Perpetual Initiatives, Always Ahead of the Times–Interview with Ho Tin Industries Ltd.

Established in Macao almost 50 years ago as an industrial manufacturing company, Ho Tin Industries Limited is a diverse industrial company. They provide a wide range of services from conception, design and production, to the manufacturing of ODM and OEM products for world-famous brand names.

Key to Success-Overseas Investors and Mainland Support

Having introduced a computer aided design and manufacturing (CAD/CAM) system, Ho Tin has been at the forefront of technical development since the early 80s. Among their home appliance products, solar photovoltaic (PV) modules for generating electricity are produced on a US-imported automatic assem bly line. The annual capacity is between 40,000 to 50,000 solar photovoltaic modules.

Though its headquarters are located in Macao, Ho Tin is also linked with research institutions from the Mainland to increase its technical strength. Co-operating with well-known universities in China, it first established its own Industrial Technology Institute in 1992 as a means to further improving Research and Development activities, developing skilled local employees and controlling the quality of their products. With support from Zhejiang University in China, Ho Tin established a mould design research institution, which marked the beginning of Macao’s research development in the field of high tech manufacturing.

In the same year, Ho Tin started Zhongshan Ho Tin Plastics and Electronics Manufacturing Factory in Zhongshan City in the south of Pearl River Delta. Its products include kitchen appliances, solar photovoltaic modules, solar garden lights and toys. All of these products are for export. Ho Tin received an award for its achievements as a chinese export enterprise in 2004.

Ho Tin’s Belief

The founder of Ho Tin Industries, Ho Tin, was born in Zhejiang province and is considered a pioneer in Macao’s industrial sector as a world famous entrepreneur. He once said: “I don’t have salesmen, my products represent themselves and are as good as a thousand salesmen.”

Today, Ho Iat Seng, has succeeded his father, the former Executive Director of Ho Tin Industries, and leads the company on the path of continued development. He continues what his father believed — Diligence and Loyalty In addition, he has put forward new ideas such as innovation and quality.

Since Ho Tin began his company in 1960, Ho Tin Industries has grown from having factories covering an area of more than 7,000 square meter, with more than 2,300 employees to nowadays 30,000 square meter. As a local company, Ho Tin Industries has over the years not only witnessed the “golden age” of Macao industrial development, but also Macao’s transformation into a gambling and entertainment centre at its core.

Thriving Under Pressure

According to Mr Ho, Macao is a tourist city with a land area of only 28 square kilometres and a population about 482,000 industrial developments are inevitably constrained by Macao’s limited domestic market and land resources. Land costs, wages and electricity are relatively high compared with newly developing areas on the Mainland. Facing these difficult conditions, Mr. Ho thinks that the government support policies on industrial products, for a company to continue being successful. Only by using these advantages can Ho Tin survive in the present inhospitable environment for industry and find its way on the Mainland market.

Catching Early Opportunities on the Mainland

Back in the 80s, Ho Tin became the first supplier of materials processed on Mainland China, because it saw advantages in government policies, convenient transportation and a favourable environment for business in the southern coastal areas of China.

Nowadays, the implementation of CEPA, together with the building of a cross-border industrial zone between Macao and Zhuhai and the “9+2” economic co-operation in Pan Pearl River Delta attract more and more investors to Macao. These new investors compete with local companies like Ho Tin. However, Mr. Ho does not see this as a threat. In his opinion, Macao’s economy will eventually diversify and this is the same goal of all Macao entrepreneurs and the Government. For future growth, Mr.Ho believes greater opportunities lie on the rapidly changing Mainland.

Change is survival

Ho Tin deeply believes that product quality and innovation are the basic requirements for the survival of a company and therefore to compete and to change with the market trends to thrive.

During the late 90s, Ho Tin Industrial once reached a monthly production of bacteries, of 60,000 to 100,000. Nevertheless, nickel-hydrogen, and nickel-chrome bacteries all stopped being used, due to the remarkable progress in IC technology and fast changes in mobile phone design. Ho Tin’s strategy at that time was to focus on “change” — adapting to the fluctuations in the market as quickly as possible. To meet the challenges of a new market, Ho Tin Industrial did not wait to “replace original products with new products”.

