Research Articles Base: Hong Kong Retail Industry

FURNITURE RETAIL INDUSTRY ANALYSIS – HONGKONG

I.                  Introduction The retail industry in the Hong Kong setting has similarly been subject to a lot of changes as the special administrative for the past years. With the advent of the region’s return to Mainland China as well as the outbreak of deadly viruses like bird flue and SARS are among the major changes that Hong Kong has endured in the past years. Aside from other industrial and commercial entities that have sprung up in the Hong Kong market, the region’s furniture industry has shown resiliency against the indicated changes. The furniture industry of the Hong Kong Special Administrative Region has made general improvements in its performance in both the manufacturing and exporting sector. An internet study on the overall performance of the furniture market is shown by . (, 2005) It shows that the furniture manufacturing industries in Hong Kong has been doing well in the international arena. With the export of household, office and kitchen furniture, the furniture industry has not only been regarded as a major player in the international scene, it has also helped in generating available employment for the local sector. However, there appears to be an insufficient account on the retail industry in the region. Though it has been indicated to do well with its outbound sales, the performance on the local scene has been overlooked. This paper intends to examine the local retail industry in Hong Kong. In order to analyze the Hong Kong market, the discussions will be using an impact analysis, strategic group analysis, and Porter’s Diamond Model. The study will also be examining one of the region’s top furniture retailers, Pricerite. At the end of the paper, the author will build a scenario that would establish a 10-year projection of the industry. It is in these data that a conclusion will be based.        II.               Impact Analysis The PESTEL analysis will be used to take into consideration the different aspects of the furniture industry in Hong Kong. A.   Political Factors Hong Kong has always been perceived as a bastion of commercial activity and capitalist ventures even before it has been placed under Chinese Rule. Nevertheless, despite the rather strict communist principles present in the central government in Mainland China, it has permitted the Special Administrative Region to continue with its prior trade and commercial activities. ( 2004) This however has been limited eventually by the Chinese government given the unimpressive performance of the leadership of the autonomous region. Along with this reduction of liberties, the Hong Kong government has to similarly contend with the changes in economic status as provided by deadly viruses such as SARS. This apparent danger brought about unemployment for over a period, along with some level of resistance to the changes of Chinese rule, eventually triggered discontent. (, 2004) The central government responded to this call be granting the Hong Kong population the right to elect their own leader. Similarly, the central government has also allowed the free flow of mainlanders to the administrative region by lessening the restrictions and encouraging mainlanders to spend their money in Hong Kong. ( 2004)    B.   Economic Factors Hong Kong’s economic performance is effectively rising from its rather meager performance over the past years. This is what  claimed in its report stating an 8.2% increase in the region’s GDP. The table below summarizes the major economic indicators of Hong Kong. Table 1. Major Economic Indicators - 2003 2004 2005 Latest Population, Mid-year (million) 6.80 6.88 6.94 6.94a Gross Domestic Products (US$ billion) 158.2 165.6 177.2 185.2 to 187.0b Real GDP Growth (%) +3.2 +8.6 +7.3 +8.2c GDP Per Capita (US$) 23,300 24,100 25,600 26,500 to 26,800b Inflation (% Change in Composite CPI) -2.6 -0.4 +1.1 +1.8d Unemployment Rate (%) 7.9 6.8 5.6 5.0e     In looking at the said data, it shows that there is a much greater demand in the region as provided by the inbound tourism from other Asian countries and from the mainland.   According to the annual report of one of Hong Kong’s top furniture company, there has been a great flux of tourists in 2004. ( 2005) This means that there is an increase in the possibility of instilling consumer confidence and created a new demand in the retail sector of the administrative region. Nevertheless, it is still apparent that price sensitivity still exists and is continuously slowing down businesses based in Hong Kong. ( 2005) This sensitivity apparently has been spawned by the meager economic fundamentals that have been ingrained in the region for the past years. The said claim is According to the report of the Hong Kong Retail Management Association (2006), the retail industry has accounted for 27.5% of Hong Kong’s GDP. In 2005, it provided the economy HK$ 204.6 billion. The table below summarizes the recent performance of the furniture retail industry. Table 2.  Furniture and Fixtures in Hong Kong       % Change 變動百分率     Type of Outlets 商舖類別 Index Number of May 2006 (Provisional Figures)             2006年5月  指數             (臨時數字) May 2006 compared with Apr 2006           2006年5月與2006年4月比較 May 2006 compared with May 2005        2006年5月與2005年5月比較 Jan-May 2006 compared with Jan-May 2005        2006年1月至5月與上年同期比較 Furniture and fixtures 傢具及固定裝置 88.7 -14.4 -5.4 0.1 99.0 -14.8 -2.7 2.6   The table shows that though there is a rising trend on the past performance of the furniture industry, the month of May 2006 showed a significant setback. This is reflected by the 2.7% decrease in the sales of furniture in the said month. C.   