IT WAS THE night before Christmas when the South China Morning Post caught up with Santa Claus, who was passing through Hong Kong on a flying visit. Leaning against the main bar at the Foreign Correspondents' Club and clutching a double Jack Daniel's, Mr Claus was clearly exhausted. Thickly bearded and badly overdressed for Hong Kong in his trademark red winter suit and heavy black boots, he had parked his reindeer and sleigh on the underused helipad atop HSBC's headquarters building before tramping up Ice House Street. It was hard work for a man in his 1,734th year, although the well-preserved Mr Claus somehow manages to look much younger than that. Born in the Roman province of Lycia around the year 270 (Mr Claus claims not to remember the exact date), he makes even Hong Kong's elite club of workaholic octo- and septuagenarian tycoons look like idle young men. 'I can't retire - no kids to pass the business on to,' Mr Claus sighed, sipping wearily on his whiskey. 'I'm also immortal and it's good to have something to do to help pass the time. But even so, this business is getting harder by the year.' Operated for centuries as a strictly local charity, Mr Claus' toy manufacturing and distribution business first began to emerge as a global enterprise in the early 19th century, on the back of a few lucky marketing coups such as the publication in 1822 of 'Twas the Night before Christmas. Yet his industry has changed more in the past 10 years than in the previous 190. For this he blames globalisation and all it has given rise to - from hypercompetitive manufacturers in the Pearl River Delta to ruthlessly efficient multinational retailers - but also admits to a few strategic flaws of his own. 'Look, everyone thinks my business is bullet-proof, and not just because I have arguably the best brand in the world,' Mr Claus said. 'The market demographics, too, are excellent. Since we relocated to the North Pole and went global 200 years ago, the Earth's population has multiplied from about one billion to now more than six billion, and Christmas is even taking root in countries where Christianity has failed to, such as China. 'But remember that as the world gets wealthier, spoiled brats increase as a percentage of the total population and good kids decrease, constraining my real market opportunity.' Ordering another drink, Mr Claus also rued the drawbacks of his business model. He has discovered that there is not much money to be made giving away toys for free and licensing deals with, for example, Hollywood movie studios for their perennial Santa films only just about cover his costs. Fortunately, his enterprise is a sole proprietorship - so he does not have to contend with pension fund managers or David Webb demanding higher returns for minority shareholders. And while investment bankers are constantly trekking to the North Pole with IPO proposals, Mr Claus has so far rebuffed every approach: 'An IPO just wouldn't be good for the kids.' Adding to Mr Claus' woes, competition in his industry is particularly punishing and, he believes, historically unprecedented. As an MBA student at Harvard Business School during the Depression, Mr Claus studied with the legendary entrepreneur Milo Minderbinder. Mr Minderbinder was later immortalised in Joseph Heller's World War II epic Catch-22 as the brilliant but corrupt United States army quartermaster who bought eggs in Malta for seven cents and resold them - somehow for a profit - at five cents. 'Milo was a genius, no doubt about it,' Mr Claus reminisced. 'But there was a war on and you could take advantage of constantly fluctuating black market exchange rates. Compare that with one of my main competitors, Walnut Inc Co Ltd Plc. Walnut pays its suppliers peanuts, its non-union employees earn next to nothing and its products sell for almost nothing. Yet its economies of scale are such that it made a record US$7.1 billion on sales of US$203 billion over the first nine months of its current fiscal year. 'And there's no exchange rate gimmickry at play here: Walnut operates in the context of a fixed US dollar-yuan exchange rate linking the currencies of its largest market and largest supplier base. How can I compete against that kind of financial alchemy?' In contrast to Walnut's disciplined, streamlined operation, Mr Claus is beset by human resource headaches. He must manage, for example, a heavily unionised work force of under-sexed, cranky Luddite elves, each possessed of a massive Napoleon complex. 'Union recalcitrance meant the industrial revolution and later innovations like the assembly line just passed us by, let alone more modern-day advances such as dispersed manufacturing models and just-in-time delivery,' Mr Claus said. 'Do you have any idea how long it takes an elf, working with hand tools only, to carve a fully functioning DVD player from a block of wood?' Distribution is not much better. Global warming is playing havoc with summertime supply lanes across the Arctic Circle. Mr Claus' reindeer too are militantly unionised and affiliated with the Teamsters. 'Why do you think they work only one night a year?' Mr Claus asked. 'It's egregiously inefficient and I've been begging them to agree to a more flexible work schedule, but whenever I bring it up they just snort 'Work to rule', put their hoofs down and start sharpening their horns.' With that, Mr Claus ordered one last double-shot of whiskey for the road. 'This one is to get me through Iraq,' he said, explaining that the disintegrating country is one of his major markets. 'Half of Iraq's population is under the age of 15 and believe it or not, tragic circumstances really do bring out the best in a lot of children. But it's a nightmare to service.' Tragically, his lead reindeer, Rudolf, was killed at a checkpoint in Baghdad last year. 'A marine sentry mistook Rudolf's nose for the triggering mechanism on an improvised explosive device and just let loose,' Mr Claus said, his eyes tearing. 'There was blood and reindeer horn everywhere. The poor marine was 19 years old but looked closer to 14 and was just devastated when he realised he'd shot Rudolf. A lot of the soldiers over there are just kids too, you know.' Biography Santa Claus, approximately 1,734 years old, was born in Patara, in the Roman province of Lycia, in the year 270 AD or thereabouts. Famous for his charity, he initially pursued a career with the Church and rose to become Bishop of Myra. Later lionised as St Nicholas, he went into seclusion in the first half of the fourth century. During this time it was rumoured that he was dead and bones alleged to be his were fought over for hundreds of years. In the early 18th century, however, rumours of Mr Claus' death were proven greatly exaggerated when he burst on to the scene as a high-flying toy entrepreneur, initially operating under the 'St Nick' brand. A 1936 graduate of Harvard Business School, Mr Claus is a bachelor with no children. However, he has been the subject of multiple paternity suits stemming from his stealthy nocturnal visits to homes the world over.