Airport upgraded for visitor influx
that between September and March, 3,029 foreigners passed through Chengdu customs.
Most of them were from the United States, Britain and Germany.
Herbal tea is not just another warm beverage in southern China. It was listed by UNESCO in 2006 as part of the World’s Intangible Cultural Heritage.
Herbal tea — a product of one of Hong Kong’s leading tea retailers Hung Fook Tong (HFT) — has also come to symbolize holistic wellness and wisdom taken from nature, from all regions of the south.
“The stock market’s attraction for the time-honored tradition of herbal tea remains to be seen. HFT’s announcement (of a HK$500-million IPO launch) was met with mixed reaction in the market. But, traditional Chinese herbal tea could break new ground, once combined with Western marketing strategies,” said Yang Fan, an analyst with a Shanghai-based securities company and a knowledgeable investor in herbal tea.
HFT is at the vanguard of a movement among local tea companies, to re-establish their markets after the tide of popular Western soft drinks swept the region before it began to recede. The company appears on solid ground in its local operations, having redesigned the packaging and presentation of its age-old product.
What once was sold from bronze urns at corner stores was repackaged as bottled herbal tea to appeal to a younger market. Now, herbal tea is available in supermarkets and convenience stores.
Yang predicted the fast-moving-consumer-goods market will diversify quickly to meet the niche demands of different consumer groups. HFT aims to reach beyond its present medicinal products market, and is marketing new lines — herbal desserts, soybean milk, nourishing home-made soups and other food products.
The multi-brand strategy, Yang noted, may be useful for tapping into the flourishing wellness drinks market. “Products intended for night owls, heavy computer users and office workers are being wellreceived,” he said.
Yang, however, added a caution. The drive to launch new products risks diverting management’s attention, company capital and resources from the core business. “It all depends,” he said. “Sales data should determine whether the company ought to be product-driven or brand-driven.”
HFT owns 99 retail stores in Hong Kong. Some, in high traffic areas like subway stations, are low-profit, high-volume locations. On the other hand, “HFT.M2 Mall Square” offers food, Internet access and a mini bookstore
A spokesman for the exitentry administration department said the bureau made preparations for the new policy. He said these included training the city’s public security
Stopping for a bowl of nourishing soup is appealing and affordable. HFT’s local expansion, together with the promotion of a healthy lifestyle, should be welcomed by consumers.” ADAM FUNG FINANCIAL ANALYST
as well as herbal tea.
“The subway locations are based on the notion of approaching customers with far lower costs, while the Mall Square concept is meant to elevate the brand’s image and give added value to its products,” said Yang.
Adam Fung, a local financial analyst at a global accounting company, commended HFT for embracing trendy concepts, emphasizing well-being, additive free products and even “feelings” of home, thus rejuvenating a product that had come to be regarded as passé.
“Stopping for a bowl of nourishing soup is appealing and affordable. The price of a bowl of soup and steamed rice at HFT is HK$50. That’s almost the same as a meal at Café de Coral. So, HFT’s local expansion, together with the promotion of a healthy lifestyle, should be welcomed by consumers,” said Fung.
Although HFT still faces stiff competition from companies like HealthWorks, Fung observed, HFT still boasts considerable consumer appeal.
While HFT’s local operations are moving forward with vigor, its future planning has raised doubts among observers. It’s widely speculated that the company plans to use the proceeds of its IPO to make a full scale advance into the mainland market, where the company already owns 29 branches. Three of them are in Shenzhen, 23 in Guangzhou and three in Shanghai.
One local stock trader commented that the saturated local market is likely to limit HFT’s growth potential here, but he believes a push into the mainland, where the customer base is immense, could go badly.
He said the HK$500 million HFT plans to raise from its IPO on June 23 is intended to expand its retail network, not its factory and production facilities. That’s a clear indication that the company’s production is already outstripping sales.
“Given the expected cut-throat competition from (mainland rivals) Wang Laoji and JDB Group, I think the outlook for HFT on the mainland should be fairly grim,” said the stock trader who declined to be named.
Yang agreed. “As Wang Laoji and JDB Group have a combined market share above 80 percent, it may be pretty difficult for HFT to take a slice of the pie,” he said.
