Kurt,
Story on Hong Kong shopping patterns:
In Hong Kong, in the past month or so, the flow is not good, and what it suggests for the rest of Asia, not to mention U.S. tech stocks, is disquieting.
Commentary Features: TSC Reader Shares Disquieting Observations on Tech from Hong Kong
By Andrew McGrath
Special to TheStreet.com
12/21/97 6:00 PM ET
Editor's Note: Andrew McGrath is a TSC reader and former money manager who has lived in Asia for the past decade and now resides mostly in Burma. He sent us these observations on the tech market in Hong Kong. He called them "purely anecdotal." You be the judge.
*****
HONG KONG -- Smell the Incense? That's Asia's Tech Funeral
Smack in the heart of Asia's Confucian Belt sits Hong Kong, arguably the tech consumer capital of the region. There hasn't been a gadget invented yet that the folks of this former British colony wouldn't buy by the container load, or at least pirate and clone.
The territory is a kind of test market for the rest of Asia: What sells here will soon be the must-have item in the rest of east Asia, spreading as quickly and thoroughly as last summer's haze. Similarly, if they don't want it in Hong Kong, it's a pretty safe bet that the rest of East Asia will ignore it, too.
To illustrate the extent to which tech and all its gadgetry have permeated this town, it is not uncommon to see a citizen whose waistline carries more silicon, in the form of cellular phones and pagers, than the bust line of a Vegas showgirl.
And this is on a construction worker, never mind the yuppy investment bankers or real estate agents, who are the recipients of more radio signals than a Cold War embassy. In a city of six and a half million people, more than 1.5 million are cellular phone users. That is saturation.
Patience is a quality and a word not particularly well represented in Hong Kong. What sells, sells right now, in volume and at a premium. What doesn't sell is discounted as fast as an Asian currency and cleared off the shelf. Shop owners and sales staff have a uniquely Hong Kong way of dealing with customers: The customer is not always right, rather, the customer is an impediment to the next sale.
It's all about turnover, that staccato movement of goods and customers out the door, as if prolonged customer contact might pass a contagious disease.
With such an easily identifiable and characteristic business style, it is readily apparent when the trend has changed. One need not wait for sales and inventory numbers to be gathered and published, one need only look at traffic flow in the shops where goods are sold.
In Hong Kong, in the past month or so, the flow is not good, and what it suggests for the rest of Asia, not to mention U.S. tech stocks, is disquieting.
If Hong Kong is Asia's tech Mecca, then the ka'aba is Windsor House, a high rise that contains the majority of the city's computer retailers. It is to computers in Hong Kong what 47th Street is to cameras in Manhattan.
Located in the Causeway Bay area, which is but a twenty-cent rickshaw drive from the area recognized as "the most densely populated place on the face of the Earth," there is certainly no dearth of potential customers. This past summer, before the end of the Pacific Century, customers almost needed reservations just to board the elevators to Windsor House's computer retail floors.
No one venturing into this locale was able to walk out without serious injury both to his credit card and physical self, as jostling shoppers, overburdened with box upon box of the latest hardware, were simply unable to avoid collisions with their fellow tech pilgrims.
Today, a few months later, most of the scars from this ordeal are healed. Windsor House is an entirely different place. Gone are the crowds, the boxes, and the desperation to get the latest, fastest and shiniest new product.
Where it was once a cacophony of aggressive consumers, one can now enjoy a leisurely stroll, stopping to smell the inkjet. It is a place of quiet reflection and boarded up shops. It seems woefully out of place in Hong Kong, but it may be the region's new reality.
It might also announce the funeral for this stage of the tech revolution, and perhaps Wall Street should take notice.
DrRisk
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