Socio-cultural Factors Being one of the major economies in Asia, the individuals dwelling in Hong Kong is seemingly familiar to the principles of trade and other types of capitalist ventures. This means that Hong Kongers know the value of their money. With this in hand, companies engaged in retail will eventually find success given that they provide the best possible line of product to the public with the most reasonable price they could offer. The table below summarizes the consumer spending in Hong Kong in 2004. The said data is acquired from a report of  (2006).                       Generally speaking, the report shows that the spending of Hong Kong consumers has significantly decreased in May of 2004. This may well be the effect of the outbreak of the SARS epidemic in the said year. However, the said study also shows that the future of the consumer spending will improve dramatically once the issue on the epidemic wanes. The table below summarizes the spending preference of the Hong Kong consumers.     D.   Technological Factors Hong Kong is one of the most technologically advanced societies with a computer literate population. (, 2003) In looking at the major players in the furniture retail industry, Pricerite and IKEA, they both have their individual websites where product information other company data is available. Some other businesses in the said region have also begun using the Internet as a medium to peddle their goods. This means that shopping online is, to a certain extent, a norm in the region. (2004) So it is viable for retail businesses to take on the internet as an ally to gather much more of their industry’s market share.     E.   Environmental Factors The emergence of deadly virus SARS has been one of the biggest factors that has affected Hong Kong economy, and with it its retail industry. Given the fear provided of incurring a sickness without a cure, the epidemic triggered a “cataclysmic fall” on the number of tourism coming to the region. ( 2004) Despite this apparent recession in triggered by SARS, the government of the administrative region has significantly lessened the case of infection of the said epidemic and eventually regained the number of tourist influx in the past years. F.    Legislation and Democracy Factors Despite the autonomy enjoyed by Hong Kong, these liberties are still under the mercy of the central government. The central government has then power to make decision regarding the region’s elections and anti-subversive legislation and use it to further place limitations on the social liberties enjoyed by Hong Kongers. ( 2004) However, this may yet to be seen in the near future if the central government wants to look good and maintain an amiable reputation internationally as it treats Hong Kong in a fair and just manner.   III.            Strategic Group Analysis The following discussion will present the company competing in the furniture retail industry. The discussions will be based on the situation of PriceRite. After the presentation of the specific attributes of the market, it the strategic position of the said firm will similarly be established. The discussions are divided based on Porter’s Five Forces Model.    A.   Threat of Entry The furniture retail market in Hong Kong is tightly contended by two huge companies, Pricerite and IKEA. Both are deeply established companies in the Hong Kong market, this shows that new entrants may have a difficult time in getting a part of the exiting market share in the furniture business. Given the nature of the competition in the said industry, both companies may possibly take on cost-reduction measure to defend their position in the market. And since the products are highly dependent on design and function for the differentiation of the products in the industry, patents, propriety knowledge, and brand reputation are among that are needed in entering the Hong Kong scene. And to some extent, these may well be considered barriers of entry among new players in the industry. Thus, new entrants are not apparently powerful in the industry.      B.   Powers of the Buyer The products that are offered in the furniture retail industry in Hong Kong are seemingly interchangeable and indistinguishable. Both of the major companies tend to the needs of the consumer with regards to the office, household, and kitchen furniture. Though the products that are sold by both companies could not be considered a commodity there are certain furniture sectors that tend to different sales channels thus ensuring a constant/regular number of buyers in the said industry. ( 2004) This shows that that the individual buyers in the retail sector are not the sole source of revenue of these companies. Though the buyers in the industry could well demand for a lower price from these companies, they don’t have the sufficient power to force these companies to take on their demands. This is supported by a report of  concerning the export of furniture from Hong Kong. The table below summarizes the performance of the region   Table 3. Performance of Hong Kong Furniture Exports - 2003 2004 2005 (Jan – Sept) Value (HK$ mn) Growth (%) Value (HK$ mn) Growth (%) Value (HK$ mn) Growth (%) Domestic Exports 21 +15 42 +98 12 -59 Re-Exports 7,677 -13 6,491 -15 3,433 -33 Of Chinese Mainland Origin 7,331 -14 6,278 -14 3,237 -34 Total Exports 7,699 -13 6,533 -15 3,444 -33   By Market: 2003 2004 2005 (Jan – Sept) Share (%) Growth (%) Share (%) Growth (%) Share (%) Growth (%) US 66.3 -18 61.8 -21 48.8 -48 Japan 11.4 -3 13.2 -2 17.1 -6 EU 5.9 -5 7.4 +5 10.2 -3 UK 2.5 -13 3.3 +13 4.1 -14 Germany 0.8 -4 0.8 -17 1.3 +5 France 0.6 +10 0.8 +14 1.0 -10 Chinese Mainland 6.2 +22 5.6 -23 8.7 +9 Australia 1.7 +18 2.1 +2 3.3 +14 Canada 2.8 -22 2.6 -21 2.6 -32   By Category: 2003 2004 2005 (Jan – Sept) Share (%) Growth (%) Share (%) Growth (%) Share (%) Growth (%) Seats & Parts of Seats 23.2 -4 26.5 -3 24.6 -41 Wooden Furniture 52.6 -20 45.0 -27 44.6 -32 Metal Furniture 8.6 -8 8.7 -14 10.4 -17 Plastic Furniture 0.3 -46 0.5 +39 1.3 +93 Other Furniture 6.1 -14 7.0 -3 4.6 -59 Parts of Furniture 1.5 -11 1.8 -1 2.0 -16 Mattresses 7.7 +8 10.6 +17 12.5 -16     C.   