GOOD CHEER From left, Cecil Yow, Jimmy Lai and Ken Chan have plenty to celebrate this Christmas - two new China-based ventures.Christmas tree maker turns to TV marketing in China.
Jimmy Lai Kam-wing is one entrepreneur who can see the forest for the trees. With over 30 years experience in the Christmas tree manufacturing business Lai knows the time has come to diversify his business while cashing in on his guanxi in China.
Lai, the 45-year-old founder and managing director of FT Holdings International, in April this year established a media division, FT Multi-Media, which has launched a unique television-marketing concept in China. A further diversion from his core business is expected later this month or early next year when FT will launch a car-alarm system business, also in mainland China.
1n 1970, Hong Kong-raised Lai began work at a local foliage and Christmas tree manufacturing firm, at a time when plastic flowers were one of the mainstays of Hong Kong’s exports. His flair for design and love of plants, albeit artificial ones, drove him to start his own foliage firm in 1979, then called Forest Trading (after listing on the Hong Kong Stock Exchange in 1997 it became known as FT Holdings International).
From humble beginnings, starting with one factory in Macau and about 60 employees, Lai has expanded production to manufacturing Christmas trees and his staff now totals more than 2,000. More than 25 China-based factories churn out his products.
Lai puts his continued success down to his ability to introduce new, high-quality products each festive season and he hopes his diversification into new areas will further strengthen the company’s position.
"I do all the design and create all the items," says Lai, who this season has introduced fibre-optic lit trees and a range of angels and Santa figurines, also with fibre-optic lighting. "I love being a business man; that’s why I can work so hard for 20 years."
However, because FT Holding aims to create Christmas trees using only best quality, life-like materials, it is finding it hard to compete in a market where other manufacturers don’t place the same emphasis on quality. "We concentrate on high grade - we are not competing in the mass market," says Lai.
He predicts the wholesale price of Christmas trees will fall by roughly 10% this year. So despite his efforts to introduce innovative products, like the large fibre-optic trees (for which the company is seeking a patent in the US) and easier-to-assemble trees with lights already incorporated into the structure, Lai has decided to bring onboard his long-time friend and experienced advertising agent and movie distributor Cecil Yow.
Yow, CEO of FT Multi-Media subsidiary, previously worked for Leo Burnett Advertising Agency and China Star Entertainment Group, which specialises in the distribution of movies and TV dramas in mainland China.
Multi-Media Limited is "actually a traditional old economy media company, despite what the name implies", says Yow. "I’m not a Golden Harvest or China Star. They make a movie or TV program and then sell it to make money. I’m actually a media services company for advertisers and advertising agencies looking for alternative or non-traditional ways of advertising.
"When we give a show to a TV station we don’t take cash, we take advertising time and we in turn sell the air time to companies like Johnson & Johnson and Omega."
To illustrate the strengths of the marketing tool, Yow describes the recent success of a 20-episode romantic drama series, Amour, which was released to 120 TV stations across China. The series was co-sponsored by the World Gold Council and a number of jewellery stores which, incidentally, aimed to update the image of gold in a market where many young Chinese think of it as an "ageing, unfashionable product".
"The talent on the show wore gold jewellery. To complement the series we also made a commercial, telling viewers where to buy the accessories seen in the show. The ad also featured a lucky draw question related to the show, with the catch being that the viewer had to go into the store to get the coupon, thereby increasing the shop’s traffic. Within three months, the whole series was sold out."
It is predicted FT Multi-Media will earn US$10 million in its first year of operation, with plans to produce about five drama shows a year, each of 20 episodes and a variety of documentaries and game shows. The subsidiary is also the biggest distributor of cartoons in China.
As to the car-alarm system business, the company is at the stage of setting up a network of land-based transmitters. Ken Chan, FT Holding’s financial controller and company secretary, says the system will provide a cheaper alternative for tracking stolen cars than satellite positioning technology.
The company will negotiate with mainland insurance companies, which it hopes will offer reduced premiums to customers who fit the car-alarm system. The system will first be launched in Guangzhou and Shanxi with another 30 cities to follow.
Last year FT Holdings posted a profit of HK$11.5 million (US$1.5 million), with 70% coming from Christmas trees and the remaining from other foliage products. Chan says he expects that in the next three years each division will contribute almost equally to profits.
Both Lai and Yow share an enthusiasm for developing the China market and are particularly looking forward to China’s accession into the World Trade Organisation (WTO). This change of focus will probably have a marked affect on revenue sources - last year, more than 90% of the company’s HK$123 million turnover came from the United States.
"I think it (China’s WTO entry) is a very good chance for us to spin off the company," Lai says. "Our foliage and Christmas tree company is still very stable but we want to expand and we have a very good friendship with government and factories in China."
However, Yow warns other businesses not familiar with the China market to do their homework before stepping onto the playing field.
"A lot of people doing business with China underestimate the complexity of the market," says Yow. "The market and government policy is changing all the time, but as the market has huge potential it’s worth putting time and effort into."
FT Holdings International last month also launched a website www.jjfestival.com to sell festive products direct to consumers. To contact FT Holdings International, tel: (852) 2429-3456 or email: enquiry@ftgroup.com.hk.