The Greater Bay Area: Boosting the ‘Bay’

Significant Strides

Over the past year, from its base in the Kwun Tong district of Hong Kong, the company has made significant strides in Southeast Asia. For the next phase of growth, it is targeting North Asia – China, South Korea, Japan, Taiwan and Hong Kong – where it has a big presence in wholesale but no mono-brand stores at the moment. Seasonal pop-ups, however, make up a core part of the marketing programme in these markets.

Esser said that China and the GBA is a priority for the coming months in what will be an e-commerce only proposition for the first year. After that, the company will look at building bricks-and-mortar stores in selected places, possibly including a flagship store in Hainan, with a view to getting involved in travel retail in the mainland.

The company is building up Havaianas brand awareness with both traditional and digital marketing, as Esser explained, saying: “We have quite a heavy programme this year in digital marketing, consisting of Instagram, Facebook and Google AdWords, with WeChat, Weibo and VIP.com in China starting in June. We also do quite a lot of out-of-home (OOH) advertising in and around airports. Right now we’re running a huge OOH campaign in all 14 airports in Thailand.”

With all Havaianas flip-flops produced at the company’s factories in Campinas Grande and Minas Gerais, Brazil, the average price of a pair of Havaianas is US$25, but can go up to more than US$100 for custom pair featuring Swarovski crystals. The customisation service is only offered in retail stores, where customers can choose from a range of strap styles, base colours and pin designs.

Hong Kong Hires Give a Marketing Edge

Esser believes that headquartering its Asia-Pacific operation in Hong Kong gives the company an edge for a number of reasons, including the smoothness of the work visa issuing process in the city, its low taxation rate, the international nature of the city's environment and the benefits of a convertible currency.

Esser said: “If you’re going to have one office in Asia, I believe you pretty much have to situate it in Hong Kong. The skills that Hong Kong people bring to the business and the special understanding they have of the China market are particularly crucial.”

The company employs 16 people from 11 different countries around the world in its Brazilian-themed Kwun Tong office and key among them, according to Esser, are the native Hong Kong staff.

He said: “The Hong Kong people that we hired have a uniquely insightful ability to see what is going on in mainland China and figure out what the unique selling point (USP) of a western product is for that market. I have been working with Hong Kong people at the interphase of trying to sell into mainland China for 25 years and I have found this to be the case.

“They get the USP of western fashion and they understand the psyche of people in China to a greater extent. I think for that reason they are good at product management and marketing for China.”

Maximising the ‘Bay’ in the GBA

While flip-flops are of course very much part of everyday life in Hong Kong – for the obvious reasons of high temperature, humidity and precipitation, as well as practicality – Havaianas hopes the lifestyle appeal of its product can also be capitalised on by authorities across the GBA making the most of the ‘bay’ component of initiative.

Esser points out that, by definition, the flip-flop market is seasonal, but if this seasonal nature of the business is combined with the lifestyle component of leisure footwear the sky is the limit.

He said: “If you look at Beijing, for example, the selling window for flip-flops is three, maybe four months of the year due to the climate and so on. In Hong Kong, and hence across much of the GBA and southern China, that selling window is perhaps seven or eight months.

“It strikes me also that the GBA is going to be the largest population centre that we have in China. By its very nature it is going to be our biggest market. We definitely have a critical mass, but the difficulties of border issues need to be addressed and – importantly – the lifestyle commercial opportunities of the ‘bay’ component of the GBA should be exploited.

“We sell two million pairs of Havaianas a year in the Philippines, and while I would love to see us doing that volume of sales in the GBA, issues of seasonality might make it difficult.”

Lifestyle Component

While Shanghai is big in terms of sales, one of the mainland cities Esser believes has potential in his line of business is Chengdu because of its reputation for being fashionable and the fact that it is seen to be working on creating a work-life balance culture. He said: “It is one of our target cities.”

The Chengdu approach, Esser believes, could be the key to business success across the GBA, in essence, capitalising on the lifestyle aspect of the GBA.

He said: “The clue is in the name. The GBA is a ‘bay’ area. The question I would ask is this: to what extent is a lifestyle component of living in the GBA relevant? The answer to that, in my view, is to a very big extent.

“If we take a look at the original bay area – San Francisco – the reason people moved there was not just the economic opportunities it offered, but the lifestyle. People were doing cool things like roller-blading, surfing and eating at cosy waterfront restaurants.

“The GBA, in my view needs to have that kind of vision. Obviously Havaianas products are part and parcel of that lifestyle and we hope that we can ride the selling wave it brings.”