Friday, January 13, 2012, 00:00

Rebuilding the market economy

It used to be routine: wake up, walk to the wet market and buy the day’s fresh ingredients for dinner. Markets have always been a part of Hong Kong life, but these days, they are losing ground to supermarkets, whose numbers have grown exponentially over the past two decades.

The two supermarkets — Wellcome and Park’n’Shop — now control more than 70 percent of the grocery sector, while the number of independent grocery stores and wet market stalls has declined by more than half since 1996. Tofu merchant Cheung Ching-loi says business at his stall in Tai Yuen Market has declined by 60 percent over the past decade.

Other market vendors tell a similar story: fewer customers, quieter markets. In the government’s 102 public markets, one out of every seven stalls is vacant. The vacancy rate is similar in markets run by the Housing Authority and The Link Reit, a publicly-traded corporation that bought 96 markets from the government in 2005.

The situation became so bad at some markets, that they were simply shut down. Before it closed last year, the government-run Mong Kok Market was more than 60 percent empty. Vendors blamed not only changing consumption habits, but the market environment: wet, dirty, cluttered and poorly-ventilated.

That was certainly the case at Tai Yuen, located near the heart of the Tai Wo shopping district in Tai Po. Built in 1980, it was more than half empty. For most of the day, customers were so rare that many merchants used the afternoon as an opportunity to nap. There was no natural light, little ventilation and no air conditioning. The roof leaked when it rained.

“The temperature could get as high as 40 degrees,” says Chu Chun-por, who runs a congee stall in the market.

“Nobody wanted to be here — there were so many vacant stalls,” says Chan Ka-lok, whose family has sold aquariums in the market for more than 20 years.

Now things are different. Tai Yuen has undergone a $95-million renovation to improve its ambiance, expand the variety of food stalls and give it an edge against supermarket competitors. The market’s facade was opened up to the street, the interior layout reconfigured, stalls expanded and a new drainage system installed to keep the floors dry.

Stall owners say that business has doubled since the refurbished market opened at the beginning of the year. “There are a lot more people than before, and more diverse customers too,” says Chan.

Tai Yuen’s experience raises some important questions about the future of Hong Kong’s wet markets. Their decline is often seen as the consequence of changing consumer preferences. But what if it’s the design of the wet markets themselves that turns customers away?

“The most important things in a good market are accessibility, permeability and visibility,” says architect Ken Greig, whose London-based firm, Greig and Stephenson, has revitalized several public markets in the United Kingdom, including London’s famous Borough Market. In addition to a pleasant atmosphere, a successful market needs a good location, multiple entrances and a clear interior layout, “You don’t want to be lost — you want to be able to orientate yourself and find what you need,” says Greig.

Those basic ingredients can produce a memorable gathering place. “It’s a social space, a space where you trade, where you meet people, have a bite and a drink,” says Greig. Borough Market and Barcelona’s La Boqueria have become major attractions not only for their food, but for their color and conviviality.

Unlike supermarkets, markets also tend to breed expertise, since vendors specialize in specific kinds of food — fresh tofu, for example, or Chiu Chow rice cakes. “That doesn’t happen in a supermarket, where there’s no discussion of a product’s quality,” says Greig. “It’s on a shelf, take it or leave it.”

Two years ago, Grieg was hired by the owner of Tai Yuen Market, The Link, to undertake renovates. Since then, he has visited more than 30 of Hong Kong’s public markets. In terms of quality, he says, they are a mixed batch. “There’s the good, the bad and the ugly,” he says. “Some markets are flying but others are stalled and not going anywhere.”

Part of the problem is that many of Hong Kong’s wet markets were built in the 1970s and 80s as warehouses for relocated street hawkers. Most market halls are strictly utilitarian, with concrete walls, few sources of natural light and small stalls so as to accommodate as many hawkers as possible.

Their management has often been just as bare-bones. “If you take a look at the wet markets run by the Food and Environmental Hygiene Department (FEHD), they are not designed and run like a business enterprise,” says Legislative Councillor Tommy Cheung, chairman of the Legislative Council’s Food Safety and Environmental Hygiene Committee. “Look at the size of the stalls, the corridors, the lighting, the ventilation — they’re not good. That’s why you don’t bring in enough people.”