Power of Suppliers In the said industry, the power of the suppliers is relatively not strong given that the companies that compete for the market share could easily find other sources of raw materials for their products. Similar to the products that the companies offer to the public, the raw materials presented by the suppliers are in the same way interchangeable and indistinguishable. Similarly, it would if ever the cost of the raw materials provided by the suppliers get out of line, the companies in the said industry would not have a hard time in finding a replacement. In this manner the operations of the companies is not compromised. However, base on the annual report of (2005) they have installed a system that would be able to equalize the power between the supplier and the companies involved. This is called the Wireless Warehouse Management System (WMS) which improved the relationship between the supplier and the company. The company is also able to reduce the transaction costs through the speed and efficiency provided by the WMS.     D.   Threat of Substitutes There is always a threat for substitutes in every industry. For instance, the furniture retail industry companies like IKEA and PriceRite may have problems with the preference of the market to purchasing antique or even traditional furniture. This means that these companies may have to contend with a lesser market share do that prefer their contemporary product. Nonetheless, there may well be quite a few of these considering the price range of the products offered by these companies are less compared to that of the ones selling antique and traditional furniture. Moreover, given that the price of these substitute products is considerably more costly than that offered by the industry, it one could also observe that the quality, benefits, and specific features provided by these substitute products are considerably lower. Other than that, the companies involved in the industry have no other direct competition with other companies. The problem in this scenario is that the companies could not compete directly with these substitute products because these are not sell not manufactured by IKEA and PriceRite. E.   Competitive Rivalry The competition in the said industry is held by PriceRite and IKEA. Both companies came from foreign countries and are vying for the Hong Kong furniture market. Pricerite has to contend with IKEA, the biggest home furniture retail chain in Hong Kong. The IKEA model is anchored on establishing and offering an extensive variety of home furnishing products that are elegant and functional with reasonable rates which a lot of individuals will be able to meet the expense. Alternatively, Pricerite is merely starting to expand and build up a more customer responsive setting with the development of their store designs and supplementary offers. Albeit IKEA is an international organization and makes the most of the media by building up its advertisings, it can’t be rebuffed that Pricerite has survived for a longer period than IKEA. Therefore, the former is more recognized in the administrative region than the latter. In the said discussion, it appears that the competitors in the industry have a considerably diverse way of doing business. However, given the rather cutthroat competition for market share, the ways they do business are becoming increasingly similar. Given the kind of products that the companies offer the market, it appears that they spend a considerable amount of money to their plant and equipment. And in order to make the most of their assets and save a lot, it is recommended that outdated and rather faulty plant and equipment should be taken out of their company.   IV.           Scenarios The following discussion is going to provide both optimistic and pessimistic scenarios for the furniture retail industry in Hong Kong. The setting will be after a decade with the possible outcomes based on the existing period as discussed in this paper.    A.   Optimistic Hong Kong’s retail industry in the furniture sector will be flourishing. The policies coming from the central government are not limiting the potential of the companies that are competing in the industry as well as those that are trying to get in the industry. The market share of IKEA and PriceRite is considerably reduced because of the entrance of new competitors in the industry. Though there are some foreign based companies that are now competing in the said industry, a bulk of the other competitors are locally based and are supported by the special administrative region. Similarly, the market grown considering the great influx of mainlanders to the region, more demand for office, household, and kitchen, furniture is created.   