SCMP Tuesday, October 9, 2001

Start small, think big


Rags-to-riches stories are the stuff of local legend. The list of penniless immigrants who have parlayed their wits into successful businesses is a long one, and their stories fuel the dreams of the average Hong Kong person even, or perhaps especially, in these difficult times.
Take Li Ka-shing, for example. Now arguably the richest and most powerful man in Hong Kong, he got his start locally as a salesman for a plastics factory. Then, with capital of $120, he set up his own comb and soap-holder manufacturer, Cheung Kong. That company, still his flagship, rode the plastic-flower fad of the 1950s to become the biggest plastics factory in the world. And the rest, as they say, is history.
But for every Li Ka-shing who has made the leap to empire builder, there are thousands of others still scrambling, running small businesses from rented factories in Kwun Tong and Kwai Chung or tiny office spaces in narrow commercial blocks in Western.
As of March, Hong Kong boasted about 300,000 small- and medium-sized enterprises (businesses with not more than 100 employees), according to the Trade and Industry Department. They accounted for more than 98 per cent of total establishments and employed about 60 per cent of our non-civil-service workforce.
The owners of these businesses still dream of making it big, and they form Hong Kong's entrepreneurial backbone.
John Ma wants to be one of them. He plans to start his own accounting and taxation consultancy, thanks to a new programme from the Employees' Retraining Board (ERB), an independent but government-affiliated statutory body.
Through that programme the Self-Employment Business Start-Up Assistance Scheme Mr Ma, 49, has enrolled in a self-employment retraining course and is learning how to write a business plan. Once he completes the course, he will be eligible to apply for a loan of up to $100,000. If he and some of his classmates start the business together, they can apply jointly for up to $300,000.
''This business is what I am familiar with, and I've done some market research in preparation,'' he says. ''I hope the loan will provide the company with larger cash reserves.''
Mr Ma is taking his course through the local charity Christian Action, but eight other organisations are also authorised to offer retraining courses designed along ERB guidelines.
The Christian Action class is teaching Mr Ma how to start a business, including how to prepare himself psychologically, recruit accountants, register his business, pay taxes, contribute to the Mandatory Provident Fund, and provide good customer service, marketing and finance. ERB will provide follow-up counselling to any of its trainees who start a new business.
Having been laid off at the end of last year and unable to find a new job, Mr Ma counts himself lucky to have been admitted in the first round of the new scheme, which was launched in August. With unemployment running at 4.9 per cent in the June-to-August quarter up from 4.4 per cent at the beginning of the year the scheme has proved popular.
More than 700 applications have already been received, even though the programme is only budgeted to accommodate 220 people. Twenty-six banks have agreed to participate, and the Government has earmarked $50 million to guarantee participants' loans up to 70 per cent.
Chua Bee-leng, an associate professor in the Chinese University of Hong Kong's department of management, says such entrepreneurship programmes benefit not only the individuals who participate but also the economy at large.
''[Starting up a business] creates jobs not only for the entrepreneur but also for anyone hired by the new enterprise,'' Professor Chua says. ''If the company grows, more businesses and more people become involved. This helps revive the economy.''
That is a major consideration in tough times like the present. The Government has already revised its full-year economic-growth forecast downwards twice, to one per cent, and Financial Secretary Antony Leung Kam-chung says it will have to be cut further still. The economy contracted by 1.7 per cent in the second quarter compared with the first, raising the prospect that Hong Kong is on the brink of its second recession in three years. So the ERB's new startup-assistance scheme could not come at a better time.
In addition, it is likely Chief Executive Tung Chee-hwa will include further retraining opportunities in his Policy Address this week. But with the economy looking so fragile, Chan Yan-chong, an associate professor of management sciences at City University, says people lucky enough to still have jobs should explore the ERB programme. Picking up self-employment skills while employed is a low-cost, low-risk approach to career management.
''The opportunity cost of starting a business is low, as they don't need to quit their jobs or sacrifice their salaries,'' he says. ''Human beings often have hidden potential, so it's good to be prepared to try.''
Ironically, the success of previous generations of entrepreneurs sometimes gets in the way of today's would-be entrepreneurs. Leo Sin Yat-ming, an associate professor of marketing at the Chinese University of Hong Kong, says some areas of Hong Kong's economy are dominated by big players, making it difficult for small new companies to gain entry. ''Many business sectors are monopolised by big companies, which is a barrier for small businesses seeking market share.''
Those who want to create their own businesses must expect hardship, even failure, Professor Sin says and should plan to learn from it. Even overseas, only one idea in 100 grows into a successful company, he says.
Add to that the fact that most retrainees have no experience managing, financing or marketing a business, and the odds start to look terribly unfavourable for graduates of the ERB programme. But, Professor Sin says, you just cannot keep a good entrepreneur down.us101
''Failure is the mother of success,'' he says. ''If you are persistent enough, you can be successful. The scheme encourages people to start small businesses, and these provide the energy for Hong Kong's economy.''
Despite the difficulties, some brave souls are willing to bet their savings on the next big thing or, in Sophia Lu Su-chi's case, the best reflexology and massage shop in Yau Ma Tei. Ms Lu, 43, started her business before ERB launched its new self-employment scheme, so she ploughed $120,000 of her own money into the business instead of getting a government-guaranteed loan.
But Ms Lu, who has been out of work as a tour guide for more than a year, is taking Christian Action's retraining course and is confident her new business will soon be breaking even. Monthly turnover has already reached $30,000, which keeps her cash flow positive, and she believes the future will stay rosy as long as she takes good care of her customers.
''Some people think my kind of business is low-class because I deal with other people's feet. But for me, a foot is a work of art,'' she says. ''I want my customers to feel good so they'll come back. Small businesses should be customer-oriented.''
Ms Lu is clearly motivated to make a success of her shop. And motivation is the key to toughing things out and nurturing a new business over the long run, says Chinese University's Professor Chua. ''It's easy to start a business, but it's not that easy to manage and sustain one,'' she says.
City University's Professor Chan is optimistic about the prospects for small businesses. He uses as an example Sirivat Voravetvuthikun, formerly a millionaire property developer and chief executive of a prominent Bangkok brokerage, who lost everything when the Thai baht crashed in 1997.
Not one to take defeat lying down, Mr Sirivat started a humble business tailored for hard times: hawking sandwiches on the street. The business required little startup capital, and the product was basically recession-proof. Now, nearly four years later, Mr Sirivat is on the comeback trail. He has expanded to 45 locations and has talked about raising US$1 million (about HK$7.8 million) to list his company, Sirivat Sandwiches, on the Stock Exchange of Thailand.
Professor Chan says this a good example of the kind of business and opportunity possible through the ERB programme. ''I think this story is very encouraging. If there had not been a financial crisis, Sirivat would not have started this business,'' he says. ''A sandwich business can be started with less than $100,000 ... I can't say everyone [in the ERB programme] will be successful, but I hope there are more successful cases to encourage others to start their own businesses.''
Annette Chiu ( ) is a staff writer for the Post's Editorial Pages.