawyer who specialises in intellectual property and came to Hong Kong to teach.
At the end of the course the eight teams had to fine-tune their business plans and present them to Metzger and Truax. Other ideas included customised candles, selling jewellery accessories and an online fine art gallery.
In the end, Li and Sin's CarryAD and a web-based tutoring concept for SATs each won HK$80,000 seed funding.
"CarryAD is a straightforward idea that is innovative and doesn't take a lot to start up," says Metzger. "It's environmentally friendly and it's very Hong Kong in that it supports wet markets, which are a great tradition here."
Although the funding comes from Metzger, he and Truax own one-third of CarryAD, while Li and Sin own the majority of shares and run the company.
"We are gently pushing them to succeed," he says. "Every Saturday morning at 8.30am we have a conference call with them for 30 minutes and then with the web-based tutoring group to gauge their progress and to give them advice. For CarryAD, they showed us designs and we helped make decisions. We don't micromanage them and they can overrule us because they are the majority shareholders.
"With CarryAD, we should know within six to nine months how it will do," Metzger says. "If they can sell people on the idea, then they will have an instant cash flow business, and that's what a small business wants and needs. It's also a great experience for them to learn to sell because it's not easy."
Sin and Li are targeting local companies to advertise on CarryAD bags, as most customers who patronise wet markets will also go to local shops selling household goods. "If the advertising client's store is located in Kwun Tong, then we will distribute the bags in the wet market in that area," Sin says.
For now, the duo are trying to secure their first clients. If all goes to plan, perhaps CarryAD bags will be in a wet market near you soon.