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Franchising

Overview

Hong Kong’s consumption-driven economy, high per capita income and strong IPR and general legal protection continue to attract U.S. and other foreign franchisors. U.S. brands such as Subway, Pizza Hut and Anti-Gravity Yoga are popular in Hong Kong.

The Pearl River Delta (PRD) continues to post strong economic growth, and economic integration between Hong Kong and the PRD has created a wealthy consumer base with strong franchising potential. Most of the local franchisees of U.S. franchisors operate as area developers and do not sub-franchise. Some do, however, include the PRD region (immediately to the north of Hong Kong) of Southern China and the Special Administrative Region of Macau as their territory of operation, in addition to Hong Kong. With its unique ties to China, Hong Kong franchise consultants often assist franchise owners, both local and foreign, to develop a strategy for expanding operations to this region. It is also common for Hong Kong area developers to partner with the U.S. franchisors to jointly develop franchises in the PRD region and other parts of China, involving equity participation from the U.S. franchisor. It has also become common in recent years for master franchisees from outside of Hong Kong to start franchise operations here having included Hong Kong, Macau and parts of China in their franchise territory. These non-resident Hong Kong franchisees are mostly from S.E. Asia and are keen to expand their territory beyond their home country for economies of scale and for development opportunities in China.

American franchisors will 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 the need to have a regional presence in Hong Kong to develop local business relationships, be in regular touch with the local franchisee to build the business, and fine tune the product offerings and services.

Sub-Sector Best Prospects

Quick service food and beverage concepts and concepts related to children, education and fitness are especially promising.

Opportunities

Most franchise growth in the past two years has been in real estate brokerage, quick service food and beverage operations, and learning centers. Macau, with its growth of gaming resorts and MICE (meetings, conventions and exhibitions) business still faces a shortage of skilled labor in the hospitality industry. There are therefore opportunities for a business model that encompasses support for operator staff as well as U.S. franchisors of training services, per se.

Hong Kong, with its open import market, 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. Hong Kong also serves as a regional showcase for U.S. franchisors looking to penetrate the Mainland Chinese market and other markets in the region.

Web 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.

Major trade show:

Macau Franchise Expo 2013
www.mfe.mo

Organized by the Macau Trade and Investment Promotion Institute (IPIM) the expo showcases about 200 franchisors, chain store operators and branded products from China, Hong Kong, Japan, Taiwan, Macau, other Southeast Asian countries.

U.S. Commercial Service Hong Kong

Contact: Ms. Swee-keng Cheong, Commercial Specialist
Tel: (852) 2521-5233
Fax: (852) 2845-9800
Email: sweekeng.cheong@trade.gov
Website: www.export.gov/hongkong