B.   Pessimistic   The furniture retail industry is still dominated by the two foreign companies that have gained access to the market, IKEA and PriceRite. Their influence in the market has been of powerful given the number of employment they created and other economic assistance that gained the favor of the government. These companies become so influential that they have been able to gain the favor of the government to enact legislation that would install more barriers to entry in the industry. The Hong Kong market for furniture wasn’t able to develop because of these.   V.              Conclusion Based on the presented discussions above, the optimistic scenario may well be more feasible than that of the pessimistic. The retail industry in the Hong Kong furniture market displays how the Hong Kong buyers behave with regards to purchasing products. With IKEA and Pricerite being at the top of the furniture industry food chain, it appears that product. Product design, price and quality are important factors in their purchasing decisions. The rising numbers of dual-income households may prove to be the reason for the demand for such increase for house furnishing products that allow for easy use and quick cooking. Hong Kong consumers consider internationally-renowned brands of imported furniture and house furnishing products to have higher quality and better designs. The discussions above showed that possibly. Hong Kong is an important part of the central government in China that it will continue to permit Hong Kong to engage in what it does best, be a bastion of commercial development in Asia.   VI.           References Credit:ivythesis.typepad.com

FURNITURE RETAIL INDUSTRY ANALYSIS – HONGKONG

I. Introduction The retail industry in the Hong Kong setting has similarly been subject to a lot of changes...

ESSAY: HONG KONG RETAIL INDUSTRY

I.                  Introduction The retail industry in Hong Kong Special Administrative Region has also been cause to experience many changes for the precedent years. With the beginning of the region’s return to Chinese rule in addition to the spate of noxious viruses like bird flue and SARS are among the key changes that HKSAR has lasted in the previous years. With the exception of other industrial and commercial entities that have emerged in the Hong Kong market, the region’s furniture industry has made known its resiliency alongside the indicated changes. The furniture industry of the HKSAR has made wide-ranging developments in its performance in both the manufacturing and exporting segment. An internet study on the general performance of the furniture market is revealed by . (, 2005) It indicated that the furniture manufacturing industries in Hong Kong has been flourishing in the international field. With the selling abroad of household, office and kitchen furniture, the furniture industry has not only been observed as a key player in the global scene, it has similarly assisted in producing accessible employment for the local area. Nevertheless, there seems to be an inadequate description on the retail industry in the region. Companies seeking to enter the HKSAR market will be without any form of background information on the industry, especially the culture that surrounds it. This is especially true when a company intends not only to do business but establish a firm base in the said area. This paper intends to examine the retail industry in Hong Kong with the use of culture as a determinant of the company’s success, particularly to the client-company context. In order to analyze the Hong Kong market, the discussions will be using specific theories on culture, particularly of Hofstede and Ronen and Shekar.   II.               IKEA Experience: Hong Kong and Sweden Company Background   The company is a major player in the international furniture company with branches and subsidiaries in several countries in Europe and the rest of the North American region. The environment to which the country intends to enter is going to be discussed in the later part of the paper. Moreover, they also intend to employ a workforce coming from the local population in order to acquire the favor of the buyers in the said region. The following discussions are based on the articles made on the said companies. IKEA is not a publicly owned company, thus, data from an annual report from the company itself would be unavailable. However, statistics from its global website will be used to take into consideration the performance of the organization. A.   IKEA Sweden The humble beginnings of IKEA, the globally recognized furniture store, in Sweden in 1947 might have never expected that they would gross a total of 14.8 billion Euros by the year 2005. (, 2002, 103;, 2006) Being the base and headquarters for operations of the company, IKEA Sweden concentrates more in making and building their merchandise as opposed to focusing on sales in the Swedish market. It has employed over a thousand employees in areas such as furniture production, print media, and design activities held by the company. (, 2002, 105) This is just in the area of  alone. However, Sweden still possesses 8% of the top countries with regards to product sales. At the same time, it is at the top countries with 9% of the total purchasing rate internationally. B.   