Overview
Hong Kong’s legal framework and high per capita income attract foreign franchisors looking to expand to international markets. There were approximately 135 franchised systems in Hong Kong in 2008, predominately in food, retail stores, fitness, children’s services, IT and educational training services. 35% of franchises in Hong Kong are in the food and quick service restaurants category, one third are in services, and the rest are in retail stores. Just under 50% are foreign-owned, the majority of which are from the U.S.
Most of the local franchisees of U.S. franchises operate as area developers and do not sub-franchise. They do, however, often include the Pearl River Delta (PRD) region of Southern China and the Special Administrative Region of Macau as their territory of operation. The PRD continues to post strong economic growth, and economic integration between Hong Kong and this region has created a wealthy consumer base with strong franchising potential. With their unique ties to China, Hong Kong franchise consultants often assist franchise owners, both local and foreign, to develop a strategy for expanding operations to this region. It is also common for Hong Kong area developers to partner with the U.S. franchisors to jointly develop franchises in the PRD region, involving equity participation from the U.S. franchisor.
U.S. brands such as Starbucks, 7-eleven, Pizza Hut, Burger King, GNC, Three Dog Bakery, and Century 21 are popular in Hong Kong. American franchisors will, however, find strong competition in Hong Kong due to the maturity of its market and the long establishment of major franchise systems. Successful franchisors are those who understand the need to tailor products and services to local consumer tastes and market them through effective channels.
Best Prospects/Services
Quick service restaurants with an entertainment theme, and franchise systems that are related to pets, children and education.
Opportunities
Most franchise growth in the past two years has been in quick service restaurants, nutritional supplements retailing, nail bars, and learning centers. Macau, with its growth of gaming resorts and MICE (meetings, conventions and exhibitions) business will continue to boost visitor numbers and increase the demand for food and beverage outlets and resort-type services. The shortage of skilled manpower in the hospitality industry is also a major problem for the many casino resorts that have opened in the past year. There are therefore opportunities for U.S. franchisors in new quick service restaurants, spas, nail bars, and training services in Macau.
Hong Kong, with its open import market, excellent transportation and business infrastructure, serves as a regional distribution, logistics and marketing hub for many U.S. franchisors to service existing Asia Pacific franchisees. Hong Kong also serves as a regional showcase for U.S. franchisors looking to penetrate the Mainland Chinese market and other markets in the region.
Resources
A list of franchise operators in Hong Kong can be found on the Hong Kong General Chamber of Commerce’s franchise website at www.franchise.org.hk.
For more information about this industry sector, please contact U.S. Commercial Service:
Ms. Swee-keng Cheong, Commercial Specialist
Email: swee-keng.cheong@mail.doc.gov
Tel: (852) 2521-5233; Fax: (852) 2845-9800