How To Launch and Market Your Business in Hong Kong
Posted on 20 July 2018
Hong Kong is a great place to start a business thanks to a densely built city, where having three meetings in three hours is always a possibility. Whether you're a tech entrepreneur, established brand or new service provider, the city (despite sky high rents) is a great place to launch and grow your business. Last week, our founder Michelle, co-hosted a roundtable lunch with Dervla Louli of Compare Retreats to share their experience and some tried an tested tools.
Dervla: Michelle and I wanted to get together to offer some real relevant experience, something that we both wish people had offered us. There are a lot of overarching questions that don't really go into the nitty-gritty. I know what I struggled with that I was asking Michelle when I was starting up. My background is purely editorial so my point of view when starting a business was content first instead of product first. I was introduced to Michelle when I was Managing Editor at Sassy Media Group. I was really struggling to find female entrepreneurs in Hong Kong that had successful businesses in the fashion space that had a long track record of success. Michelle was someone who always came up in conversation. Can you tell us a bit about yourself and how you created MISCHA the business?
Michelle: When I was in middle school my parents moved us from Toronto to Hong Kong, and I ended up going to university in the UK. I didn't study fashion nor business. I wanted to study medicine so I did a Biomedical Science degree at King's College London. But the creative and entrepreneurial side was always calling me. After an extended quarter-life crisis, MISCHA really started as an accident. I launched a collection as an experiment and I thought if I never sold any of them I would have Christmas gifts for all of my girlfriends. But on that first day I sold out of 30-40 bags I'd sewn myself, met my first stockist, and took additional orders. Once the business was a decent size, I quit my job to focus on running the brand full time in 2008. And tell us about you Dervla.
D: I'm half Irish and half Egyptian. I was born in Saudi Arabia, went to school in Ireland and also wanted to do medicine. My dad is a doctor and I was raised with a very traditional outlook on what success was; law, finance, maybe an accountant or engineering. After I got my law degree, I did my internship and fell asleep as someone was convicted of murder! I eventually went into investment banking in a really great venture capital firm. When I came to Hong Kong, not having a visa was difficult but it's where I got my first publishing job.
D: What I'm really interested in as someone who has never created a product or sold one in my entire life (maybe like a lemonade stand), is when you have an idea for a product, how do you manage your costs creating it?
M: There are two common ways to do pricing; a multiple of the cost of the product or working backwards from a target retail price. Depending on the business, retailers routinely mark up two or three times from wholesale, with distributors taking even more. When I first started, I didn't have any kind of margin calculation and I didn’t factor in my time either. In order for your business to grow sustainably, you have to factor in your own time and all the costs.
D: What was your revenue model from the beginning and when was the tipping point when you needed the Investor?
M: Creating a brand and marketing the products is a capital intensive process. But it was clear from the beginning that I wanted to create this East meets West identity, with the inspiration coming from the Japanese hexagon. I have to say, that iconic print is what helped us scale. We started off as a traditional wholesale business showing at all the international tradeshows in Paris, New York, Singapore and Australia. We grew quickly because the orders funded our productions. The tipping point came when I couldn't do it myself anymore, I needed to hire and fund larger productions.
D: I remember visiting your office and from day one everything you did was always very beautiful and partnerships were carefully planned. But I want to know everything that went into setting up an office; the paperwork, the visas and Hong Kong Tax laws.
M: You're too kind! Before all the fun stuff, you need to get all the boring stuff set up. Your Company Secretary and auditors are your best friends when it comes to all the legal and accounting stuff. There are a few depending on budget and levels of service.
- The first thing you need to do is register your company. You can register a private company at the companies registry relatively quickly and cheaply. You would need a company secretary to set up a limited company, I would recommend Soverign Group or JP Walsh & Co.
- Setting up a bank account is pretty straightforward depending on what passport you hold.
D: I used the company called Jumpstart to open my consultancy business, apply for my business registration, act as Company Secretary. We used Metta in the beginning but needed an office in order to apply for our travel agency licence at Compare Retreats. Many of these companies will provide virtual offices services as well.
D: So you talked about the B2B model selling to brick and mortar stores, can you tell us about your strategy for e-commerce?
M: In 2016, we made the decision to pivot from a wholesale business model to being a direct to consumer, e-commerce model, that functions fundamentally differently. By that time, we already had some brand awareness and a track record. The recognition from exclusive retailers such as Lane Crawford, Tangs, Isetan and Franc et Fils, helped us open doors and producing large volumes allowed us to scale the business quickly. we then went one to do our own retail pop ups, which allowed us to hone our voice and control the customer experience better.
D: Tell us about what websites and tools you use for e-commerce. It’s the kind of thing you can spend anywhere from US$100,000 to US$100 building and you actually get a very similar product.