IKEA Hong Kong The IKEA stores in Hong Kong started as early as 1975 and was later bought by The Dairy Farm Company Ltd in 2002. (2006) It has three stores that take on over three hundred thousand square feet. The IKEA model is anchored on establishing and offering an extensive variety of home furnishing products that are elegant and functional with reasonable rates which a lot of individuals will be able to meet the expense. Albeit IKEA is an international organization and makes the most of the media by building up its advertisings, however its major competitor, Pricerite, has survived for a longer period. Therefore, the former is more recognized in the administrative region than the latter.       III.            Product Features and Characteristics The company is a major player in the international furniture industry. Among their major products that it offers includes office, household and kitchen furniture. Office furniture products include desks, cabinets, and other items found within the office environment. On the other hand products under the household and kitchen category are basically those utilized in an ordinary dwelling. Basic products like beds, wardrobe, couches, tables and the like are among the products that the company offers in the market.   IV.           Industry and Cultural Characteristics   In the current trends of globalization and internationalization, the issue of culture is necessary for companies and organizations seeking to compete in the international setting. Commercial and business activities have been attributed to the emergence of cultural globalization. ( 2003, 205) Similarly, it in these stated factors that allow organizations to obtain cues and clues on how to address particular situations in specific locations as they do business. ( 1998, in , 2003. 205) Some studies even pushes the envelope in saying that companies are even compelled to take on these differences in culture in order to adapt to the different demands of the consumers in the international scale. The following seminal works emphasizes the concept of culture as the major indicator of the overall performance of a firm. Moreover, the theory of cultural sphere will be used to take into consideration the environment surrounding the furniture industry in Hong Kong. A.   National/Regional Sphere 1.     Regional Sphere   Hong Kong has been one of the most ought after markets in the Asian region. Geographically speaking, the said area has been strategically positioned in the middle of the shipping routes. (, 1998, 346) In the context of the mainland, Hong Kong is situated in such a way that the Pearl River estuary passes through its territory. ( 1997, 738) With the presence of world-class harbors and ports, Hong Kong indeed has been one of the most lucrative markets in the Asian region. Traditionally, the laws that govern the land are based on the principles encouraging investments. ( 1997, 701) After the reunification process, the special administrative region still possess the same legal climate that encourages investments, however reforms on the context of patents, copyrights, and trademarks have reinforced this investor-friendly aspect of Hong Kong. (p703)   2.     National Sphere   The seminal work of  (1984 in  1994, 53) on culture has been used in the study of international marketing for the past decades. It has been used primarily as a set of indicators on how individuals on a specific culture react on particular sets of situations. The model of  (1984) is indicated below. The concept of power distance is focused on the level of equality present in a particular society. This means that this measures the manner in which wealth is distributed in a society.  (1999, 10) indicated in their book that Hong Kong is classified as a high power distance culture. This is similarly supported by the study of  (2000, 9). According to the study of (1984 in , 1994) societies with high power distance index that power and wealth are significant factors in society to the extent that it has inherently allowed these elements to develop within. This means that social mobility is not likely in the case of Hong Kong. Hofstede indicates individualism as to the level on which a culture regards the individual or collective elements of their society. More specifically, this measure how they consider collective or individual accomplishments and how they deal with interpersonal relationships. Recent studies show that Hong Kong society has a rather collectivist culture. ( 2003, 241) This means that the culture surrounding interpersonal ties is considerably tighter in the context of Hong Kong. There is an unwritten yet understood responsibility that each and every Hong Konger has on his/her comrade.  In this context, masculinity describes the level on which a society regards masculine roles and achievement. Moreover, this shows how gender is regarded in the said society. The recent work of  (2001, 433) indicated that Hong Kong society acquired a high dimension of masculinity in their culture. This shows that the major structures of the society in Hong Kong are dominated by male. Needless to say that Hong Kong has a high level of gender differentiation present in its society.   This dimension measures the level to which the individual s on a society regards uncertainty and ambiguity. The study of  (1999, 12) indicated that Hong Kong has a low uncertainty avoidance in its culture. This means that Hong Kong people are keener on acquiring risks and is open to the idea of change in situations. Given this attribute, Hong Kongers have a greater tolerance to ambiguity and uncertainty. Hong Kong is said to have a strong long-term orientation. (1999, 12) This indicates that commitments are highly regarded in such cultures. Similarly traditions are similarly deemed important in such societies.  (1999, 12) added that the persistent and thrifty attribute of the Hong Kong population have this effect on the orientation of the individuals towards their economic activities.  The work of  (1985, in , 1996) indicated that specific countries have the tendency to cluster together particularly with regards to the similarities of their culture. They indicated eight country clusters: Anglo; Germanic and Nordic; Latin European and Latin American; Near Easter; Far Eastern; Arab; and Independent. Hong Kong is categorized under far Eastern cluster. This means that the said state possess a culture that has high power standard, low uncertainty avoidance, very collective, and masculine. In considering the work of  and the classification of  totally complement each other.   B.   Industry 1.     Consumer Behavior The buying behavior of people often entails how a product or merchandise performs in the market. The response of the public to these specific kinds of products will similarly show how long it will stay in the market. To some extent the modern consumer is characterized as powerful in the market because not only that they now the value of their money, they are also informed and educated in making their choices. ( 2002, 12) According to  (1998, 275), the Chinese consuming public possess decision making behaviors similar to what  (1990, 134) indicated as brand conscious. This means that these consumers’ decision tends to be more oriented to purchase products that are well-known brands regardless of the high price. They tend to equate high price with high quality. These studies also established that the said consumers value high quality considering they claimed that their findings indicated that it is among the top factors that identified their respondents. Moreover, the study of  (1998, 275) indicated that the Chinese consumers are more price conscious as compared to the results of the other studies indicated here.   2.     Sources of Competitive Advantage   The economic integration of Hong Kong, one of the top capitalist regions in the Asian region, to the remaining communist superpower is rather unprecedented in recent history. ( 1997, 701) Though it has been under the British rule for several years, earlier works indicated doubts regarding the possible repercussions of the hand-over in the Hong Kong economy. However, (1997, 730) indicated even before the hand-over that the environment to which Hong Kong is usually related to will continue to be favorable for international investors. This means that the financial outlook of the Hong Kong economy will continue to be appealing for investors and businesses alike.   Another source of competitive advantage is the availability of skilled employment in the country. (, 1997, 701) Nevertheless, there is an apparent inequality in the context of gender within the workforce. ( 2002, 69) Normally, this is reflected in the employment positions and earning between male and female employees in the administrative region. Even so, companies seeking operations in this area will have access to skilled labor.   3.     Rate of Technology Change The rate of change in technology in the Hong Kong environment is considerably at par with its counterparts in the international setting. Initiatives taken by the administrative region has been significantly aggressive. Early attempts to attune the population with IT applications in the academe has made it possible for the Hong Kong students be more adept in this area. ( 2003, 269) 4.     Nature of Product and Market In accordance with the yearly report of one of Hong Kong’s top furniture corporation, there has been an immense influx of travelers in 2004. (, 2005) This denotes that there is a boost in the opportunity of instilling consumer confidence and fashioned a new demand in the retail sector of the administrative region. Nonetheless, it is still obvious that price sensitivity still subsists and is incessantly holding back the development of businesses based in Hong Kong. (, 2005) This sensitivity actually has been brought about by the meager economic fundamentals that have been embedded in the HKSAR for the past years.   5.     Regulation and Intervention Hong Kong has constantly been supposed as a stronghold of commercial activity and capitalist ventures in Asia even before it has been given back to Chinese Rule. However, regardless of the rather firm communist values present in the central government in China, it has allowed the Special Administrative Region to carry on with its past trade and commercial actions. ( 2004) This nonetheless has been restricted eventually by the Chinese government provided the unimposing performance of the leadership of the autonomous region. Together with this cutback of liberties, the Hong Kong government has to likewise deal with the changes in economic status as presented by lethal viruses such as SARS. This evident danger triggered unemployment for over a period, in conjunction with some level of resistance to the changes of Chinese rule, in due course brought about discontent. ( 2004) The central government reacted to this cry be permitting the Hong Kong population the right to elect their own head. Correspondingly, the central government has similarly permitted the free flow of mainlanders to the administrative region by reducing the restrictions and cheering on mainlanders to splurge their money in the administrative region. (, 2004)   C.   