Yang calculated that the mainland herbal tea industry had already peaked after experiencing sustained, rapid growth between 2003 and 2009, before stabilizing at 32 billion yuan. The growth rate has slowed from a robust 25 percent annual growth rate to a still healthy 15-17 percent.
Statistics from the Beijing Academy of Industry Economy Research showed that sales volume for the mainland herbal tea market reached 32.18 billion yuan last year. The retail market for herbal tea grew by 17.8 percent.
Retail stores are asset-intensive, added Yang. Since online competition is behind the slump in sales at bricks-and-mortar retail stores, HFT may have to re-evaluate the costs of maintaining traditional storefront operations and shift its mainland expansion focus to online sales.
But JDB Group already is a step ahead. The mainland company is already working with Jingdong Mall, the mainland’s leading online retailer, to broaden its online business.
Yang speculated that HFT’s most profitable expansion strategy might be to move beyond China’s borders, and reach out to overseas Chinese. HFT, in fact, opened the first overseas herbal tea house in Toronto, Canada, in 1994.
Some still contend that market conditions on the mainland are favorable, based on rising consumer demand for health-oriented products, worldwide.
Swire Beverages, the Hong Kong-based franchise producer and distributor of CocaCola Company products, reported that sales of bottled water and fruit juices in Hong Kong have drawn equal to sales of carbonated drinks. During the 1990s, carbonated drinks accounted for 80 percent of sales volume.
Fung pointed out that in 2007, Wang Laoji, a 170-year-old herbal tea seller, recorded sales of more than nine billion yuan, surpassing mainland sales of Coca-Cola Company that year.
The herbal tea industry is making a strong comeback, fueled by a growing consumer consciousness of wellness foods and beverages.
“As an experienced retailer of healthy drinks, with a strong production network, HFT has some leverage in the mainland market,” said Fung. “The value-added marketing concept in HFT.M2 Mall Square is worth promoting on the mainland.”
Travelers at Chengdu Shuangliu International Airport can enjoy Mapo tofu and have a shower before they board their flight as part of the improved services at the airport’s restored international terminal.
China’s western portal city Chengdu, in Sichuan province, has attracted more overseas visitors since it brought in the 72-hour visa-free policy last September, said an airport official.
The airport has improved its facilities to provide better services to international guests.
After five months of construction, the first-class cabin and tax-free shops in the airport’s international terminal were completed in late April.
The new first-class cabin can host 140 people at one time. It is the only first-class cabin to provide cooked meals and showers in central west China, an airport official said.
The official told reporters that the meals included some renowned Sichuan cuisines such as Mapo tofu and spicy diced chicken with peanuts.
The cabin follows a Sichuan theme, with folding screens decorated with the pictures of pandas and Sichuan embroidery, both hallmarks of the province’s culture.
French windows give travelers views outside and the new 400-square-meter tax-free shop was inspired by counterparts in Hong Kong, Taipei and Singapore. passed through Chengdu customs between September and March tax-free shop in Chengdu Shuangliu International Airport
The shop offers perfume, cosmetics, tobacco and wine as well as food, health-care products and travel accessories.
More top perfume and cosmetics brands are due to be added to the shop’s range, according to an airport official.
n airport spokesman told reporters that they supported the 72-hour visa-free policy through commercials and by improving hardware construction and elevating the management level.
Chengdu was the fourth Chinese city, after Beijing, Shanghai and Guangzhou, to implement the 72-hour visafree policy for foreigners.
In 2013, the overall capacity of Chengdu Shuangliu International Airport reached more than 500,000 tons.
There were altogether more than 250,532 airplanes taking off and landing from the airport, with the daily average number of the airplanes surpassing 687. To date, Chengdu has opened 73 international flights. Statistics from the ExitEntry Administration Department of Chengdu Municipal Public Security Bureau showed departments and hotels and the launch of a round-the-clock hotline in both English and Chinese to answer questions about the policy.
The department promoted the policy through visits to foreign accumulated communities, companies and colleges, brochures sent to foreigners in Chengdu and messages broadcast on local TV stations.
The spokesman said the department also helped foreigners who have to stay longer than 72 hours in Chengdu by processing all the permits needed within three working days.
Chengdu Shuangliu International Airport offers better services to visitors from home and abroad.