In the past two decades, Ho Tin Industrial has been committed to promote, design, develop and produce environmental friendly products and has set a good example in the sector. Solar products did not appeal to companies and factories when they first appeared in 1987, but they soon became popular and are trendy today. Mr.Ho believes that the growth of this industry has been due to a combination of low labour costs on the Mainland and the reduced operational costs.

With the most advanced machines, international brand solar cells and raw materials, Ho Tin Industrial offers a wide range of standard and customised high quality PV products. Their annual PV module capacity is up to 10MW and they also produce up to 10 million other solar products. It is one of the biggest manufacturers in the world now.

In Macao, Ho Tin Industrial was the first industrial company whose facilities met the international quality assurance standards of ISO 9001. In addition, it organised the ISO14001 environmental management system in 1997 and was also the first to be awarded the certificate. As a Macao based company for almost 50 years, Ho Tin Industrial maintains its core purpose of consistently protecting the environment, preventing pollution and promoting sustainable development for all.

Daiso’s First Store in Northern District Brings a New Shopping Experience to Macao

Daiso, the premier Japanese value store, opened its first branch in Macao on 30 September. Sun Star Group invested around MOP15 million in the joint venture. The cooperation project was a well-considered decision rather than a mere co-incidence.

Sun Star Group’s major scope of business is the management of large shopping centres in Macao. Its current operations include, Sun Star Plaza and Sun Star Castle at the Barrier Gate area (also known as “Guanzha”), which was completed more than a year ago. Daiso is a subsidiary of Daiso Industries Co. Ltd. (Daiso Industries) of Japan. The first store in Macao is located in the ground floor of Sun Star Plaza near the Barrier Gate area, with an area of roughly 22,000 square feet. Daiso Japan granted Sun Star Group the franchise to operate a store in Macao. The Sun Star Group is responsible for the capital while Daiso Japan is the supplier of merchandise and provides guidance and planning advice.

The Chairman of Sun Star Group, Mr. Harton K.H. Ma, pointed out that Daiso’s management and operations are one of the best in Japan. It has been ranked second in the service industry and ranked first in the retail sector for years. This is why they decided to bring it into Macao.

Introducing the Japanese Approach of Retail Management

Mr. Hirotake Yano, President of Daiso Industries came to Macao and officiated the ribbon-cutting ceremony at the opening of the Daiso store. Being a man of action, Mr. Yano was very attentive to details; he went around the store and demonstrated the display of goods on the shelves to the sales assistants. With such dedication and commitment, Daiso will surely set a new trend in shopping in Macao.

Sun Star Group opened the first store in Guanzha in consideration of its proximity to the border between the Mainland and Macao. The constant flow of people and goods in the area brings a larger number of potential customers to Daiso.

On opening day, more than 30,000 types of Japanese goods were available in the store, goods were imported from Japan once a week.

Mr. Ma said that the Guanzha store was well accepted by the public after its soft opening on 13 August. There was an average of 2,000 to 3,000 customers every day and the figure increased to as much as 5,000 people during weekends and public holidays. Sun Star Group has therefore planned to open the third floor before Christmas and increase the total area by another 8, 000 square feet. They also intend to open a flagship store in Macao with more Daiso products so that local consumers will have greater variety.

New Consumption Pattern Takes Shape

Mr. Ma estimates that it will take seven to eight years for this ten-year-long investment project to generate returns. They hope that Daiso will not only give a boost to the Barrier Gate area, but also take the lead in developing the Northern District into a new shopping area.

Mr. Ma said that the investment decision of Sun Star Group was based on scientific data and was not a hasty decision. A survey on the potential source of customers was conducted before the opening of each Daiso store. For instance, the second store opened in Sun Star Castle in December this year focus on the sale of cosmetics, food and stationery products since the potential customers in the central district are mainly tourists and a number of shopping centres are also available in the neighbourhood.

A Stronger Brand in Macao

At present, Daiso has more than 300 stores in various countries and places outside Japan including Canada, Hong Kong, Palestine, South Korea, Singapore, Taiwan, Thailand, and the United Arab Emirates. Macao may look insignificant in such an extensive network, but Mr. Yano said that he attached great importance to the Macao market because as far as Daiso is concerned, the size of the market is not the most important factor, it is the quality of each branch that matters which is crucial in the development and expansion of the Daiso business.