Company Hong Kong is essentially a predominantly Chinese society which still has considerably stronger familial ties. ( 1995, 83) This attribute even goes as far as the context of business. Small and medium sized businesses in the administrative region are commonly run by families. And being a predominantly Chinese society, it is still subjected to specific attributes. A study of  (1997, 5) indicated that the Hong Kong companies that are governed by Chinese families operate through an amalgamation of interpersonal relationship which relies on personal trust. In this context, decisions are made such that consultation from family members and other components in a company’s social circle is commonplace. Thus, trust is therefore plays a huge factor in the decision making process in companies of Hong  Kong. D.   Professional The employment pool of Hong Kong has been considered as highly skilled. (1997, 701) With the environment of Hong Kong being conducive for investment, it is not surprising that the administrative region acquire foreign direct investments, thus creating employment to the Hong Kong public. ( 1997)  1.     Education in Hong Kong Basic education in Hong Kong has acquired the British system of six years in primary, three in junior secondary, two years in senior secondary, and two years additional compulsory matriculation on university examinations. (, 2003, 137) However, the changes brought about by the handover to Mainland China have triggered several reforms in education particularly in the aspect of mother tongue instruction and restructuring of the past 6+3+2+2 structure. (p138) The reforms in the Hong Kong curriculum entail the development of a more generalist perspective in the context of basic education in the special administrative region.   On the other hand, there are also specific policy initiatives that the Hong Kong administration intends to carry out. The Design and Technology subject is added in the curriculum in Hong Kong schools. ( 2003, 21) This subject is comparable to technology education programs that are normally seen in US curriculums. With these subjects infused in the educational system, the future workforce of the region is subjected to problem solving training that will assist them in the future.         E.   Functional Hong Kong is among the most technologically superior societies with computer literate residents. ( 2003) In observing the major competitors in the furniture retail industry, Pricerite and IKEA, they both possess their individual websites where product data other company facts is accessible. Some other companies in the said region have similarly started employing the Internet as a means to market their goods. This denotes that shopping online is, to a particular level, a standard in the region. (,  2004) So it is feasible for retail companies to employ the internet as an ally to acquire much more of their industry’s market share.  The products that are offered in the furniture retail industry in Hong Kong are seemingly interchangeable and indistinguishable. Both of the major companies tend to the needs of the consumer with regards to the office, household, and kitchen furniture. Though the products that are sold by both companies could not be considered a commodity there are certain furniture sectors that tend to different sales channels thus ensuring a constant/regular number of buyers in the said industry. ( 2005) This shows that that the individual buyers in the retail sector are not the sole source of revenue of these companies. Though the buyers in the industry could well demand for a lower price from these companies, they don’t have the sufficient power to force these companies to take on their demands. This is supported by a report of TDC  concerning the export of furniture from Hong Kong. The table below summarizes the performance of the region   Table 3. Performance of Hong Kong Furniture Exports - 2003 2004 2005 (Jan – Sept) Value (HK$ mn) Growth (%) Value (HK$ mn) Growth (%) Value (HK$ mn) Growth (%) Domestic Exports 21 +15 42 +98 12 -59 Re-Exports 7,677 -13 6,491 -15 3,433 -33 Of Chinese Mainland Origin 7,331 -14 6,278 -14 3,237 -34 Total Exports 7,699 -13 6,533 -15 3,444 -33   By Market: 2003 2004 2005 (Jan – Sept) Share (%) Growth (%) Share (%) Growth (%) Share (%) Growth (%) US 66.3 -18 61.8 -21 48.8 -48 Japan 11.4 -3 13.2 -2 17.1 -6 EU 5.9 -5 7.4 +5 10.2 -3 UK 2.5 -13 3.3 +13 4.1 -14 Germany 0.8 -4 0.8 -17 1.3 +5 France 0.6 +10 0.8 +14 1.0 -10 Chinese Mainland 6.2 +22 5.6 -23 8.7 +9 Australia 1.7 +18 2.1 +2 3.3 +14 Canada 2.8 -22 2.6 -21 2.6 -32   By Category: 2003 2004 2005 (Jan – Sept) Share (%) Growth (%) Share (%) Growth (%) Share (%) Growth (%) Seats & Parts of Seats 23.2 -4 26.5 -3 24.6 -41 Wooden Furniture 52.6 -20 45.0 -27 44.6 -32 Metal Furniture 8.6 -8 8.7 -14 10.4 -17 Plastic Furniture 0.3 -46 0.5 +39 1.3 +93 Other Furniture 6.1 -14 7.0 -3 4.6 -59 Parts of Furniture 1.5 -11 1.8 -1 2.0 -16 Mattresses 7.7 +8 10.6 +17 12.5 -16   V.              Conclusion and Recommendations A.   Conclusion   In looking at the discussions above, it appears that the use of culture has a significant effect on the way companies do business. Take the company presented here for example; being in the furniture industry, they are able to design furniture that would be able to cater to the needs of the Hong Kong market. Given the data above, it stated that Hong Kong has a very high discrepancy between the rich and the poor. Another fact indicated above is that the Hong Kong culture, regardless of the metropolitan setting, still possesses that collective trait. In this manner the designs of their products could be as modern as they want, however, the designs should similarly acquire the necessary traditional functionality that the Hong Kong household requires. The company should similarly create a name for themselves not only with their products but also through the imbedding their brand in the consciousness of the public. Relating their product with traditionally credible individuals or institutions may trigger the consumers’ dimension for long term orientation.   