12 February 2014
More than 230 exhibitors from 19 countries and regions attended last month’s HKTDC Hong Kong International Licensing Show, which spotlighted some promising new sectors, including those related to sports, art and luxury brand. Those areas are also attracting European companies looking to doing business in Asia, according to Hong Kong Trade Development Council Assistant Director Raymond Yip, who recently led a mission to Hong Kong Day at Brand Licensing Europe in London. Mr Yip explains how European companies are using Hong Kong to take advantage of Asia’s fast-growing licensing market.
What were your impressions of Brand Licensing Europe?
I think it was a very eye-opening exercise in the sense that this is the second-largest licensing show in the world and the largest in Europe, which is renowned for its premium brands. Of course they, like other business sectors, are also looking East, eyeing the large pool of manufacturers in Asia.
European companies are finding that Hong Kong is a perfect place to explore licensing opportunities in Asia, according to HKTDC Assistant Director Raymond Yip, who took part in the inaugural Hong Kong Day at the Brand Licensing Europe in London last October
Is there widespread awareness among European companies about Asia’s licensing potential?
Not all of these European brands have explored Asia enough. Of course, the first-tier brands are quite well-represented in many parts of Asia, but many second-tier and third-tier brands are relatively underexposed in Asia. And in Europe, traditionally many of the licensing is done with retailers. In the case of Asia, a lot of licensing is done with manufacturers higher up the value chain, and they present excellent opportunities for licensors around the world, particularly those from Europe.
What are some of the Chinese mainland’s most promising licensing sectors?
Fashion licensing and brand licensing have been the fastest-growing sectors on the Chinese mainland, growing by something like 67 to 68 per cent last year, almost double that of entertainment licensing, the largest sector.
Mainland China is virgin, uncharted territory when it comes to the licensing world. The licensing market has grown by leaps and bounds over the past few years, from about US$3 billion in 2009 to US$5 billion last year, a staggering 60 per cent growth. Yet US$5 billion dollars of sales of licensed products represents only three per cent of the world’s licensing market, which was US$153 billion last year.
What else is driving demand for licensing on the mainland?
The other positive factor that the mainland presents to the world is its national policy. Under the current 12th Five-Year Programme, they are encouraging manufacturers inside the mainland to move away as much as they can from OEM business to more proprietary exports such as ODM or OBM. But not every manufacturer is prepared to invest to the tune needed to create one’s own brands. I believe what would be half-way is licensing. Through licensing, one can add value to the manufacturing and have better control on the margins.
How can Hong Kong help develop the mainland’s licensing market, while strengthen its own role as Asia’s licensing hub?
Hong Kong is one of the most advanced markets for licensed products. In terms of per-capita sales of licensed products, we rank second in Asia, after Japan. In 2012, everyone in Hong Kong spent about US$37 on licensed products, compared with Japan, which spent about US$80 per capita. In per-capita sales, we are higher than any other market in the Asian region. And many of the large licensing agents are based in Hong Kong and cover the region, thanks to our excellent financial and legal infrastructure. Licensing is essentially an IP business, and one needs to be convinced that the legal structure affords them adequate protection.
The other advantage Hong Kong offers is the presence of a large number of manufacturers, who, like our Chinese mainland counterparts, are also in dire need of moving up the value chain. That’s why we see, year after year, more visitors coming to our licensing show, and we are getting even stronger support from Europe.
Apart from the Licensing Show, we have a large pool of potential licensees in such business sectors as fashion, toys, electronics and houseware. Apart from brands, there is also potential for sports licensing, entertainment licensing, fashion-brand licensing, collegiate licensing and even art licensing.
What about art licensing?
That subject is beginning to catch the eyeballs of the Chinese mainland’s Ministry of Culture. We have organised mainland road shows to engage companies under the purview of the ministry, including those in animation and culture, from museums to art. The Ministry of Culture and constituent organisations, such as museums, are interested in generating revenue from their normal business operations. For example, animation companies can enhance awareness of their characters by licensing them to manufacturers for products. In the case of museums and art institutions, such products as the paintings of Qi Baishi or, in the West, works by Andy Warhol, could be licensed. I think the ministry is quite inspired by this potential area for generating revenue. And they can plough back what they earn into the continuing development of the culture industry.
- United Kingdom
- Hong Kong
- Western Europe