Jollibee, other Southeast Asia businesses expanding in Hong Kong – thanks in part to fan base of foreign domestic helpers
Despite Hong Kong’s notoriously high rents, a number of Southeast Asian businesses are expanding.
Fried chicken wizard Jollibee, retailer Charles & Keith and flavoured French fry maker Potato Corner are among Southeast Asian businesses expanding in Hong Kong, helped in part by a huge fan base: the city’s 370,000 domestic helpers, nearly all of whom hail from Indonesia and the Philippines.
Jollibee – a popular chicken and burger place in the Philippines, with 1,062 stores – has eight restaurants now in Hong Kong, and plans to dramatically ramp that up. It will open 41 total outlets over the next five years in Hong Kong and Macau, though it declined to say how many stores in each city.
“It feels like you’re back home,” said Filipino Joanna Galabay, a long-time foreign domestic worker in Hong Kong, as she munched on a drumstick at a Jollibee’s branch on Connaught Road.
Despite the city’s notoriously high rents, other Southeast Asian businesses are expanding as well.
Singaporean bags-and-shoes chain Charles & Keith opened its first branch in the upscale New Town Plaza in Sha Tin last month, and will open its second outlet – at Parker House in Central – in November. It has committed to opening another store in the city, and told the South China Morning Post it plans to “expand cautiously to 10 locations in the next five years.” It has branches in the Philippines and Indonesia so is well known to the city’s domestic helpers.
Potato Corner, which now has four outlets in Hong Kong, said a branch in Central is in the pipeline. The restaurant chain started in the Philippines but, as part of its international expansion, took off as well in Indonesia.
“For Southeast Asian brands in particular, Hong Kong has a unique advantage for having a long-established Southeast Asian population,” said retail analyst Lawrence Wan of CBRE Hong Kong. “ … You can see their restaurants opening in prime areas. The lifestyle and [trendy] fast fashion brands from Southeast Asia are also gaining steam.”
The number of Southeast Asian companies in Hong Kong rose 17 per cent between 2013 and 2017, with the city now having 586 such businesses, according to the government’s Census & Statistics Department. In addition to players like J. CO Donuts & Coffee of Indonesia, and Bread Talk and Irvins Salted Egg, both from Singapore, they include big multinationals, such as the Development Bank of Singapore and the United Overseas Bank, also from the Southeast Asian city state.
Hundreds of thousands of maids fan out on their Sunday day off in this city of 7.4 million people. Filipino maids often meet their friends at Jollibee, for example, chatting, eating, snapping selfies and calling family back home. In April, visiting Philippine President Rodrigo Duterte created quite a stir when he sat down at the Hung Hom outlet of Jollibee and chatted with a Filipino maid. Indonesian helpers are also fans of Jollibee.
The women have expanded the customer base of the brands by bringing home drumsticks, doughnuts and other treats with them when they return to their employers’ homes on Sunday nights. The Southeast Asian businesses have also simply grown by word of mouth.
“We initially entered Hong Kong because of the large Filipino population in the market,” Jollibee’s media office said. “However, we are now seeing that our new stores have majority local customers, with more Hong Kong locals loving our Chickenjoy [chicken meals].”
Potato Corner, which markets itself as the maker of the “world’s best flavoured fries”, said its Hong Kong stores achieved the “all-time record for highest single day sales” in the brand’s 25 years of operation. It didn’t give specifics.
“Potato Corner is popular among Filipinos, and some of our most loyal regulars are Filipinos. Indonesians [are our loyal customers], too, as Potato Corner has a strong presence in Indonesia,” said Ryan Asis Maniago, managing director of UpFive Corporation Ltd., the master franchisee in Hong Kong.
As Hong Kong’s population ages, its need for foreign domestic helpers will grow, with the number of helpers expected to jump to 600,000 over the next three decades, the government says. While their wages are modest – HK$4,520 (US$577) a month, plus living space in their employer’s home and food – their sheer number makes them a serious consumer base. They spend about a quarter of their wages in Hong Kong, according to a study by NGO Mission for Migrant Workers released in August. That would mean they are dropping about HK$5 billion (US$640 million) a year in the city.
The number of Southeast Asian businesses is expected to grow under two free trade agreement between Hong Kong and the Association of Southeast Asian Nations, which represents the 10 countries of the region: Indonesia, Thailand, Vietnam, Singapore, Malaysia, Philippines, Myanmar (also known as Burma), Cambodia, Laos and Brunei. The agreements go into effect next year.
Consulate officials from the Philippines, Singapore and Thailand also noted that Hong Kong serves as a strategic gateway to China’s huge number of consumers, elevating its importance to businesses of the Asean member countries.
However, businesses said in interviews that expansion is hampered by the city’s high rents. Also, some complained that it is difficult for them to set up bank accounts for their operations.
“The cost of doing business in Hong Kong is more expensive compared with other countries, especially in rent,” Irvins Salted Egg said.
The snack company said it is negotiating with a few landlords for some prime retail spaces in popular shopping malls.
In 2017, Hong Kong’s Causeway Bay, home to one of Potato Corner’s branches, had the most expensive retail space in Asia, and second in the world behind New York.
Property consultant Cushman & Wakefield said annual retail rentals in the trendy and popular shopping district on Hong Kong Island reached HK$21,255 (US$2,712) per square foot, just behind Upper 5th Avenue’s HK$23,400 (US$2,986) per square foot.
While rents are high, the Thai Consulate applauded the city’s business-friendly tax system.
“The simple tax system with no VAT and importing tax is also a selling point to Thai exporters,” the Thai Consulate-General said.
There were 154 existing trademark registrations from Thailand in Hong Kong as of last year, a 77-per cent increase compared to 2016. Leading Thai brands in Hong Kong include Bangkok Bank, spa and spa products retailer Thann, and restaurant Blue Elephant.
Thais have opened many small business in the city, including massage parlours and beauty and nail salons.
The city’s attractiveness has grown to Southeast Asian businesses, some of which were quick to thank Filipino and Indonesian domestic helpers for getting them off to a solid start.
Noemi Morgado, a Filipino maid working in Pok Fu Lam, is one such helpful ambassador.
“Ever since I brought [my employer’s family] a bucket of Jollibee fried chicken on New Year’s, they have regularly asked me to bring some home [after my day off],” said Morgado, holding three buckets of the chain’s fried chicken.