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Franchising & Licensing Opportunities
Pansy YauDeputy Director of Research
4 December 2014
Business Opportunities for SMEs in Hong Kong
Where is the Cheese?
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Paradigm Shift in the Global Value Chain
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Source: Actrium Solutions’ estimates from International Franchise Association, World Franchise Council, European Franchise Federation, Asia-Pacific Franchise Confederation, trade interviews and industry sources
(US$ billion) 2009 2014 2019CAGR
(2009-2014)CAGR
(2014-2019)
US 2,049 2,377 2,756 3.0% 3.0%
EU 343 438 512 5.0% 3.2%
Australia and New Zealand 123 143 174 3.1% 4.0%
China 182 293 729 10% 20%
Other Asia 194 316 635 10% 15%
Rest of the World 141 227 457 10% 15%
Total 3,032 3,794 5,263 5.0% 7.0%
Franchising Revenue by Region
Mainland China
Hong Kong
Singapore
Malaysia
Japan
Indonesia
Korea
Taiwan
India
Thailand
Vietnam
Philippines
87%
46%
36%
33%
29%
25%
23%
20%
16%
12%
12%
4%
International Franchisors Have Their Eyes on the Growing Asian Market
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Note: Multiple selections allowedSource: HKTDC survey
Targeted Markets for the Next Three Years (Franchisors)
Opportunities for Hong Kong Companies – Act as Master Franchisees or Area Developers
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Appointed a Master
Franchisee in Hong
Kong14%
Appointed an Area
Developer in Hong
Kong17%
No69%
Master Franchisee
Area Developer
0% 50% 100%
17%
8%
48%
35%
17%
44%
10%
8%
6%
4%
2%
0%
6=very likely 5 4 3 2 1=very unlikely
Note: Scale of 1-6; 1 denotes very unlikely and 6 denotes very likely. The percentages may not add up to 100 due to rounding.Source: HKTDC survey
Possibility of Appointing a Master Franchisee /Area Developer in Hong Kong (Franchisors)
Appointed a Master Franchisee / Area Developer in Hong Kong (Franchisors)
Source: HKTDC survey
Hong Kong as a Two-way Springboard
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Hong Kong can be a Springboard for Franchise Businesses Entering into the Following Markets (Franchisors and Franchisees)
China
Taiwan
North America
Europe
ASEAN
Japan
Australia and New Zealand
India
Central & South America
Middle East
Others
90%
73%
68%
56%
48%
32%
27%
25%
13%
9%
1%
Note: Multiple selections allowedSource: HKTDC survey
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Major Potential Sectors
• Food & Beverage (F&B) • Education and Training • Health & Wellness• Beauty• Automobile Servicing• Hotel
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Who Will Get the Cheese?
Sharing the same vision with my company
Knowledge and network of the local market
Personal traits (e.g. honesty, being responsible)
Team building and people management skills
Operation and execution ability
Business acumen and experience
Capital resources
Currently owning a shop or service unit
5.76
5.63
5.46
5.41
5.27
5.10
4.93
2.71
Criteria of Selecting Franchisees (Franchisors)
Note: Scale of 1-6; 1 denotes the least important; 6 denotes the most importantSource: HKTDC survey
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An Alternative Option -- Licensing
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Positive Views on Asia’s Licensing Business
Licensing markets with expected growth over next 1-3 years (n=154)
10.4%
5.8%
23.4%
30.5%
16.9%
11.7%
18.2%
16.2%
18.8%
83.8%
7.8%
4.5%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%
Europe / US
Other Asian countries
Thailand
Indonesia
India
Philippines
Malaysia / Singapore
Taiwan
Hong Kong
Chinese mainland
S. Korea
Japan
Source: HKTDC Survey
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Licensing Activities on the Chinese Mainland by Company Origin
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Types of Properties Handled by Licensors and Agents on the Mainland
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The Cheese of King Bee Toys
Diversified from OEM to domestic sales 3 years ago
“Piggyback” on the established brand awareness of top tier property licensors and their marketing support
Produce and distribute secondary category licensed products throughout China. Business has trebled in size
To get a license contract, it necessary to convince the licensor:– your distribution capacity in China– your products need to demonstrate a degree of differentiation in
terms of innovation or concept, yet should be in line with the overall brand values of the license
– your ability in exercising high levels of quality control in manufacturing and managing the supply chain
Thank You!
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