M: After a very bad experience with the first web developer, I decided to build it myself and that's why we started using Shopify. It's an amazing platform, easy to use even if you’re not super tech savvy. Over the years, they’ve added more app integrations that help streamline every aspect of running a business from inventory management, accounting, customer service, payment gateways to sales analysis. Your website needs to be one of your sales channels too, and therefore it needs to be built for the purpose. Since we started e-commerce in 2013, it’s our most steadily growing business unit. There are many others available like Squarespace, Wix, and WooCommerce.
D: The best piece of advice I’ve been given is for you to bring the customer as far as you can on social media, so when they get to the website they’re 90% there, and they just need to make the decision to buy. So I want to talk to you about the journey of a MISCHA bag. What is the strategy behind marketing a new product; service, article, website, new services, once it goes online?
M: The journey begins way before it goes live on the website. After many seasons, we have more sales history to go on, so when we design a collection now, we’re thinking about how to market them. Of course, there are the operational things to think about like; pricing, is this product in line with our brand, are the margins good enough and what are competitors doing etc. But we always think about the story so by the time we launch, we’re halfway there. We've already done the photoshoots, lined up partnerships, events and influencers to work with. We do competitions and collaborations on an ongoing basis and the rest is digital marketing.
D: What digital platforms are you active on? Let’s name them all!
M: Everything on social really! Instagram, Facebook were the first ones. Twitter not so much, but Pinterest is big for us. It’s actually one of the largest search engines and a major traffic driver. Organic reach was possible just a couple years ago, but now mostly every platform is pay to play. Linkedin is a surprising traffic driver, both personal and MISCHA. The algorithms are a little less sophisticated than Instagram and Facebook for the moment, so if you want value for money you should use LinkedIn advertising. We use them all.
D: What other tools or software do you use?
M: Yes, we use a SAAS software called Ematic Solutions, to help us manage and grow the database, make sure that it is engaged. But the content is always us. We like Easyship to aggregate our e-commerce fulfilment and we've trained our logistics company to use it. I like Monday.com to organise the team, freelancers and a remote task force. Our accountants, Cornerstone put us onto to Xero for up to date accounting. What about you?
D: I love WeChat, I don’t really understand it but I do my best. And Weibo is another kettle of fish. I went into digital marketing agency, RedAnt, looking to do WeChat and weibo. They said, if you don’t have some serious money behind this, they would advise for you to put your money into the channels that you're already working on. They gave me the example of ASOS, they went in and they decided that their money was actually better spent on the US market. So that did it for me! Are you in China?
M: I would totally agree with them. We had a long drawn out and expensive process setting up a company in China in order to have an official WeChat account, and WeChat store. It’s the first step to setting up an online presence in China. If I were to do it again, I would hold off because it spread us thin when we really should’ve been focusing on our target markets. I see China as a whole different entity. You can't just translate your material for the channel. Unless you have a team, really big budgets or a strategic Chinese partner, I would hold off.
D: Do you sell on Taobao or Daigous?
M: No, we don't, it’s not really the right positioning, but we are on different Chinese platforms. We’re on MyMM, the LCJG group shopping app, and MeiPu, the app run by the Chinese tech giant Meitu. There are lots and lots of platforms. We do cross border shipping and have a WeChat store. It’s an early stage solution to entering the Chinese market, but in the long run and on a bigger scale we would be shipping from within China via T-Mall.
D: From day one your digital marketing strategy has always been really strong. I remember you sent some products to the Sassy office and you were one of the first to do monogramming in Hong Kong. Every single event or eDM or even little piece of post I got had #jetsetmischa on it, and not changing it meant you now have an amazing collection of images when you search the hashtag. We’re actually struggling with that for Compare Retreats now. How do you stay focused on one product category?
M: I’d love to be able to do it all, but we only have the bandwidth for bags right now. Our strategy has always been practical and achieving the most aesthetic effect in the most effective way. Over the years we’ve learnt from the mistakes in each collection, we refined and improved. We always look at the numbers and don't just go with what you feel. That has its value too, but the numbers don't lie.
D: We were tempted to expand our portfolio to healthy resorts. We had some press in the Sunday Times yesterday, which is my favourite paper in the UK so I kind of fainted. The writer said we were a health and fitness travel website, which is true. But all we do is luxury wellness retreats, that’s all. I believe in focusing on your niche because you can’t do it all. How do you choose your partnerships?
M: MISCHA was really born from my inspirations from travel, a healthy and positive lifestyle, so I seek out these kinds of collaborations. Similarly, many seek us out. I think when you’re doing a single thing, people know you for that and they come and find you. Hence the John Masters Organics collaboration. I'm really into Interiors and we recently did a collaboration with a boutique hotel in Japan. We designed soft furnishings for a fifty-five room Hotel 88, in the heart of Osaka.
D: It’s great to have mentors and people that you can ask, who are different ages, with different experience to bring to the business. I ask for help so much and I find it really useful. You raised investment early on, can you give us some tips and pointers.
