As China’s markets open under its World Trade Organisation membership, a growing number of Hong Kong companies are striving to establish their own brands in the mainland. This is a turnaround for Hong Kong, as traditionally its businesses have concentrated on producing original equipment manufacture (OEM) goods for other companies rather than developing products for sale under their own names. But the successes that have emerged already can show the way for other businesses.

The biggest advances are being taken in retailing, particularly in clothing and, to a lesser extent, in convenience stores and restaurants. Top of the list are well-established Hong Kong casual clothing chains – companies such as Giordano, Baleno, and the slightly more upmarket Esprit. Others, such as newcomer Moiselle, along with the G2000 and U2 chains, are aiming to follow in their footsteps.

The techniques used by these firms to establish and promote their brands are direct and straightforward, with the most common simply being there. For all of these companies, the main form of promotion is their clean, modern stores, well-lit and marked out by bold signage. With trained staff offering good service, these stores are clearly distinguishable from the more dowdy department stores or cluttered boutiques that otherwise dominate the Chinese mainland market.

Already, these companies have a sizeable presence. Baleno for example has swamped China with more than 500 stores, some 80 more than a year ago. Giordano is not far behind, with 482 of its Giordano and Giordano Ladies outlets. Esprit has more than 75 outlets either of its own or stocking its products.

Aiming for the young and trendy

JeansWest, owned by Hong Kong’s Glorious Sun Group, is the biggest foreign casual clothing retailer in China, also with more than 500 outlets. It says the main focus of its brand positioning is to focus on young people who are fashion conscious. The company does this by stressing that the contemporary and Western nature of its products – highlighted by its very name – mean they are both good quality and yet sold at a reasonable price.

The approach is pretty much universal among the other Hong Kong clothing retailers. Baleno uses Hong Kong singer and actor Andy Lau – one of the most recognised figures in Hong Kong, and who already has big recognition in the mainland, especially in Cantonese-speaking Guangdong in southern China.

Even so, the emphasis is very much on using advertising to supplement the physical presence of stores. Patrick Lau, vice-president of Esprit’s Group finance division, says: “We use a little bit of advertising and fashion shows in various cities. In other places this wouldn’t be effective, but it works well in the mainland.” Even the advertising is minimal – restricted to billboards and posters around stores. “We don’t need to do a lot of print or TV advertising,” says Lau.

Hong Kong fashion retailer Moiselle International follows a similar approach. Instead of advertising widely, it promoted its brand at China’s CHIC 2002 clothing exhibition, held in March this year in Beijing, and at its own Flower Sweets show put on as part of the Hong Kong Fashion Extravaganza also held in Beijing.

The look of international business

The one major exception to Hong Kong clothing companies chasing the casual clothing market is Gold Lion. It has successfully pursued a completely different market segment: the aspiring Chinese business executive, offering suits, ties, shirts and accessories such as tie pins and wallets. Gold Lion has been an established label in China since the late 1980s with a brand built around aspiration and success measured by wearing the dress of international business.

Where the clothing stores have led, convenience stores are following, with Hong Kong firms building up international recognised franchises. The Circle K franchise, for example, is being rolled out in South China by an arm of the Li & Fung trading and distribution group, Convenience Retail Asia, and 7-Eleven stores are being nurtured by Dairy Farm, a member of the Jardine Matheson Group.

The model is one tried and tested in Hong Kong, now home to more than 450 7-Eleven stores. Currently, through a 65 per cent owned-operation, it has 85 stores in Guangzhou and Shenzhen, with the target of opening 350 in the next few years. In China, as with the clothing retailers, the main way in which the brand is being built is high street presence, with the stores clearly differentiated from their local competitors by their bright, well-lit spaces, distinctive signage and 24-hour operation.