“If you don’t have the ability to create a trend, you follow the trend”

Kam Leong
[email protected]
Photos: Cheong Kam Ka
For Rick Cheung, director of newly launched cross-border online shopping platform Macaueshop.com owned by HN Group, e-commerce is the current trend for the local retail world as it can resolve the problems of high rents and the lack of human resources in the territory. Talking to Business Daily, Mr. Cheung said the new online shopping platform, by selling guaranteed quality goods and co-operating with local SMEs, hopes to get a slice of the action via the establishment of Free Trade Zones in China – eyeing the 1.3 billion population there
Why do you think a cross-border online shopping platform will be viable in Macau?
Firstly, many Mainland people favour products in Macau. It’s because they can buy the products in Macau cheaper due to the currency exchange rate [between Reminbi and Patacas]. In addition, local products, especially the medical and health products that our company is selling, can be guaranteed quality goods. For these two reasons, I think it is advantageous for us to do a cross-border shopping platform in Macau. In fact, this business also aims to share the fruits that may be brought from the establishment of the Free Trade Zones of the central government … [providing] regional advantages for Macau to do this kind of business.
Nevertheless, Mainland China has already had many different kinds of mature online shopping platforms offering procurement services for goods in Macau and Hong Kong…?
Frankly, we are a bit late starting this kind of business now. However, we think that we should still catch the opportunity of making cross-border retail business [opened up] by the establishment of Free Trade Zones on the Mainland.
In fact, in recent years, our group had been thinking about adjusting our business model. After all, it may be a dead-end for us if we don’t do so following the rent in the city getting higher whilst human resources are getting tighter. Without enough human resources, even if we are able to open 10 more physical stores, so what? The free-trade policy for cross-border businesses offers local enterprises a new way out. Since the country opened its own market, we’re now facing the possibility of 1.3 billion customers. If we don’t catch this opportunity now, when should we?
Regarding competition from the mature platforms in Mainland, why do you think your platform can win?
The reason why online overseas shopping is so popular on the Mainland in [recent] years is because there are too many counterfeits and parallel goods flooding the Chinese market, which makes e-commerce in Macau advantageous as people can be assured that the products we sell are quality ones.
How will you promote this platform to Mainland customers?
We will promote our business on different big-scale portal platforms in the Mainland. We will also place advertisements. We may even set our foot in some Chinese online shopping platforms as one of their stores.
When you deliver your products to the Mainland, which of the taxation systems is applied for the service?
The taxation system applied for cross-border e-commerce business is different from the normal tax you pay for custom entry…which we call personal postal articles tax. However, under this taxation, the tax varies depending upon the types of product. Postal articles tax requires customers’ real name as shown on their ID cards. For example, tourists will have to register with their national ID cards before they are allowed to buy goods from abroad.
That means your platform will require Mainland customers’ real personal information when they place orders?
Yes. If they are from Mainland China, and they choose cross-border delivery services when placing orders we will ask them to input their ID card number.
Is this taxation cheaper than the usual entry taxation?
It’s much cheaper. Generally speaking, a can of milk powder may be between 10 and 30 per cent cheaper by paying a portal tax rather than an entry tax, in addition to the difference between the currency exchange rate.
Nevertheless, it is hard to compare the two taxations sometimes. As Macau is one of the southern tips of China, if you have a product delivered to Guangdong Province, of course the price you need to pay will be cheaper by paying portal tax. However, if you have your products delivered to the Northern part, the price won’t vary much for either tax you pay.
How many members are you aiming to reach?
We currently have 800 members. By starting our advertisements from June, we hope the number will surpass 100,000 by the end of this year, [thus] we’re not only aiming at local members but also Mainland members.
Of the current members, what is the ratio between local and Mainland members?
I estimate 90 per cent of them are local people because we have not started our promotion or advertising to the Mainland market yet.
Helping local SMEs
How is the progress of your co?operation with local SMEs?
After the official launch of our programme on June 3, we have already received many enquiries from local SMEs seeking co-operation with us. And we’ve been busy negotiating with them.
Can you introduce the co?operation models?
There are two models for co-operating with SMEs, of which the first model is directly procuring their products from them. Meanwhile, the second model will be defining our allocation in profits. For example, to what level of sales we reach for their products, we will take the relative percentage of amount from the profits. However, in addition to selling their products for them, we will provide them with other services, such as photography, as you know e-commerce business requires images of the products. In addition, we will provide them with the copywriting, as well as helping them introduce and build their brands. After all, in e-commerce, these are the elements that attract the eyes of buyers. On the other hand, we will offer them customers services to help them deal with customers’ enquiries, promoting and delivering their products. As such, they only need supply their products, with nothing else to do.
