Iceman Hui Lau Shan melts away

Hong Kong-based ice and dessert vendor Hui Lau Shan (許留山) yesterday confirmed that it has shut down nearly 20 stores in Taiwan, cutting the number of local outlets to 22 from a peak of 40 stores in late last year.

The first store was established in the 1960s in Hong Kong and became well-known for its Chinese-style health desserts, such as bird's nests, herb jelly and snow-frog cream.

Hui Lau Shan entered Taiwan's market in April of last year with a big bang. The vendor expanded quickly, and eight months after entering the market it had established 40 stores around the island.

Then the situation changed.

"Early this year we decided to make some adjustments, and close some stores gradually," said Huang Ling-hsuan (黃玲軒), a public relations representative at Hui Lau Shan Taiwan.

She said the company's general manager and primary investor Ho Hsin-pi (何杏璧) is considering opening a chain selling fashions imported from Korea in Taiwan.

"Therefore, some of the closed [Hui Lau Shan] outlets will be transformed into clothing stores," Huang said.

Chinese-language TV news yesterday reported that Hui Lau Shan may face difficulties operating as the company had closed half of its outlets in Taipei, lowering the number of stores in that area to seven.

Huang refused to make any comment on the issue.

Another official at Hui Lau Shan Taiwan said high rent and slow sales have hurt the company's bottom line.

"In a bid to garner attention, we set up stores in prominent locations when we entered the market," said Chiu Yu-chi (邱郁綺), a marketing official at the company's Taichung office.

But the subsequent high rent had become a heavy burden on the chain, she added.

The slow economy has also forced Hui Lau Shan to slash prices.

The vendor cut prices by nearly 40 percent in May this year. For example, one serving of herb jelly was lowered to NT$119 from NT$190, while prices of the vendor's shaved ice were also cut from NT$79 to NT$49, Chiu said.

"The sales dropped significantly. Compared to the same period last year, our current sales dropped nearly in half," she added.

One market-watcher said Hui-lau-shan's setback can be attributed to excessive expansion.

"For a new market entrant, establishing 40 stores within several months can be risky," said Beryl Lee (李培芬), the director of the Association of Franchise Promotion, Taiwan (台灣加盟促進協會).

Consumers may visit Hui Lau Shan out of curiosity initially, while they may not come again often since most Taiwanese still like local flavors, Lee explained.

Meanwhile Lee stressed that shutting down some stores for adjustment is not always bad.

"As long as the chain-store operator can strengthen its financial structure [by shutting down loss-making outlets], the move is worthwhile," she said.

After all, Hui-lau-shan is a brand with a good image and great publicity, and therefore "it still has wonderful potential to succeed in Taiwan," Lee said.