Eagerly back to work, after pesky Utor departs

It is traditional, after Hong Kong shuts down as severe tropical weather passes, for our business leaders and great thinkers to complain that it’s all a big fuss about nothing. This is the 21st Century, they say. People no longer live in wooden huts, go fishing on sampans, or travel by pony through flood-prone gullies – or whatever the big problem used to be. There is no reason why the majority of us shouldn’t be able to make it into work when it gets windy enough to warrant the Number 8 signal. Others, notably bureaucrats petrified of being blamed for schoolchildren getting wet and other storm-related freak accidents, insist it is better to be safe than sorry. They would point, as an example, to Typhoon Utor, which hit the region over the last couple of days and tore a satellite dish off a building in To Kwa Wan. The rest of us, the ‘small potatoes’ cruelly forced to stay in bed yesterday morning, reluctantly accept the fact that we have no say in the matter.

So it is with the fate of ParkNShop, vendors of fine comestibles and household supplies to the gentry. Tycoon Li Ka-shing is offering his chain of supermarkets to the highest bidder, and big retailers from across the world are rumoured to be sniffing around. The good news for possible buyers is that the well-established brand with its extensive network of outlets should remain a steady producer of cash-flow. The bad news is that its chances of expansion are limited as the Hong Kong market is mature and saturated, and the company has arguably been mollycoddled from competition by duopoly and cartelization.

Another factor is the cost of space. There are signs that exorbitant rents are peaking as the Mainland shopper acquires more refined tastes, starts to prefer Europe, or lies low for fear of Beijing’s anti-corruption inspectors. But it is hard to see retail space getting significantly cheaper for whoever owns ParkNShop in future. A stroll around one of its (or fellow duopolist Wellcome’s) branches shows that a shop’s number-one – and vicious – competitor is the landlord. The narrow aisles are even more crowded by stacks of products wedged strategically at the ends and elsewhere among the shelves. Even in locations owned by other parts of Li’s empire, the supermarket manager is clearly possessed by an almost pathological urge to squeeze every last penny out of every last square inch of the premises (even to the extent that the congestion reduces customers’ physical access to goods).

Bloomberg see rents as a possible problem for ParkNShop’s post-Li owner. Potential buyers have to consider that the Hong Kong consumer’s tolerance of cartelization is waning, as – quite probably – is the influence of the city’s octogenarian tycoons. And they have to bear in mind that Li Ka-shing did not get where he is today by knowingly disposing of assets with attractive prospects. Furthermore, they have to accept that even after buying the brand from him, they will still, in many cases, find that he remains the landlord, expecting them to go on giving, month after month, long after the transaction is complete. He will essentially be selling the middleman, and carrying on scooping up his slice of the pie. Li on one side, Hong Kong consumer on the other: rock, hard place?

Olive oil ‘for babies’. Who can begrudge nice Mr Li if people are dumb enough to buy it?

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13 Responses to Eagerly back to work, after pesky Utor departs

  1. There is no excuse for blog update tardiness nowadays. Phrases like “idle bum” come to mind.

    And how did you manage to get a photo of Scrooge without his teeth in?

    Quite hilarious that Li Ka Scrooge is being squeezed out by the high rents he has created. Sensible investors will tell him to get stuffed.

    Let’s hope he dies of some horrible ailment we can put down to construction pollution or the fact that the ambulance got stuck behind one of his delivery trucks.

    Scrooge must be alive to irony by now when he sees what he has sired and what he has created. He will enjoy it.

  2. Gweiloeye says:

    I prefer to think of Typhoon days in bed until midday as part of my patriotic duty to ensure the safety of all Hongkongers. Then praying to the HKO gods to ensure the T8 remains until after midday so I can support Hong Kong’s food and beverage business (ok ok beverage only) after they open the doors once the T3 is called.

    p.s. has anyone seen something in the Mr Li’s shit holes called “The Pungency”- someone in that products marketing department should be sacked.

  3. If the “no need to worry about typhoons” contingent get their way, I predict it will only be until a busload of schoolkids gets washed away in a flash flood, then we will revert to the total shutdown approach which gives many of us a welcome occasional holiday (though since I work at home, sadly not me).

