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1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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Page 1: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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Franchising & Licensing Opportunities

Pansy YauDeputy Director of Research

4 December 2014

Business Opportunities for SMEs in Hong Kong

Page 2: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

Where is the Cheese?

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Page 3: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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

Page 4: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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)

Page 5: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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

Page 6: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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

Page 7: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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Major Potential Sectors

• Food & Beverage (F&B) • Education and Training • Health & Wellness• Beauty• Automobile Servicing• Hotel

Page 8: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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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

Page 9: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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An Alternative Option -- Licensing

Page 10: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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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

Page 11: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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Licensing Activities on the Chinese Mainland by Company Origin

Page 12: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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Types of Properties Handled by Licensors and Agents on the Mainland

Page 13: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

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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

Page 14: 1 Franchising & Licensing Opportunities Pansy Yau Deputy Director of Research 4 December 2014 Business Opportunities for SMEs in Hong Kong

Thank You!

Visit us at http://research.hktdc.com/