Since Daiso now has already established stores in Hong Kong, Macao and Taiwan, will they start developing the Mainland market in consideration of its vast market and potential customers? Mr. Yano said that currently Daiso’s goods are targeted at European and American living standards. Although there are Daiso warehouses in the Mainland and many enterprises have also expressed their interest in working with Daiso, Mr. Yano believed that it is premature to do so. The Group’s major concern at this stage is to focus on running the existing stores well before they would consider accessing the Mainland market.

Distilled Water from Macao Taps the Mainland Market

L’essence Distilled Water Factory (Macao), the only local distilled water manufacturer, began operations at the end of 2005 giving Macao its own distilled water brand.

Millions of Patacas Spent on European and American Equipment

L’essence’s total investment is over ten million patacas. Over the past six months it has been preparing to commence production. In the final run-up, Acting Manager Chen Jing Xi says that they have run numerous tests in order to improve production efficiency and guarantee quality. Residents in Macao will be able to buy this locally produced distilled water in major supermarkets after its Christmas launch.

Mr. Chen further points out that the product line of L’essence includes bottled water in 350ml, 500ml and 1000ml bottles and family size containers of 3 and 5 gallons. During the production trials, the factory was able to produce 9, 000 small bottles of water per hour. When official production begins, it will be able to produce more than 10,000 bottles of water and several hundred family size containers per hour.

Mr. Liu Ji Min, Managing Director of L’essence says they are going to open an outlet in northern Macao, they are in the process of renovating and decorating the store and making preparations for its opening in January 2006 and indicated that if it all goes well, they will open more outlets in other parts of Macao. They will also promote their products using various marketing measures in order to make L’essence a well-known brand in Macao.

A Taste of “World Heritage”

For any product, an appropriate brand image is needed to highlight it’s positioning and features. Since the company wants to manufacture distilled water as a Macao brand, says the managing director, they have put a great deal of thought and consideration into product packaging. They along with many famous Mainland marketing and promotion companies have developed different types of packaging, hoping to find a unique design for the product. They also applied to Macao Government Tourist Office for the inclusion of “World Heritage” on the package. Mr. Liu says that is because they are interested in business opportunities for the tourism industry brought about by the listing of Macao in the World Heritage UNESCO catalogue.

“Visitors are important potential customers of L’essence. If we can put the image of World Heritage site on the package, we can highlight our branding position and also increase Macao’s profile.”

MR. Liu says positioning his product as distilled water from Macao will eventually help them to tap the Mainland market because, although there are abundant distilled and mineral water brands in the Mainland market, quality varies significantly from one to another. Thus his marketing strategy is to build a reasonably well-known brand in Macao and then enter the Mainland market using CEPA. He further points out that if they are to meet the Mainland market demands, their plant in Macao might not be large enough. Therefore, when their business is on the normal track, his next step is to build a factory in the cross-border industrial zone to allow them to meet the increased production demands.

Stringent Controls Guarantee Quality

Apart from packaging, quality is crucial to product recognition. Based on his previous experience in the pharmaceutical industry, Mr. Liu adopted a full set of stringent quality controls and sanitation methods in the distilled water production. Apparently, the lion’s share of the ten million patacas’ investment was spent on purchasing production equipment from countries such as the US and Germany. They conduct stringent controls on production, operations and sales in line with ISO9001 and HACCP (Hazard Analysis and Critical Control Point). Every process is done according to 100-level purification standard to guarantee quality.

“Only good quality can win recognition from consumers”. Mr. Liu is confident that consumers will take to their product. He is convinced that since they have a production line that uses high-tech equipment, providing a top quality product, they will cultivate a distilled water brand name for Macao and later introduce it on to the Mainland and international markets.

New Dining Choices Enrich Macao’s Food Culture

The Chua Lam Gourmet Kitchen which is affiliated to the Hong Kong based Treasure Group, opened its first chain restaurant in Macao last August. The Chua Lam Gourmet Kitchen Macao has invited the famous gastronomist and columnist, Mr. Chua Lam to be the consultant. Famous for his television appearances, Mr. Chua is well-known for his selection of wine, bountiful and extravagant feasts which may help to enrich the knowledge of Macao’s cuisine culture.