  4. Spud says:

    I do wonder what PnS would be like without Cheung Kong behind it, pulling strings and making deals. Would they have the same clout as before? Probably not.

    This is HK afterall, there can only be one buyer, Wellcome.

  5. Real Tax Payer says:

    Some interesting juxtapositions, not to mention humor sharpened by a day off courtesy of typhoon No 8.
    Wind and pouring rain notwithstanding, RTP was yesterday up at the crack of dawn for his morning constitutional in HK Park only to be pissed off to find the dates locked. I didn’t even know HK park had gates – but they do : bloody great big ones, and even a guard to make sure energetic tax payers could not climb over them !
    (Even more pissed off was a particularly attractive HK lady who was counting on HK park for her usual short cut from Pacific Place to LKS House)
    So even the fish and trees in HK get a day’s holiday when there is typhoon No 8 .
    Talking of LKS, I guess he’s planning to double all rentals in the places which PnS now leases as soon as he has sold the chain, and in the meantime he has quietly bought a controlling share of Wellcome stock, thus to bankrupt the new owner of PnS.
    So finally he will own ALL the supermarkets in HK.
    Cunning bugger…..

  6. maugrim says:

    In a city with a work-life balance that’s way out of ‘balance’ its sad to say that we take what we can get. I feel sorry for the underlings who trooped in to do 2 hours of work. At least the Philippinos have four day holidays owing to the birth of the patron Saint of our lady of Guadalupe or something. Mind you, owing to the usual ‘wah’ that ‘someone’ in the territory lost money, they are a little more reluctant to call a number 8 on a non business/summer holiday day

  7. Blow Hard says:

    Normal procedure is to announce the time of lowering the T8 signal 3 hours before. If it is lowered at 14:00 or later the great unwashed need not report to their desks that afternoon.

    Clearly, around 11:30 someone panicked and calls were made. 2 hours before is not that far off 3 hours before, right? And by making it 13:40 instead of, say, 13:59, no-one would think they did it just to beat the 14:00 deadline. The MTR needs to make money too, you know. Can you imagine the losses if they missed out on a whole day’s worth of commuters? Heads would have to roll at the Observatory. Ferries, of course, had to go by the real forecast and wait until the wind actually calmed down before venturing forth.

  8. Tiu Fu Fong says:

    T8 = quiet day in the office and soaring productivity on my part.

    More productive than staying at home with the wife and dogs and being ordered out on dog piss/shit/buy snacks ventures every two hours.

  9. Real Scot Player says:

    Some wet British Airways fag cancelled Tuesdqy’s BA25 jumbo from Heathrow in case Utor was too blowy on landing at Chep Lap Kok. CX LHR-HKG flew on regardless, no problem landing.

    Window into the cock up of modern Britain, right there

  10. Joe Blow says:

    At the risk of sounding my age (35), in the olden days the typhoons were a whole lot more lethal. Lashing rains, immense winds, sampans beached on the shore and the next day the streets looked like war zones, neon signs dangling from buildings, garbage cans in the middle of the road. I never experienced myself but apparently Jardine Johnnies would organize impromptu typhoon parties, where they would drink all night long -as if they needed an excuse- rather than go home and put themselves in harm’s way.

  11. Joe Blow says:

    For the young ‘uns:

    Jardine Johnnie = a chinless, pasty faced, slightly effeminate 20-ish Brit who got a trainee management job with Jardine’s, courtesy of his father’s club membership/ school tie/ Tory-slash-City connections. Talent and ability were secondary.
    Mark Thatcher was once a Jardine Johnnie, just to give you an idea.

  12. Real Scot Player says:

    @JoeBlow. Och, haud your wheesht. Typhoons are not lethal in Hong Kong on land. Possibly the ferries at sea need to mind themselves but who cares.

    Comparing civvie wet weather to war zones, you sound like a Health & Safety wallah.

  13. Incredulous says:

    @Joe Blow. Even worse, David Cameron was once a Jardine Johnnie!

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