Perhaps the most surprising thing about the abrupt ending of the Great 2012 By-Elections Bill Filibuster Outrage is that Legislative Council president Tsang Yok-shing didn’t push his emergency ‘halt’ button sooner. It is possible to draw all sorts of depressing conclusions, and we haven’t heard the last of it, and it’s a Friday – so we turn to some arguably more cheerful news, which only the exceptionally alert among us noticed a few days ago.
Supermarket chain Park N Shop is pulling out of Shanghai; at its peak, it had 21 outlets in the city. They say they will be back, but it seems they have an uphill struggle ahead of them. The retailer has had problems adapting…
“ParknShop started out as a standard supermarket, which was effective in Hong Kong because of limited space and high rental fees,” said an executive from a local supermarket. “But that model does not apply well in China, where hypermarkets are the norm. ParknShop has not been able to adapt to that norm,” he added.
As all shoppers in the Big Lychee know, this part of Li Ka-shing’s sprawling business empire shares a near-duopoly with Jardine’s Wellcome. The two players’ prices often fluctuate in tandem, suggesting that either they are engaged in cut-throat competition with each other, or they are colluding to keep prices up – or (I have a sneaking but unfounded suspicion) they maintain a semi-rigged but not overly exploitative blend of the two designed to rip us off gently but forever. We do know for a fact that they lean on wholesalers not to supply independent stores that undercut the big boys, an act that would be completely illegal in most developed capitalist markets.
These store closures could be part of an industry-wide consolidation affecting lots of other big merchants. But reading between the lines of the news reports on this (also here and here) it is hard to avoid coming to the conclusion that Park N Shop’s main problem in Shanghai was that it couldn’t handle a market where space is affordable and competitors are allowed to exist. At least they tried: the other conglomerates that dominate Hong Kong’s consumer market mostly don’t even bother expanding operations overseas, no doubt knowing they wouldn’t last five minutes. Amusingly, one of the companies beating the Hutchison subsidiary in Shanghai is the French Carrefour chain – which failed in Hong Kong essentially because our property and retail cartels froze it out.
Global Times points out that Park N Shop still does well in Guangzhou. Presumably the chain established itself in the Pearl River Delta at an earlier stage, and local consumers were and are very familiar with the brand from watching Hong Kong TV. That’s a nice-size region to complement the mature Hong Kong market, but letting Carrefour, Walmart et al have the other 90% of the country to themselves is hardly what we would expect of our beloved ‘Superman’.
I think Ming Pao mentioned this story, but I don’t recall seeing it feature prominently – or at all – in much mainstream Hong Kong press. (It’s there, but hardly obvious.) Even if the closure of a couple of stores is relatively trivial, Li Ka-shing is always worth a few column inches. Perhaps we are seeing a bit of Hong Kong’s famous media self-censorship here: Park N Shop is a huge advertiser, as are several other Hutchison/Cheung Kong retail, property and telecoms interests.
And we wouldn’t want to read too much into it, would we? CY Leung usurps the Chief Executive quasi-election at the last minute; anti-graft police kick Henry Tang’s basement door down at midnight; Sun Hung Kai’s Kwok brothers are led off in handcuffs; and now… KS Li’s Mainland empire mysteriously disintegrates. On what happier note can we declare the weekend open?