With an area of only 1,096 sq. km and a population of 7.07 million, Hong Kong is a small place with no natural resources and yet it has become the world's 10th largest trading economy and the 11th largest exporter of commercial services.
The success of Hong Kong as a leading trade, finance and business centre stems from a policy of free enterprise and trade, well-developed infrastructure, excellent telecommunications and industrious work-force. As a free market open to all, there are no barriers to trade, no restrictions on investment, no foreign exchange controls. The following 'achievements' of Hong Kong might be of interest: |
Source : HKTDC |
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- The world's freest economy
- The world's most service-oriented economy
- The world's 6th largest foreign exchange market, third largest in Asia
- The world's 7th largest stock market, third largest in Asia
- The world's 2nd highest per capita holding of foreign currency
- The largest source of foreign direct investment (FDI) in Asia
- The most important entrepot for the Chinese Mainland
- The world's busiest airport for international cargoes
- The world's third busiest container port
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Franchising has been growing slowly but steadily in Hong Kong. In the 70s, Kentucky Fried Chicken outlets operated in Hong Kong. At that time, not many people have heard about franchising in Hong Kong. After some time, all the outlets were closed. KFC re-entered Hong Kong a few years later and is now operated by an area developer. In January 1975, McDonalds opened the first of its very successful restaurant chain in Hong Kong.
Recognising the benefit of franchising to the economy, the Hong Kong Franchise Association was established in 1992 as a committee within the Hong Kong General Chamber of Commerce to monitor and promote the development of franchising activities in Hong Kong. The HKFA has been organising study missions, seminars and training courses, publishing books and even CD-ROMs on the various aspects of franchising.
Source : Apple Daily |
The legal climate is conducive to franchising in Hong Kong. There is no specific legislation governing franchising operations in Hong Kong. There are no exchange controls, anti-trust laws, or foreign equity participation or local management participation regulations. Disputes arising from the franchise agreement will be subject to the common law (and specifically the principles of contract law) and to the legislation relating to the registration, licensing and protection of intellectual property rights, such as Trade Marks Ordinance, Trade Descriptions Ordinance, Copyright Ordinance, Registered Designs Ordinance, and Patents Ordinance. |
As franchise operations are not required to register with the HKSAR Government nor any trade associations, there is no official record of the total number of operators in Hong Kong. Our records indicated that there were about 55 franchise operators in 1992. The number grew to 95 in 1997, and peaked at 124 in 1999. The number remained low during the past few years. A list of franchise operators in Hong Kong can be found in our website at www.franchise.org.hk.
Of these franchise operators, 42% are local franchises. 44% of the franchises in Hong Kong are in the services sector, 38% in catering and the rest (18%) in retailing business.
Every sector in Hong Kong is placing more focus on quality – for both products and services. Enterprises must constantly improve their quality and efficacy in order to survive. For labour-intensive jobs such as catering and retailing of which wages are generally low, improvement in productivity might not be an easy task. For many of these businesses, franchising may provide just the answer.
Potentials |
- Traditionally, franchising focused on clothing and catering industries. Now, many different businesses have emerged, such as children related, training courses and household maintenance, etc.
- To improve competitiveness, simply improving productivity or price cutting might not be enough. Innovation in products or services would be important.
- Different franchise packages might have to be devised to attract franchisees.
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