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From Hawker to Pastry King

Fri, 17th Jan 2014
Upstart becomes a household name in a decade. (January 2014)

Macao is famous for its local pastries such as egg rolls, almond cakes, peanut candies and nougats. They have a history dating back to a century ago when fishermen and sailors visiting the local port needed a bite to eat. The shops selling them became household names, thanks to the distinct flavour of their products and their charming names like Sweet Tooth and Fragrant Shop.

Over the years, many of these family-run shops have shut down, thanks to shrinking demand and the difficulty of finding a successor to run a business that requires working seven days a week.

In the late 1990s, just when Macao was hit by a crime wave and an economic downturn, a young immigrant decided to bet his entire fortune on the pastry business. In 1997, Leong Chan-kuong, then 28, borrowed from friends and mortgaged his home to set up a pastry shop called Koi Kei Bakery, in a quiet street. He overcame initial difficulties and gradually expanded his business. Then came Beijing’s decision to allow Chinese to visit Macao freely, which soon brought millions of visitors each year. They came mainly for the casinos, but snatched a packet or two of souvenir pastries when they went home.

Leong quickly seized the opportunity to expand, from one small shop into a major business with 17 branches in Macao employing around 500 people. His company now owns about 70 percent of the pastry souvenir market, based on various studies by independent sources.

In recent years, the longer-established household names have tried to make up lost ground, but their growth has been slower. It is difficult to catch up because Koi Kei dominates the market with massive spending on advertising and shops all over the SAR.

The success of Koi Kei is a story of how an immigrant managed to breathe new life into what was considered a sunset industry. It is also a story of how a small business grew in step with Macao’s economic growth, at a time when other family-run shops failed to adapt and died in the tougher business environment.

Young immigrant from Foshan

Leong was born in Foshan, a small town famous for its Fung Ku masters at the turn of the century. He migrated to Macao in 1979 at the age of 10, with his parents and two brothers. Like many migrants, he started life as a hawker, following his father’s footsteps selling ginger sweets and peanut candies on a cart.

Business was good, with Leong making 15,000 patacas a month, when the average salary in Macao was 3,000 patacas. During the peak tourist season, Leong made even more – 10,000 patacas a day. Despite the good money, Leong did not enjoy life on the street; he was exposed to the rapid changes in the weather and harassment by competitors.

His dream was to set up a pastry shop, but his family rejected the idea as risky.

In 1997, he took the plunge, sinking all his financial resources into the shop on a quiet backstreet called Travessa do Matadouro, which was to grow eventually into a popular centre for selling souvenirs.

He named the shop after his father, even though their relationship was strained by the change of young Leong’s career.

The first few months of business were disastrous. Local mafia demanded extortion money and even set fire to his shop. Then repair works on the street discouraged visitors. His family was also pouring cold water on his plans.

For a while, Leong had to go back to pushing his cart, to subsidise the shop.

He persisted because there was no way back. “I felt I was on the edge of a cliff and had to cling on to whatever I had,” he said, still full of determination after all these years.

Then came China’s decision to issue short-travel permits to Chinese individuals to visit Macao. “It was like turning on the tap. A trickle became a flood,” he said.

The bet paid off

Leong’s initial commercial bet, at a time when better-established shops were shrinking, paid off handsomely.

In 2002, Leong set up a branch near the Saint Paul’s Ruins, the top tourist destination of Macao. It immediately raised his company’s profile among mainland Chinese visitors who were looking for souvenirs other than key rings and postcards.

Since then, Leong has set up outlets at all local tourist landmarks, even inside the major casinos, the Venetian and City of Dreams.

In the early 2000s, Leong set his eyes on opening shops in other Asian cities, such as Singapore.

In 2010, Koi Kei established its first shop in Hong Kong, in the retail district of Causeway.

On the mainland, Leong does not have a shop yet, although he bought a piece of land in Zhuhai in 2008 with a view to future production on the mainland when the time is right. He is apprehensive about issues like copyright infringement, corruption and other bad business practices in mainland China. “I want to move cautiously, without pressure or a sense of burden,” he says. He is looking to expand first in the big cities of Beijing and Shanghai, where purchasing power is strong. “People there are ready to pay 100 patacas for a packet of dried beef jerky, much higher than our usual retail price,” he said.

It has not all been plain sailing: there have been two major economic crises in the last decade – the SARs epidemic in 2003 and the global financial crisis in 2008.

Passion for work

Leong has never lost faith in his business despite the challenges. He works 365 days a year, typically 16 hours a day, but with little sign of fatigue.

“I do not smoke or drink; I do not take holidays and have no hobbies. My work is my passion. I like to get involved in all aspects of my business, from sourcing the raw materials to production to design.” He dresses simply, in a white shirt and jeans – no gold watch or bracelet that are the usual accessories of successful businessmen.

Married with two young children, Leong makes sure he has at least one meal at home out of his daily hectic schedule.

Leong personally tastes all 300-plus categories of pastries, candies, dried meat and other items before production. He recalls having to sample egg rolls 200 times – 40 pieces – in a single day.

With moon cakes, a traditional sweet pastry sold during the Moon Festival each autumn, he sampled all the specimens that were available in the market before launching his own brand.

Leong is always in search of better tastes and more varieties for his pastries. The “phoenix roll”, for example, used to be a plain recipe of egg, refined sugar, sesame and coconut flakes. Today, there are many varieties, with fillings such as seaweed and shredded pork slices.

His typical day begins with reading newspapers, in search of ideas for his business. Next, he visits each store for first-hand research of what customers want. Then he goes to the factory to taste personally the products and supervise production.

When he makes the occasional trip overseas, it is always work-related.

Leong is also moving into high-margin products, in addition to pastries: preserved seafood and Chinese delicacies such as abalone, dried oysters and scallops. Sales have been good, thanks to his extensive shop network and well-established brand name.

Another area of growth is chocolate. “I have noticed how expensively priced chocolates are,” he said, adding that he is setting up a small chocolate production facility to test the market.

Shrewd property investor

Leong is also a major investor in property, buying retail space to set up shops. He owns most of the 14 shops in Macao. Many of the properties he bought earlier have risen many times in price during the last decade. The space he bought in 2003 for one million patacas for his shop near Saint Paul’s Ruins has now risen to hundreds of millions of patacas. He now has three shops in that area, which together account for half of his total business revenue.

In 2012, he spent 300 million patacas to acquire a low-rise building in Macao as the company’s headquarters. “I am not a property speculator. I buy property because I need it for my business. For years, I was a street hawker at the mercy of the weather. I understand the need to have a permanent space to do business properly.”

His shrewd property investment has made him a billionaire but his business focus remains unchanged. “I like my work. It is my passion. It’s fun and full of challenges,” he said.

 

By Louise do Rosário in Macao

Photos by Eric Tam

(Issue N. 20, January 2014)