Rid­ing out the storm — we did!

HK re­tail­ers saw one of the worst years on record in 2016, but TSL jew­elry group de­ci­sion-maker Estella Ng tells shrewd run­ning and strat­egy had helped them win the day.

China Daily (Hong Kong) - - BUSINESS - Con­tact the writer at so­phiehe@chi­nadai­lyhk.com

When the go­ing is rough, rid­ing the tiger with skill and shrewd­ness may not be that haz­ardous af­ter all.

That’s what prob­a­bly Tse Sui Luen Jewellery (In­ter­na­tional) Ltd (TSL) — one of Hong Kong’s old­est and well es­tab­lished jew­elry and in­vest­ment chains — found as the city’s re­tail in­dus­try un­der­went one of the tough­est years on record in 2016 amid a global eco­nomic down­turn and a shat­ter­ing slump in tourist ar­rivals, says Estella Ng Yi-kum, the group’s deputy chair­per­son, chief strat­egy of­fi­cer and chief fi­nan­cial of­fi­cer.

It was, in­deed, a dread­ful time for lo­cal re­tail­ers, in par­tic­u­lar, the jew­elry trade, but good com­pa­nies can still rake in the dol­lars in a chal­leng­ing en­vi­ron­ment, she be­lieves.

“In the hey­day, com­pa­nies may still go bust. But, in bad times, with good man­age­ment and strat­egy, they may still be able to make it with hand­some prof­its,” she tells China Daily.

TSL, which has been in busi­ness for 46 years, per­formed rel­a­tively well last year, driven to a great ex­tent by its op­er­a­tions on the Chi­nese main­land, hav­ing recorded de­cent growth of 1.5 per­cent year-on-year in terms of same-store sales.

The mar­ket, she pre­dicts, will re­main vo­latile in 2017, mired in un­cer­tain­ties, po­lit­i­cally and eco­nom­i­cally, as the world tries to fathom out the af­ter­math of such shocks as Bri­tain aban­don­ing the Euro­pean Union, and the pro­tec­tion­ist and com­bat­ive poli­cies of new White House oc­cu­pant, US Pres­i­dent Don­ald Trump.

“For the re­tail mar­ket, we still need to fas­ten our seat­belts in the next 12 months while po­si­tion­ing our­selves and seek­ing new op­por­tu­ni­ties.”

The Chi­nese main­land, Ng says, will con­tinue to be TSL’s fu­ture growth en­gine as the coun­try cur­rently ac­counts for more than 60 per­cent of the group’s en­tire op­er­a­tion.

TSL, which is also en­gaged in prop­erty hold­ing and the lo­gis­tics and sup­ply-chain busi­ness, will open up a fur­ther 100 fran­chised stores on the main­land in the next two years. At present, it owns 316 stores there, in­clud­ing 115 fran­chised out­lets.

“We’re on tar­get,” says Ng. “The ra­tio of our self-run and fran­chised ones is 2:1. So, for ev­ery fran­chised out­let, there’re two self-op­er­ated stores. A few years down the road, the num­ber of our fran­chised stores will take up 70 per­cent of our to­tal on the main­land. This means that the pace of open­ing up new fran­chised stores there will be much faster than that of self­op­er­ated ones.”

Eye on mass mar­ket

In Hong Kong, TSL keeps the num­ber of stores at around 26 but, for the past two years, its busi­ness strat­egy has changed as it tries to re­place some of the stores at prime tourism cen­ters with ones that are near MTR sta­tions. The aim is to cater more to lo­cal res­i­dents and the mass mar­ket as the main­land tourist pool shrinks and peo­ple’s shop­ping be­hav­ior changes, says Ng.

Cur­rently, about half of the chain’s lo­cal stores are lo­cated in prime tourist cen­ters, while the rest are fo­cused on the mass mar­ket.

Ac­cord­ing to Ng, the ap­petite for jew­elry and di­a­monds among the mid­dle class is still very strong. While about 22 per­cent of TSL prod­ucts are made of gold, the rest are mainly jew­elry and di­a­mond cre­ations, and the com­pany is co­op­er­at­ing with in­ter­na­tional de­sign­ers to launch cross-over prod­ucts.

“We’ ve also widened the price range. We’re not just tar­get­ing high-end prod­ucts. We do have af­ford­able ones for those look­ing for some­thing that’s rea­son­ably priced — prod­ucts that you can wear ev­ery day to work or use as small gifts for your­self.”

Young con­sumers are not left out ei­ther.

“We’re not just foc us­ing on large di­a­monds, but also on smaller ones with el­e­gant de­signs that are much ad­mired by younger con­sumers. You can see the ap­petite as it’s on the rise as op­posed to tra­di­tional prod­ucts.”

Apart from shift­ing busi­ness strat­egy, TSL has jumped on the e-com­merce band­wagon — a sec­tor that may be small for the com­pany, but is grow­ing very fast.

E-com­merce po­ten­tial

In 2015, when TSL launched its e-com­merce plat­form, the rev­enue gen­er­ated then was about HK$5 mil­lion, while the se­cond year raked in be­tween HK$30 mil­lion and HK$40 mil­lion.


Ng be­lieves e-com­merce d o e s h av e g r e a t p o t e n t i a l with a huge marke t and a trend that ev­ery­body is fol­low­ing, par­tic­u­larly on the main­land.

E-com­merce ac­counts for some 3 per­cent of the group’s turnover and it aims to lift the pro­por­tion to 5 to 10 per­cent in the next few years.

“Fun­da­men­tally, we’re try­ing to get our prod­ucts across to dif­fer­ent types of con­sumers, re­gard­less of whether you’re a so­phis­ti­cated client, from the mid­dle class or a teenager. When­ever they visit our stores or our web­sites, there’s al­ways some­thing for them to buy.”

Ac­cord­ing to TSL’s lat­est in­terim re­port, the group’s net profit dropped 24.1 per­cent to HK$11.7 mil­lion, while turnover fell 11.6 per­cent to HK$1.55 bil­lion for the six months ended Au­gust 31, 2016, com­pared with the cor­re­spond­ing pe­riod in the pre­vi­ous year.

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