From street stall to shop chain, baker's life sweet
When Macau baker Leong Chan- kuong opened Koi Kei Bakery in the shadow of the ruins of St Paul's 12years ago, among the first through the doors was a group of uninvited guests - angry triad gangsters determined to defend their turf against the newcomer.
Leong was forced to stand his ground, crossing swords with tattooed gangsters who repeatedly set fire to his shop front, initiated gang fights, blocked his shop with a truck, or did whatever they could to trample the newcomer in the Chinese bakery and snack market.
'A gangster happened to be my rival and feared my bakery would be a threat, so he commanded his mates to get rid of me and my business,' recalled Leong, who sells crunchy peanut and ginger candies, almond cookies and egg rolls to tourists as 'souvenirs of Macau'.
'They kept pestering me for some months until the government cracked down on triad activities before the handover [of Macau to the mainland in 1999].'
Leong had to fight a lonely battle for some months as his father strongly opposed his decision to expand from peddling Chinese candies on a cart to opening a proper bakery.
'My father did not think my business idea would work and deemed me a failure before I started,' said Leong, who fell out with his dad as a result of the business venture.
'Neither did my two brothers support me, so I sold my apartment and borrowed from friends the necessary HK$1.7 million and kicked off the business.'
His father's opposition was not a surprise, given that he probably realised his son's perfectionism would put more cost pressure on the fledgling business. Leong conceded that in the early days, he threw out more peanut candies than he sold simply because they failed his taste test.
Leong's Koi Kei investment may have tested his filial ties but he can thank his father for one thing - the skill of baking.
Despite having finished only primary education, Leong learnt from his father how to make peanut and ginger candies as the family had been in the baking trade since his grandfather's days in his hometown in Foshan, Guangdong province. Koi Kei was named after Leong Snr.
The Koi Kei Bakery was soon packed with tourists and local people. It has since usurped the dominant position of the 74-year-old Choi Heong Yuen Bakery as the chief producer of Macau's souvenir candies.
Leong now runs a chain of nine shops and recently expanded to Hong Kong by opening an outlet in Causeway Bay.
Leong's two brothers eventually joined his bakery enterprise to supervise production after they suffered setbacks in their own businesses.
The Causeway Bay outlet signals the first step in Leong's bid to break out of Macau and into the mainland.
'Hong Kong is a metropolis. If we can handle it, we will make it in Beijing and Shanghai,' he said.
About two months after its debut, there are so many customers at the 400 square foot shop in Causeway Bay that 20,000 boxes of almond flakes and 10,000 boxes of almond-cashew candies have been sold so far.
The brisk sales were predictable, if not planned.
Leong said he intentionally chose Koi Kei's location on the other side of touristy Pak Sha Road, where arch-rival Kee Wah Bakery is located. Kee Wah makes the original 'souvenir of Hong Kong' with Chinese-style almond cookies, sweet crisps, egg rolls, ginger cookies and peanut candies. Another neighbour is confectionery retailer Aji Ichiban.
Koi Kei has extended its opening hours beyond 11pm.
'We want to create a cluster of souvenir shops so it becomes Hong Kong's souvenir street. There is a souvenir street in Macau and I don't see why Hong Kong can't have one,' Leong said.
'We are the maker and retailer of Macau's souvenirs and I don't see why we can't be the maker and retailer of Hong Kong's souvenirs.'
His business strategy originated in Macau, where some Koi Kei outlets do not close their doors until 11pm, at least two hours later than their rivals.
It appears toiling long hours is the most important ingredient in his recipe of success. Leong, who works 18 hours a day 365 days a year, told this reporter not to ring him before noon as he does not get up until lunch time.
Apart from his short sleeping time, Leong spends his day touring Koi Kei outlets, tasting and checking the quality of products at the central kitchen in Macau, designing wrappings and packaging for the products, inventing recipes, sourcing ingredients, greeting customers and formulating advertising and business development strategies.
Inventing his own recipes or modifying others' have led to a catalogue of more than 300 types of bakery products and snacks.
Leong's latest offering is custard mooncakes, based on the recipe used by the Peninsula Hong Kong's Spring Moon restaurant.
'I have tried and studied Spring Moon's custard mooncakes for a month and worked out our own recipe,' said Leong, who said trying rivals' products was part of his strategy. 'We will give the custard mooncakes a new name and put them on the shelves next month.'
Leong said it took him 12 months to perfect his recipe for traditional mooncakes with lotus paste and egg yolks. The marathon process paid off, with all the mooncakes sold out before the Mid-Autumn Festival last month.
In a marketing-driven world, Koi Kei changes its wrappings regularly. Leong launched new packaging recently, putting egg rolls and peanut candies in hard plastic boxes with fancy ribbons. The new package, which raised the marked price of a box of peanut candies by about 30 per cent to HK$53, benefited its bottom line.
'I like changing designs of packaging, trying out new things and chasing after improvement constantly,' Leong said. 'That's why I am 40 and am still single. Girls may be too insecure to have a boyfriend like me who changes all the time.'
However, one thing Leong will never change is the use of high-grade ingredients. He sources butter from Japan, almonds from the United States, peanuts and organic black sesame from Hunan and Hubei, and sugar from South Korea. 'If the ingredients do not taste okay, we suspend production until the right quality is available,' he said.
A case in point was the recent drought in southern China that hurt peanut harvests and left the market with supplies of inferior stock. This prompted Koi Kei to halt production of peanut candies for 12 days in September, forgoing HK$1.5 million in sales, he said.
The bakery stopped production of almond flakes temporarily in the past week after imported butter turned sour during transportation.
That Koi Kei can afford to use expensive ingredients and sells the products at relatively affordable prices has a lot to do with its ownership of most of the shops and the factory in Macau.
Leong ran into luck riding on the right side of the economic cycle. At a time when Koi Kei was urgently looking for new factories to expand its production capacity last summer, property prices were so high that he even doubled his offer for one site in Macau. The offer was ignored but it turned out a blessing in disguise.
Shortly after the global financial crisis, Leong paid about HK$30 million for the factory, a 30 per cent discount to the market price.
'My father's neighbours often tease me saying that I am a lucky boy buying shops during economic downturns such as Sars and the global financial crisis,' he said.
The new factory adds 60,000 square feet or 30 per cent to the existing production space of 200,000 sqft. Automation and extra production capacity will raise almond cookie output 10 times to four million pieces a day. The extra capacity will play a crucial role in helping the bakery expand into corporate gifts and the mainland market.
Leong said Koi Kei was contemplating its second outlet in Hong Kong while identifying sites for its first shop in Shanghai and then in Beijing.
Resisting the temptation to set up factories on the mainland, he said keeping production in Koi Kei's Macau home turf would ensure quality and management control.
''Made in Macau' gives customers more confidence,' Leong said. 'Therefore, we will only produce for our shops.'
Despite his legendary career in Macau, Leong is ready to fight another battle in the robust but competitive market on the mainland.