Some people say that Macao is an Asian version of Europe, but Mr. Chua disagrees and says that Macao is unique and has its own characteristics. The kindness of its citizens blended with the excellence of local cuisine has contributed to its particular lifestyle.

In the past year, as the travel industry developed rapidly, restaurant industry has also flourished. According to an official survey, 1,471 restaurant businesses have been registered with the Civic and Municipal Affairs Bureau by the end of November 2005, among which 85 permits were issued. In addition, among the 220 restaurants registered with the Macao Government Tourist Office from January to October this year, 11 were newly registered in 2005.

Before Mr. Chua decided to invest here, he made frequent visits to Macao and studied the local restaurant industry. He traveled around Macao to observe the market and to uncover its unique characteristics and potential. Two to three years ago, following the liberalisation of the gaming industry and subsequent rapid economic growth, he started his investment plan in Macao.

Macao – Right time, Right Place, Right Market

In Chua Lam’s opinion, this is the right time for investment as all the required conditions are favourable. He foresees that after the completion of the HK-Zhuhai-Macao Bridge , there will be direct vehicular links and passenger flow amongthe three places. By that time, Hong Kong, Zhuhai and Macao will be better connected with closer partnership in their economic, people and logistics development.

As an investor, he thinks highly of the governance of the Macao Special Administrative Region and the good relationship between the authorities and citizens, which brings about the harmonious social atmosphere. He said that in the course of introducing of the Gourmet Kitchen to Macao, he felt that the Macao Trade and Investment Promotion Institute was very hospitable and considerate to investors. During the development of the project, the department provided a temporary office and helped in the applicaton of the necessary permits and licenses.

The Chua Lam Gourmet Kitchen is located in the prime location and busiest area in Macao, Largo do Senado. Inside the elegant, light yellow Portuguese building, there are six restaurants: Wing Lai Yuen (a very popular and famous restaurant in Hong Kong), He-En (serves various special Japanese dishes), Oh Sushi and Tappas, Tokyo Hip House, and Order Yaki. These restaurants serve authentic and unique foods including the hand made Sichuan noodles made with ordinary ingredients flour but give an extraordinary taste, as well as the delicate Japanese Kobe steak and delicious grilled foods. All dishes available are reasonably priced so that they are affordable for most people. Mr. Chua also believes that Macao has its unique cuisine culture and it is an exaggeration to say that the Chua Lam Gourmet Kitchen in Macao needs to borrow the experiences from other places.

Good Management Takes Time

There is no doubt that the introduction of Chua Lam Gourmet Kitchen, the Sichuan restaurants from Hong Kong and the authentic Japanese food have created more choices for local people to satisfy their tastes. Although Hong Kong and Macao are so close together, it still takes time to analyse the types of restaurant to open which can fit in with the local food culture. Mr. Chua said that if everything was strictly planned, their own characteristics will be lost. After the restaurants are opened, they can make changes and adapt to local tastes. They have to go through such constant modifications in order to work out a style which match the features of the Macao restaurant industry. He is certain that he has made the right decision to invest in Macao and once it becomes successful it is very possible that a second or third Chua Lam Gourmet Kitchen will be opened.

Investment is Not Just Confined to Food

Chua Lam is not contented with the introduction of Chua Lam Gourmet Kitchen in Macao. He said that the experience and lessons learnt from investing in the restaurant industry has familiarised him with Macao’s administrative procedures, market demands and potential. By utilising these experiences, he is planning to establish an investment consulting company which, provides consultancy service to companies which are planning to invest in Macao. He will use his column to introduce Macao’s investment environment and persuade people to establish businesses here.

He stated that many Macao residents come from Fujian Province. So Fujianese restaurants would be quite profitable. The Macao’s Park in the Cross Border Industrial Zone offers relatively low land prices and competitive factories, salaries and operational costs. It provides favaourable conditions for the investment of various manufacturing industries, particularly the electronics knitting industry which provides processing service to well-known international designers brands.

Mr. Chua pointed out that investment in Chua Lam Gourmet Kitchen is just the first step of his many ambitions. “Nowadays, Macao’s economy is at the first phase of prosperity, we have so many different choices and it is a golden opportunity to invest.”