Overview
Hong Kong’s legal framework and high per capita income attracts foreign franchisors looking to expand to international markets. There are approximately 130 franchised systems in Hong Kong in 2007, predominately in catering, retail, photo processing, laundry services, IT and educational training services. Just fewer than 50% are foreign-owned, the majority of which are from the U.S. 35% of franchises in Hong Kong are in the catering and quick-service restaurants category, one--third are in services, and the rest are in retailing. 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 (immediately to the north of Hong Kong) 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 its unique ties to China, Hong Kong franchise consultants often assist franchise owners, both local and foreign to develop a strategy for expanding the franchise operations to this region. It is also common for the Hong Kong area developer to partner with the U.S. franchisor to jointly develop the franchise in the PRD region, involving equity participation from the U.S. franchisor.
U.S. brands such as Starbucks, 7-Eleven, California Pizza Kitchen, Three Dog Bakery, Gymboree, Krispy Kreme, 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, and promote them through effective channels.
Best Prospects/Services
Best prospects include quick-service restaurants with an entertainment theme, and franchise systems that focus on pets, children and education.
Opportunities
In Hong Kong, most franchise-related growth has centered around quick-service restaurants, nutritional supplements retailing, nail and beauty care, and learning centers.
Hong Kong with its open import market and 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, and to find new franchisees in the region. Hong Kong also serves as a regional showcase for U.S. franchisors looking to penetrate the Mainland Chinese market.
In Macau, recent growth in gaming, hospitality and MICE business has boosted visitor numbers and increased local demand for food and beverage outlets and related services. The shortage of skilled labor in the hospitality industry in Macau is also major challenge – franchises that offer turn-key solutions, training and support may find new opportunities related to quick-service restaurant, spas, nail bars, and hospitality--related services.
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