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Denise Tsang

A group of beleaguered Hong Kong exporters who tried to tap into the mainland's buoyant consumer market five months ago have found the experiment tough going.
Most of the 30 exporters who banded together under the umbrella of Ziti, a showcase label for promoting Hong Kong brands and products, are on the verge of pulling the plug on their involvement with the Sogo department store in Wuhan as sales have slowed to a trickle.
Andy Lee Chi-hung,  the president of the Hong Kong Brand for China Market Association  that operates Ziti, says the exporters are negotiating a settlement with the store and about 80 per cent of them are likely to leave.
Lee, a Hong Kong entrepreneur who has spent the last 20 years building from scratch the teenage fashion chain Cocolulu that now operates in 27 mainland cities, said the root of the problem was the exporters' lack of patience in developing the market and promoting their brands and products.
'Some wanted and expected to make money as soon as they got into the market and this has turned out to be a disappointment,' Lee said. 'It is a long march that needs trials, time and patience.'
Lee said Ziti would reshuffle its brands, which means losing some and introducing new ones.
Ziti's first mainland venture involved retailing trendy fashion items - shoes, handbags and accessories - in Wuhan in August last year and later expanding to other shopping  centres such as Aqua City  in Nanjing, Tianyi Plaza in Ningbo, M Square  in Shanghai and Peace Plaza  in Dalian. The brand mix varied from city to city.
The exporters, who are still suffering from the global trade slump, are banking on the central government's policy of spurring domestic consumption for sustainable growth. Despite the rapid penetration, many of them have had a hard time enticing customers. 
Vincent Chan, the general manager of Role Model Handbag and Accessories,   will decide the fate of his shop at Sogo in the next few weeks. 'Sales were so slow that it took several days to sell one handbag,' he said. 'It will take some time to generate some meaningful sales, but the situation here is very difficult.'
The sluggish sales were disheartening compared with the strong debut Role Model had five months ago. The retailer sold two clutch bags  at 800 yuan (HK$911)  each within 15 minutes of the shop opening. 
'The debut was a big bang, but it died down after 10 days,' Chan said. 'Business is better when there are discounts, but we can't give discounts all the time.'
Role Model has had a better experience at Peace Plaza in Dalian, which opened in December.
'Many shoppers at Dalian don't mind paying a bit more for quality products, but those in Wuhan will compromise quality for prices,' Chan said. 'Dalian is a totally different market.'
He added that Dalian shoppers are more open to new products and new styles, for example, a nanny in her 60s bought a Role Model handbag designed for younger women.
Wu Zhengmei, the general manager of Nanjing Aqua City Management, which owns one of the most popular and trendy shopping, entertainment and office complexes in the city, said Hong Kong exporters must spend time and resources developing and learning the consumer market there if they want to operate a sustainable retailing business.
'Shoppers generally love Hong Kong brands and products for their quality and modern design,' Wu said. 'However, brand owners have to be more patient.'
There are about 23 Hong Kong brands operating under Ziti at Aqua City and they compete with roughly 200 mainland brands.
Wu said China is so huge that from east to west and south to north, weather, styles, spending power and culture can be poles apart. A prime example is a jacket she bought from a Ziti retailer, who only kept one piece for each size while some of the jackets were too thin to withstand a severe winter in Nanjing, she said.
'More can be done in improving logistics and managing inventory,'  Wu said, adding that Aqua City has drawn about 10 million visitors a year since its opening in August 2008. 
'We worry about the marketing of Hong Kong brands owned by small and medium-sized enterprises that may not have sufficient resources to promote their products.'
To boost traffic, Aqua City spent 10 million yuan a year on promotions and marketing. It made sales of at least 600 million yuan a year, Wu said.



Mainland market foray a tough test for exporters