M: If you have to bring on an investor, I’d be very aware of what your value is and what the other person is bringing to the table besides cash. It’s like a relationship, you have to have expectations aligned, and these also change over time. The value is whatever feels right for you. As a brand, raising money isn’t all about what’s in your P&L, they’re investing in something that is intangible and they're investing in you. Another thing that people don’t talk about it is the exit. You have to have a clear vision, do you want a business that you can pass on to your grandchildren, something you want to spend a finite amount of time on before exit or do you want to be acquired? I think you need to have a picture of that. It is helpful to have at least a 3 to 5 year plan for investors. If it’s not your forte, you can get friends to help, or pay a consultant to put together a good pitch deck for you. Have someone with an opposite skillset as you to look at it.
D: I work with consultants a lot for my business. I got the former Head of Sales and Partnerships from Sassy Media Group, who was the most savvy seller I've ever met in my life, to come in. Get people you butt heads with, because they offer you the opposite skills. They can look at my company and tear it to shreds. That's what I usually say to people, you can you beat the crap out of this and then we rebuild it. It has been essential for Compare Retreats. She helped us on our key strategies of monetizing both sides of our platform.
M: Now tell us about Compare retreats and how you went about setting it up.
D: It’s the world's first booking portal and magazine for the best luxury wellness retreats in the world, that have been tried and tested by certified health and fitness professionals. We’re essentially an aggregator for luxury wellness retreats and it was born out of a real desire and a problem I had. I was spending a lot of money and I had to WhatsApp 15 people every time I went away. The reviews on TripAdvisor weren’t being written with transparency and there wasn’t enough information to make informed decisions. As Managing Editor at Sassy Media Group, I got very good at building, developing pushing marketing partnerships and integrated content. I started a blog called Healthy Holiday Hero, but I knew that I didn't know enough about luxury resorts. So I hired the former editor of Asia Spa magazine, a qualified yoga instructor, to write 100 anonymous reviews to start. We eventually brought on more experts to review.
M: Let’s talk about content marketing and how you can use it to sell your product or service?
D: It is exactly what it sounds like, it’s creating content that is used to market a product. No piece of content in a content marketing strategy is ever created just because. Every single piece of content has a purpose to inspire you to travel, to motivate you to do something and usually comes in visual form or as a personal success story. On the Compare Retreats Magazine we try to provide really in-depth reviews and roundups like, what is a colonic. You'd be so surprised that is one of the most successful posts.
M: How do you manage to create content affordably?
D: For us as an aggregator or a publisher, we always make sure to ask for all the photos and footage so we can market the property. For writers, the best ones we ever had were freelancers because they never like to be in the office and are always off travelling to stay inspired. We like to use Upwork for freelance writers. If we see something we like, we always reach out and ask what their rate is. If it's out of the range, we try and work something out with the creator on the deliverables. Funny story, I once blew our entire month's budget on a photoshoot! I came home and told my husband we got five great photos for our content and he said, "why are you doing a photoshoot, you're not Vogue!" We're a small company with a small budget, so you have to be smart about setting a budget and sticking to it.
M: What's your view on working with influencers and social media accounts?
D: I started Compare Retreats at a time when influencers had hit its peak. You could go onto websites and find out if an account had fake followers. I had someone managing our account at the time and that's how I found out they had bought 1000 followers. I had to fire them, go through and delete all of them. I'm quite careful about it now. I set the bar very high for Compare Retreats because every writer wants to write about travel. At a bare minimum, I think our experts have to have some sort of health and wellness qualification, like Cristina McLauchlan here. Cristina is a yoga teacher, she's the founder of ethical PR firm The Vibe Tribe, and the Brand Manager for MANA! Fast Slow Food she lives and breathes wellness. In my opinion, that is our kind of wellness influencer, someone who lives and breathes what they do.
M: So walk us through the steps you would take on a very platform on a typical day.
D: So I get an email from my editor Rebecca saying we've just launched a new retreat in the Middle East. So my url is my product and I think how I can get the most out of it. I start with Instagram first and share to Facebook and Twitter. I go onto Unfold App and create four to five stories that I use to push my post. In that post, I'm directing people to my link in bio with the swipe up in IG stories to that url. I've shared that post to Facebook, then I push it out on Twitter. For LinkedIn I change it up a bit, addressing corporates and professionals. I use a video the retreat has sent me and appeal to their desire to escape the rat race. Pinterest, I create a beautiful cover image for the post and all the SEO tags, and it's done. We'll also do a feature on the founders or owner and that gets further traction.
D: People always hesitate to start their own business because they think someone else is already doing it. But Peggy Chan from Grassroots Pantry gave me the best advice, she said: " No one does you." And it's true, Comparison is the thief of joy. I think it's not enough to be a brand anymore. People relate to other people. Like with MISCHA, it's an extension of you and your lifestyle. Similarly with Compare Retreats, when I say something is great, I get more traction than when Compare Retreats says something is great.