Is there any targeted product you aim to co-operate with?
Local products featuring Macau. The initial target of our platform is to feature Macau-characteristic products. As such, local food souvenirs such as almond cake, beef jerky are our first targets. Moreover, Macau was a colony of Portugal, hence, products with Portuguese features are another target. Yet, our platform is open to any kind of product… We don’t restrict the categories of products that we will co-operate with as long as these products are not illegal.
Is there any requirement regarding the capital of the SMEs, or the quantities of goods that they can provide?
Well, we will for sure have requirements on the quantities of products that they can supply. However, the number will depend on how much their products appeal to the market. Before official co-operation, we may conduct a trial run with them, so that they will have an idea of how many goods they have to prepare to store in our warehouse. This will take some time for them [to have knowledge of that] as not many people in Macau have participated in the e-commerce industry. They don’t have an idea of how fast sales can go via e-commerce.
Manpower & regulations lacking
In your opinion, what does the local e-commerce industry lack?
It lacks talent for developing the industry in Macau. I’ve been in the local industry for about one year. Basically, I’ve not found anyone involved in the industry. Most of our crew members, in fact, are trained by me as I had worked in the industry for four years in Mainland China before.
The government has said it may improve the current laws on e-commerce this year, such as allowing third-party payment platforms. Do you think the current regulations on the industry are sufficient?
Currently, there is a grey area in the industry which has its deficits and shortcomings. However, I think the industry should still be supervised by regulations. For a company like ours, it is better for us if there are regulations for us to obey and follow, so we don’t have to wade across the stream by feeling the way as we did – not knowing whether the step we took was illegal or not. So if there are clear instructions to the industry by the government it helps us to develop our business.
How long do you think it needs for the local industry to mature?
In fact, you can already feel that the industry is gradually getting more influential. The trend has entered Macau already; for example, the social application WeChat is being used by many local residents while you can also conduct e-payments or transactions via online banking services. I think it has been growing already.
In addition to human resources, what are the other challenges the company faces in preparing for the platform?
Still, human resources are the biggest challenge for us… Meanwhile, the delivery services we conduct in the city are also challenging as the traffic in Macau has been a problem, with more and more tourists and higher density. As such, it is challenging for us to deliver the products to clients within 24 hours after they place the orders [as part of our services].
Is the higher cost of telecommunication fee in Macau than other regions another challenge?
Certainly it is. The reason why the e-commerce is so popular in Mainland China is because you can access to the Internet anywhere via free Wi-Fi… In Macau, this is actually kind of a big problem. In fact, making Macau an I.T city that you can access to the Net anywhere should be a policy that the government can work on for supporting the e-commerce industry as this will benefit the industry a lot.
When do you expect that you will see breakeven from the platform?
We hope that we will see breakeven in around two or three years.
[For e-commerce business,] the period for return depends on the scale of your business. The bigger scale your business is, more time you will need for reaching return. I think it depends on whether you know how to integrate the resources available. For example, making use of other’s power to promote your own business – that’s what we’re doing, too, by joining other online platforms as a store. Through this, we hope to speed up the time it takes for returns.
What are the prospects for the e-commerce industry?
I’m confident in the industry as it is the new trend. Observing the retail industry in China, you may see many physical stores have shut down. Why is that? It’s because people’s shopping habits have changed and online shopping is getting popular. I’m familiar with this market. The industry is a trend and you just need to make use of it. As said by Ma Yun [founder of Alibaba] – “if you don’t have the ability to create a trend, you follow the trend.” This is very true. If you can’t create a new business model yourself, why don’t you follow the most popular one?
The platform
Macaueshop.com, which is a new cross-border online shopping platform that was officially launched on June 3 this year, is hoping to reach the Mainland China market by selling quality goods in Macau and offering nationwide delivery services.
Owned by local industrial conglomerate HN Group Limited which retails medical and healthcare products and food & beverage products in the city, the platform also hopes to bring a new shopping experience to local residents.
Although the platform currently only sells goods that its mother company owns the distribution rights for, its director Rick Cheung is also seeking co-operation with local small and medium enterprises, hoping to bring their products, preferably with Macau features, onto the shopping website, too.
The platform receives payment via credit cards, namely Visa and Mastercard, as well as WeChat Payment for mobile users. For PC users, customers can pay also via UnionPay, Alipay, and S.F. Payment of S.F. Express, in addition to credit cards and WeChat Payment. Nevertheless, the PC site of the platform will only be launched in August, according to Mr. Cheung.