First and foremost, let me say that while I am an unabashed Hong Kong-ophile I do not work for or get paid by either the Hong Kong Government or the HK Toy Association! Of course happy to take donations or dim sum from them!
I’m on a big A380 Jumbo Jet on my way home as I’ve just finished 17 days in Hong Kong! Boy, did they go fast. The first three were pretty easy outside of breaking jet lag because I planned the trip assuming I would have to spend three days locked down in the hotel. I was lucky they lifted the quarantine and just had to deal with three or four days of room service and takeout over my first weekend here! The first week was a lot of re-acclimating with my team of 50 and catching up since we just finished off fall previews in LA and Dallas. Given the accelerated timelines for production and shipping, it’s time to finalize factory costs and make the “go, or no go” moves on tooling and call shots for 2023 now! Bye-bye, February Toy Fair. Too little too late to green-light product in the modern world. I won’t be shedding a tear, not having to fight the weather either.
The second week went by really fast, with a lot of great work and finalization, along with a few broken hearts on items that have yet to make the cut. I found prices stabilized for sure. The exchange rate is working in our favor for once as well as the lower supply chain costs. Some of us will finally be able to catch up on crushed margins over the past three years. With costs stabilized, hopefully, we’ll all see that inflation has peaked, at least in toys. I find the factories open and hungry for business. While I’m not seeing costs of i/c chips going down much yet, the lead times are back to normal, same with other components where lead times extended drastically.
As I mentioned in my last installment, the city is eerily quiet and serene, from what we’ve all come to know over the years. Pleasant in a way but missing the buzz. Sort of like walking around Manhattan at midnight on a Thursday night in September. However, there are still people out and about, and you still have to dodge the random Honk’ee walking toward you, head down, staring at their phone as they come within inches of bumping into you.
During my second weekend, while I was free to eat out and hit a few bars, which was liberating, it was a bit low energy. I got a chance to walk some of the big malls like Harbor City/ Ocean Terminal as well as IFC and Pacific Place, which were all surprisingly similar as I remembered them with all the big store brands still there. The exception was no rope lines outside Gucci or Prada on Canton Road!
The big surprise was the new K11 Museo which is between the Old Regent (which is under renovation) and the new Rosewood (which is the place to be if your new line is “toy of the year” and you can afford it). The mall is fabulous; you’d think you were Dubai or retail heaven. Definitely worth a visit. Not very busy yet. The real shock was Time Square and Russel Street on the Hong Kong side, which isn’t a place more toy folks wander, but it’s a big indicator of the local market. It was really dead, and it’s typically jam-packed—a lot of closed storefronts on the street. At one time pre-Covid, the stores opposite Time Square on Russel street had the most expensive rents on the planet! However, all these owners play the long game, and I suspect in due time, it will all be booming again.
My family and I have been members for 20 years of a great local club called the Aberdeen Marina Club. You might have never been there; however, you might have been to the famous Jumbo Restaurant, which was billed as the world’s largest restaurant and was a giant floating restaurant parked permanently in Aberdeen Marina on the Hong Kong side. Well, Covid and age took their toll, and Jumbo needed a massive renovation which the owner was not prepared to undertake, so it was sold. While it was being towed to be refitted and off to a new home it sank at sea off the coast of Hong Kong in a storm! Sounds suspicious to me but I’m from Jersey so call me a skeptic it was a freak accident. So no more Jumbo but a nice new view opened up out the back deck of the Marina Club! Google Jumbo restaurant sinks as the pictures are amazing.
