Mon, Jan 03, 2011 page12

• FEATURE: Taiwanese retailers look to make it big in China

  • By Jason Tan / Staff reporter
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  When retired soldier Wu Po-chao (吳伯超) decided to bring Taiwanese “pearl milk tea” to Hong Kong in 1994, he had total capital of just NT$1.6 million (US$54,917) — half of it borrowed from a college senior.

  Wu rented a 40m2 corner shop in Mongkok District, a popular youth hangout, for which he had to pay rent of HK$85,000 (US$10,900) a month, though the shop made HK$80,000 in the first month after it opened.

  In a market dominated by Hong Kong-style diners, Wu had to convince people that Taiwanese milk tea was a tasty alternative to Hong Kong-style milk tea.

  He placed commercials in newspapers and on TV informing Hong Kong residents that if they wanted a strong tea taste then local tea was their best choice, but if they were interested in milk tea with a lighter taste, but strong tea fragrance, his shop had just what they were looking for.

  In the third month, revenue jumped to HK$400,000.

  Two years later, Wu decided to branch out, opening a tea house chain called Real Brewed Tea House (仙蹤林) in Shanghai. The first outlet was on Huangxin Road, a high school district, and he sought to introduce students to pearl milk tea.

  Within a few months the street was full of “copycat” stores offering pearl milk tea.

  To differentiate Real Brewed from the competition, Wu had an idea: Why not put swing chairs in the tea house for “easy customer recognition?”

  This novel idea initially proved very successful, until his competitors followed suit.

  Wu shared his experience of doing business in China at a cross-strait retail forum organized by the Taiwan External Trade Development Council (TAITRA, 外貿協會) in Taipei on Dec. 23.

  In 1998, Wu opened another Real Brewed outlet on Huaihai Road — a central shopping area in Shanghai, but one that was also home to many multinational corporations.

  In choosing a location, Wu selected a spot occupied by a diner serving Shanghainese cuisine. The owner, who had rented the spot for more than 10 years, had just renovated the restaurant and did not want to sell. However, Wu was determined not to let this opportunity slip through his fingers.

  A few days a week, he went to the diner to order food and talked to the boss, telling him why it -mattered so much to him. The two men gradually got acquainted and after six months, the shop was transferred to Wu.

  “This was the most expensive area in Shanghai and investment partners said I was insane,” Wu recalled of his decision.

  “But the outlet on Huaihai Road allowed me to develop an international brand image and that set me apart from the copycats. That was a key turning point for Real Brewed,” he said.

  Many Taiwanese enterprises have faced the challenge of copycats — a common business strategy adopted by Chinese enterprises.

  Today, 48-year-old Wu operates more than 180 Real Brewed tea houses in China and he is not alone in seeking to make the most of the growing disposable income of Chinese.

  Elephant King (象王), a laundry chain with Taiwanese roots, currently has over 600 outlets in China that employ about 5,000 workers and its business is expanding.

  “The growth of Chinese domestic consumption is explosive. The last-standing winners will be those in control of channel networks,” Elephant King’s founder, Huang Jing-neng (黃進能), told the forum.

  Huang reiterated the importance of having the right location: deciding in which cities to -establish a presence, and where to set up stores in those cities.

  When Huang decided to expand into China in 1998 he visited major cities including Shanghai and Beijing and finally chose the Greater Shanghai area as his preferred location.

  “I thought that if we could win over Shanghainese who are famed for their fussiness, then we could conquer the whole China market,” 54-year-old Huang said.

  Elephant King’s first dry-cleaning shop was opened in the Changning District of Shanghai. The spacious shop was brightly lit and had a transparent shop front to attract customers.

  Every morning before opening, uniformed employees would do morning exercises in front of the shop for 20 minutes. That gimmick attracted the attention of the neighborhood and slowly, laundry orders started pouring in.

  Elephant King was also one of the early adopters of environment-friendly cleaning solutions.

  It developed various solutions tailored to the demographics of a specific city, such as dining habits, water quality and living environment.

  For instance, Sichuan dwellers love spicy hotpots, resulting in frequent yellow stains on their clothes.

  Today, an Elephant King outlet cleans an average of more than 300 pieces of laundry a day, with some in popular locations cleaning as many as 1,000 items a day.
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