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Retail Sales and Management Services
The
Shanghai retail sales and management
services business (“Shanghai Business”)
was a major contributor of turnover and net
income for the Group during the year ended
31 March 2011. Turnover for the Shanghai
Business declined 8% to HK$60,682,000 with
an operating profit of HK$7,288,000 and
gross margin of 58%. The decline was mainly
due to the adjustments of the Shanghai’s
business model in response to the changing
landscape in the Shanghai’s retail and
consumer mobile telecommunications market.
We
managed 28 retail services stores
at end of the fiscal year for one of the
major mobile telecommunications operators in
Shanghai (“Shanghai Telecommunications
Operator”). Due to renovation of certain
shopping malls and the government’s
redevelopment projects, two retail services
stores were temporarily closed as a result.
The Shanghai Business had been impacted
negatively by the increasing competition in the Shanghai mobile telecommunications
market. The high penetration in the Shanghai
mobile market coupled with the heavily
subsidised program for the 3G handset forced
Shanghai Telecommunications Operator to
tightly control marketing costs and expenses
and this affected our service income during
the year. With the changing of the market
and consumer landscape in the mobile
segment, the retail business was undergoing
some fundamental changes in its structure
and purpose, evolving from a traditional
service-oriented outlet to a sales-and-marketing-oriented retail store in order to
cater the need of the consumer in the
growing popularity of the smartphone and
mobile applications. In anticipation of the
changes, we had invested heavily in a
comprehensive and in-depth training program
to upgrade the staff’s professional
skills and productivity. This investment in
human resources seems to generate initial
success.
The Shanghai Business had been
recognised as and awarded with the “Best
Co-operative Partner”
in
2010 by the Shanghai Telecommunications
Operator. Although the
changing competitive landscape in the
Shanghai market continues to pose challenges
to our continuous and stable income, it
opens up opportunities to create new market
and services to enhance our relationships
with the Shanghai Telecommunications
Operators. We also began exploring market
opportunities outside of Shanghai to
leverage our experience and expertise in the
retail sector as part of plan to expand our
business nationwide.
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