B.    Recommendations The findings above indicate several indications of the market based on the buying behavior of the public in Hong Kong. The said studies presented above claimed several generalizations regarding the buying behavior of every nationality. Along with these generalizations includes the possible opportunities for the companies on how these attributes could work to their advantage. These features of the market behavior and consumption will ultimately help the companies operate in such a way that they complement the needs of the public based on these attributes. 1.     Build up the Brand Reputation of the Company     Considering the brand’s reputation is a big part of the buying behavior of the public. This means that branded products in this context is considered as among those considered as the highest quality in the market because they have to make sure that they have a strong hold on their market share. ( 1994, 373) Taking this into context, it is more likely that these branded products are pricier as compared to the other products made by the other players in the industry. Based on discussions above regarding the buying behavior of the public, it appears that the price of the item is negligible provided that its brand has a reputation in the market of having high quality. This is an opportunity for the companies to take into consideration the possibilities of this attribute. They have to establish that they could indeed heed to the demands of the public with regards to the qualities of the products. They could also differentiate their products with the others in the market by instituting a more functional attribute to their merchandise. On the case of the new entrants in an industry, what they want to do is to establish a brand name first and equate themselves to high-quality products. Being a new player in the market, they may have trouble competing with the branded products because the said branded merchandise have already created a name for themselves and equated their brand to economic status, elegance and the like. On the case of local manufacturers, they could similarly take advantage of this opportunity by making joint ventures on these branded companies. In doing so, they are able to use an established brand without to contend with the trouble that new entrants face in entering the market. 2.     Use advertisement and other marketing strategies to create a foundation to acquiring a grater market share    The findings above indicated that brands with strong hold in the market are able to acquire a greater market share as compared to its competitors. This means that the popularity of the brand have a great impact on the number of sales and revenue earned from the market. And according to one study, the reputation and popularity of the brands also depend on the country of origin of every company. ( 1997, 361) Country image is important in this aspect; brands made from specific countries not only denote quality but also exude the image of prestige. In this context, companies should take into consideration and constantly monitor their intangible assets. (1997, 361) These intangible assets include brand loyalty and brand popularity. This will work if they create a strong brand by constantly reminding the public of their product line through advertisements and other marketing campaigns. A good illustration would be the advertisement of Nike where they use local sports heroes to market their products to the public. ( 2004, 185) Not only did Nike presented an image of excellence in the context which the local market could relate to, they have also utilized the strength of their brand to exude quality and resilience as required by the sports activities carried out by the local sports heroes.  3.     Get closer to the consumer by establishing stores in commercial areas       Another aspect present in the findings above is that the modern consumers tend to adhere to a buying consumption where they treat it as a leisure activity. Leisure shopping is apparently brought about by the emergence of shopping malls and department stores all over the world. ( 2001, 7) This shows the opportunity for companies. This indicates that much of the consumption that takes place on the part of the buying public occurs in these areas: the malls and department stores. It would be advisable for these companies to strongly consider taking up commercial spaces in malls and department stores in order to effectively market their product line. In some ways acquiring shop space in such areas not only allows the consumer easy access to the products of a company, it also serves as a means to advertise the products to the public. Thus, department stores and malls are thus an effective instrument for the companies to get closer to their buying public. VI.           References             Credit:ivythesis.typepad.com

ESSAY: HONG KONG RETAIL INDUSTRY

I. Introduction The retail industry in Hong Kong Special Administrative Region has also been cause to exper...