Rents in government-run wet markets have been frozen for years, and many stalls pay far less than an equivalent space on the street or in a shopping mall. The average rent for a stall is HK$2,700 per month, though some stalls rent for less than HK$100, such as a dry goods stall in Yuen Long’s Tai Kiu Market whose rent is just $81.70 per month.

Cheung says the low rents are used as an excuse by the government to avoid investing in new market infrastructure. It creates a vicious cycle, he says — rents are low because market conditions are poor, but unless those conditions improve, vendors cannot do enough business to justify increased rent.

“Wet markets provide a lot of jobs,” says Cheung, but the decline in business has hurt their ability to create employment. “When I was campaigning 10 years ago, I went to wet markets. Stall owners then were able to hire two or three workers. These days, they can’t afford to hire any staff. This is how it’s regressing.”

Unlike supermarkets, says Cheung, profits from a market stall go directly into its owners’ pockets. If that same person worked for a chain supermarket, he or she would earn the same hourly wage regardless of the store’s overall fortunes.

“The government doesn’t have a wet market policy to help give them an environment competitive with supermarkets,” says Cheung. “It’s because they don’t understand. I have had high officials debate with me about why we shouldn’t just do away with wet markets and shop at supermarkets instead.”

Six years ago, the government sold more than half of its markets to The Link. It was billed as an opportunity for the markets to be improved and made more competitive. But The Link has been criticized for stocking its properties with chain stores and raising rents far beyond what independent business owners can afford. In low-income Tin Shui Wai, where most wet markets are operated by The Link, food is so expensive that many residents travel to Yuen Long, where prices for vegetables and other staples are 30 percent cheaper.

Even free-market supporters like New People’s Party vice-chairman Michael Tien have taken The Link to task for making its markets unaffordable to local residents. With a primary focus on pleasing shareholders, Tien wrote in an editorial in September 2010, “concern for small business owners and their customers is a distant second.”

Tai Yuen Market is meant to prove otherwise. Rents for existing tenants have been frozen for three years. Ken Greig’s new design has made it more spacious, with better access to the street and a staggered layout so that visitors have a clear view of every stall.

Other changes include a detailed website with photographs and profiles describing the specialities of each merchant, as well as women hired from the nearby housing estates who act as greeters and guides for market shoppers.

Early next year, the final phase of renovation will be complete when a new extension opens with more upscale tenants such as European-style delis. The Link says these high end shops will subsidize the low rents of existing merchants.

There will also be a rooftop vegetable garden cultivated by a professional organic farmer. Market waste will be composed and turned into fertilizer. Produce grown on the roof will be used in cooking lessons offered downstairs; surplus vegetables will be sold by the market’s merchants.

All of this was enough to earn The Link an Environmental Excellence Award at this year’s Asian Corporate Social Responsibility Awards. “We have a good relationship with the tenants,” says Cissy Tsang, The Link’s head of market development. “Every tenant here has a very good story. They first came here as very poor hawkers and they’ve since been able to raise their children and buy homes. Their children are all very well-educated, but some have even quit their careers to run their parents’ stalls.”

Since the renovation, many stalls have hired extra employees to help cope with the increase in business. “It’s much better than before,” says the owner of Fat Kee Vegetables whose surname is Lau. When the renovated market opened, Lau began displaying her vegetables in wicker baskets instead of the usual styrofoam containers. “It looks prettier — the customers like it,” she says.

The government is also making some changes to the way it designs and manages its markets. Over the past three years, the FEHD has spent $230 million to improve lighting, drainage and ventilation in its markets, as well as replacing the floor and wall tiles. It is also renting out more stalls to bakeries and cafe to create a more rounded mix of tenants. And last year, it published an illustrated guide, in ten languages, to all the food items on sale in Hong Kong’s wet markets.

Some markets are also being renovated, such as the Fa Yuen Street Market in Mong Kok, which was originally slated to be closed. But there are no plans for any renovations on the scale of Tai Yuen Market.

Tommy Cheung says this is a missed opportunity. “Even if many things are wrong with Hong Kong’s wet markets, there are still so many people who shop in them,” he says. “If we make the environment user-friendly, imagine how many people would want to shop there.”