Wandering around Lan Kwai Fung things were pretty quiet. Very light walking traffic on the week night I was there, a bit better on the weekend. Same in the bars and restaurants. Still fun to walk around but a far cry from the heyday’s. Wan Chai on Lockhart road where Carnaby’s and Joe Banana’s are as well as the more infamous places like Amazonia and Neptune’s all were really dead. Weekend and week night. About a third of the doors in the area are shut and padlocked including a good Mexican restaurant. They also have seemed to change the rules so all the rowdy bars’ doors are closed and blacked out so you can’t wander by and see or hear the crowd or lack of crowd inside. Of course at the beers bars there as are the usual ex-pats (mostly Brits) that have been, I assume fixtures for years, wasting away. So, Wanchai might be a skip when you are back. Wyndham street and those above LKN are still super hip and had decent crowds inside and out on the weekend. I have to admit that I skipped Knutsford Terrace this trip. Maybe I still have a little PTSD from a hard night out at the Russian Ice Bar or the new Beer Pong place!
I suspect like a plant that just needs a bit more water once things open up it will all slowly get back to normal but probably with a few less ex-pats and businesspeople. A lot of folks have cleared out back home or to places like Singapore. That’s not to mention a lot of Hong Kong people have emigrated to places like the UK, Canada and Australia.
Well, my last week was also really busy meeting with all our great vendors many of whom have been friends and associates for decades. It was great to see them, and they were very happy to see their first customer in almost three years in person. Lunch was on them, and boy did I eat my way through the week with vendors by day and local friends by night. The food here is still the best in the world from the unbeatable Cantonese cuisine to some of the best western restaurants on the planet.
The big question everyone is asking here is what about January?? Is anyone coming? My answer is “I’m not sure… but I’ll be here”! Basic Fun’s showroom will be open from January 2nd to January 8th for buyers that are hardy enough to make the journey after so long!
Word on the street is the HK Toy Fair at the Wanchai convention center is happening in January. That’s typically more of a local show for the region and for non-North American buyers but it’s part of the January market week circuit as we’ve known it. I suspect as they are a very hardy lot the international distributors will be here in force. If anything to try to keep up their frequent flyer status! Seriously they need to come and see vendors both HK, Chinese and US partners. The big question are the retail buyers and the US buyers in particular. I’m not very confident we’ll see many if any this January but there is always hope. Hell, we didn’t expect much of the Dallas preview show and it turned out to be great with all the majors on hand so you never know.
The other question I’m being asked is do I need to keep my showroom here? That’s a tough call for sure. I’m going to guess that a lot more companies will be thinking about LA for previews and a lot of the distributors and international retailers might consider LA to be the place to go instead of Hong Kong at least in 2023. Of course in some way that defeats the idea of Hong Kong which was and still is “Gateway to China” since LA is a lot farther from the factories. But if folks are done with Hong Kong for now I guess LA is a reasonable fall back.
However, I would assume that Hong Kong over time, maybe October 23’ or January 24’ will be back. Our plan is to hedge our bets, bite the bullet and do both. Keep our showroom in Hong Kong and take some temp space in LA and see what happens. For my part, if you have a team in Hong Kong that manages your China business it’s important to have a place/room to layout the product so you can sit back and look at it. That’s opposed to a bunch of product crammed into an office or conference room reviewing one by one. Your team also needs to see the product. However, for many a showroom is a luxury not a necessity. To each his own.
What I say to my industry colleagues that typically come over to work the product lines, work with vendors and who with your HK teams: It’s time to come back to Hong Kong! Likely your team needs to see you, your vendors need to see you and you will remember how great this city is and how much you actually do miss it if you were the type to appreciate the finer and even not so finer things about the city. It’s been 3 years!
I will leave you for now with this: Never bet against Hong Kong! They’ve seen wars, upheavals across the border, a variety of economic crisis, a number of pandemics ( remember Bird Flu/SARS!) riots and a historic change of control in 97’ and 21’ and the place just rolls with the punches and rolls on! You might wait to think about buying a flat, you might second guess keeping your showroom but don’t bet against this city and it’s people, you’ll lose and Hong Kong will win.
Not sure about you all but I’ll be back soon. My ticket is booked for the holidays’ I’ll will be here with my family and for the week after New Years to see some buyers and sell some toys!