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Monday, October 5, 2015, 09:03

From the captain’s log

By Emma Dai

From shipping hong to marketing giant, it has been an eventful voyage spanning some 120 years for Jebsen & Co Ltd, group managing director Helmuth Hennig tells Emma Dai.

From the captain’s log
Helmuth Hennig, who has inherited the family passion for sailing from his father and grandfather, believes it throws up the same challenges as running a business, as it is all about teamwork, preparation and execution, with a target to be reached at the end. (PARKER ZHENG / China Daily)

The booming consumerism in China offers a “blue ocean” for overseas niche market players, despite the prospect of being rocked by waves in the shape of a slowing economy and challenges from e-commerce — so believes the top manager of a century-old hong.

“When I joined the company, there was a lot of discussion about disintermediation — why do you need a middleman? What are the values that companies like Jebsen bring to the table? Do you create value or just take margin?” recalled Helmuth Hennig, group managing director of Jebsen & Co Ltd.

“We have no God-given right to be here. We need to work hard to create value. At the end of the day, (we would survive) only if we were innovative,” Hennig told China Daily in a leadership interview.

Established by two Danish families in 1895, when the last Chinese empire under the Qing Dynasty (1644-1911) was on the wane, Jebsen started its journey as a shipping agency, one among the thousands of hong in colonial Hong Kong.

Despite the dramatic changes in the business landscape in the last 120 years, the company never shifted its focus away from China and the region, even during World War II and the “cultural revolution” (1966-76) years. Their top picks, though, evolved from BASF indigo dye in the late 19th century, to various automobile brands and consumer goods today.

Its four strategic business units are consumer, beverage, industrial and motors, complemented by specialized businesses including logistics and marine. According to the company website, Jebsen supports the value chain of its partners from brand building, marketing, import and logistics, to sales and distribution to a wide network of wholesalers, retailers and consumers.

Importing Hong Kong’s first Volkswagen Beetle in 1953 and the first Porsche sports car to the Chinese mainland in 2001, Jebsen remains the exclusive distributor of Porsche in Hong Kong and Macao, and a major dealer on the mainland. Entering the millennium, Jebsen sees potential in the growing wealth of the mainland.

Marketing and distributing nearly 200 brands from Pentax to Dyson, Jebsen’s network stretches as far as Urumqi, capital city of the mainland’s westernmost Xinjiang Uygur Autonomous Region.

“It’s very difficult for us to compete in the mass market, which means moving volume, being a cost leader, basically trying to maximize scale. That’s not what we are about. We are predominantly a niche player. Our strength is to bring brands to a marketplace with preserved value and position them to a more premium range,” Hennig said.

“Very often, niche suppliers don’t have the scale or ability to be in China on their own. What we offer is everything from marketing, brand building, sales and distribution to after sales — a whole palette to pick from,” he said.

However, Hennig cautions that the process of choosing is also a measure of one’s ambition, corresponding with capabilities.

“China is massive even for niche products. It’s not waiting for anything. It takes not only time and investment, but also management attention to succeed. Brand owners have to commit resources, which means having people in the field to understand the competition, pricing and unique selling points. There has to be the willingness to accept China as a distinguished market.”

While each brand has its own demographic and earnings criteria concerning where and how far it should go in China, Hennig said first-tier cities are still fashion-leaders and thus the key.

“Even though we talk a lot about overseas purchases by Chinese tourists, many still travel to Shanghai and Beijing to understand what’s trendy at the moment, and take the lead from there. That’s the way brands get developed — word of mouth would spread and we will see whether others follow.”

However, consumption momentum has been affected by various setbacks lately, from the deceleration of GDP (gross domestic product) growth to a softening renminbi, even the volatility of the domestic stock market.

“Economic headwinds have definitely had an impact,” Hennig said. “Chinese consumers are likely to become a little bit cautious purchasing premium goods. But it will at least partially be outweighed by the growth of the upper middle class, who will find these products affordable. That’s exciting to us.”

“Meanwhile, outbound tourists have just developed into a consumer force. Apart from purchases overseas, they also bring back impressions, ideas and desires, which they will continue to fulfill at home,” he pointed out.

In the last couple of years, Jebsen has seen mainland business growth slow down from as high as 20 percent to a high single digit. “This year we expect it to grow at somewhere in the range between 6 and 7 percent, which we need to get used to,” Hennig revealed. “It’s still faster than Hong Kong and Taiwan. So the opportunity is still with the Chinese mainland.”

While traditional luxury watch and high-end wine businesses have been hit by the Beijing-led campaign against bureaucratic extravagance and gift-giving in recent years, Hennig sees a future in “products that people really enjoy on a daily basis”. “These products have been offered at a premium — but certainly not luxury — prices. They are much more accessible,” he said.

And probably J-Select, a multi-brand retail operation specializing in technology and design-oriented lifestyle products, is the best expression of this ambition.

J-Select opened its online store in Hong Kong at the end of 2013, followed by another flagship store on Alibaba’s online marketplace Tmall.com in 2014. That was followed by brick-and-mortar stores in Sha Tin and Tseung Kwan O this year, with one more due to open in Hong Kong at the year end. Its first brick-and-mortar store on the mainland is expected next year.

Targeting young couples, J-Select offers a variety of houseware choices, from Dyson fan heaters, Fitbit activity trackers and Bang & Olufsen Wi-Fi speakers, to Smeg mini refrigerators.

Unlike many other online-to-offline retailers, J-select does not offer exclusive products in either channel. “There’s no doubt that the e-commerce platform creates price expectations, but consumers will finally choose between shopping online for convenience and offline for better experience,” Hennig said. “It’s about building relationships with customers, knowing more of their behavior — what they are looking for, how often they come back, how quickly they make up their minds.”

“It’s also about building a reasonably loyal consumer base, who see J-select as an opportunity to look at different products that are fairly unique and priced with satisfying services.”

“It was way too early when we talked about e-commerce a decade ago. But now if we don’t do something about it, we are going to be left behind,” Hennig said. “It’s certainly a threat, but it also offers a whole new opportunity — a challenge to survive and thrive in the future.”

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