FEER(2/7) HK's KMB Emerges As Model For Transport Operators
By JONATHAN FINER IN HONG KONG
The real competition comes from other forms of transport. In the next 15 years, the government will pour some HK$200 million into making railways "the backbone of the territory's transport infrastructure," according to the Transport Department's Wong. But KMB's ridership has held steady since 1997, while traffic on the Mass-Transit Railway, Hong Kong's subway, has dropped by 1%-2% per year. Edmund Ho, KMB's financial director, believes that the development of new rail lines will provide KMB with opportunities for growth. "The new railroads will need bus links and that will create business for us," says Ho. "We can adjust."
What's good for KMB is good for Hong Kong, too. In many ways, the territory is tailor-made for public transport. It has a high population density and a car penetration of only 15%. The relationship between vigilant transport authorities and well-run private companies is now winning the attention of other cities.
In Singapore, long Asia's transport standard-bearer and ranked just ahead of Hong Kong in a recent study of infrastructure leaders by Hong Kong-based Political and Economic Risk Consultancy, SBS Transit is following KMB's lead by seeking passenger feedback. Several other Singapore companies are developing on-board media platforms. And the Singapore government last year echoed Hong Kong's strategy by transferring several of SBS's routes to a competitor.
"Of course, there are some regulations we think we could do without," says Chan, who laments the need to apply for every schedule or routing change. "But overall, the government has found a solution that works for others to emulate." It helps when one of the city's near monopolies doesn't always act like one.
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Commuters Become A Captive Audience For Ads:
Why Hong Kong's Roads Are Paved With Advertising Gold
KMB Executive Director Winnie Ng's biggest challenge in her old job as a marketing director for a theatre chain in North America was making sure the audience turned up. In her latest venture, Kowloon Motor Bus's on-board advertising offshoot, Roadshow, the main attraction to investors is that the audience has little choice but to attend.
Roadshow broadcasts a mixture of paid commercials and entertainment over television screens to some 2 million Hong Kong bus passengers every day. Companies like Pacific Century CyberWorks, Shiseido and HSBC pay roughly half the price of an equivalent television slot for the right to aim mass-market corporate-image advertising at viewers who can't switch channels.
Roadshow -- which started in 1999 with on-board radio -- is now installed on 1,500 of KMB's buses and an additional 500 from Citybus, giving the fledgling company an 88% share of the bus TV market.
From the company's standpoint, the venture has been enormously successful. When KMB spun off Roadshow, it became the first outdoor media-sales company to be listed on an Asian stock exchange. The initial public offering netted KMB Holdings HK$300 million-400 million ($38 million-51 million), according to Kingston Lee of Schroder Investment Management. Roadshow has since grown to a market capitalization of HK$1.9 billion, nearly one-sixth the size of KMB itself.
The audience's verdict is unclear. Many are irritated by the noisy intrusion into their daily commute. The English-language South China Morning Post frequently prints letters lambasting Roadshow.
But Ng says research shows otherwise. "According to our ACNielsen study, more than 80% classify KMB's service as better since Roadshow came along," she says.
Perhaps there's a silent majority that values silence less than the rest.
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Updated January 30, 2002 5:15 p.m. EST
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