Creative Directors of MO-Design, Chao Sio Leong and Hong Chong Ip, both graduates of the Macao Polytechnic Institute, joined the civil service for several years before “lighting out” to create their own brand MO-Design. This inaugural issue of C² covers the dialogues between Editor-in-Chief Lei Chin Pang and the two on their experience in running a creative business.
L: Lei Chin Pang
H: Hong Chong Ip
C: Chao Sio Leong
L: Tell me briefly how did you set up MO-Design?
H: MO-Design (“MOD”) was created in 2009 and then moved to the “Yellow House” where the government as a tenant of the premise lent us the site at one tenth of the market rentals. We then operated at the site for two years since 2012.
When our accountant worked out our financials for a business of two years, we knew that we were going to have a deficit by the second year. So, should we keep going or should we give it up? We decided to keep it on, as it was all in all a chance to promote local product design and creativity. Macao’s product design at that time was still at a startup stage.
Our idea for MOD is to market both Macao products and non-local products in equal proportions and to have the merchandises in the shop divided into three categories: MOD products, local brands and overseas brands. Products are grouped and shelved, not according to place of origins, but mixed with products of other areas to encourage market entries of local products.
L: Well, normally when we shop, say in a bookshop, the travel books of local writers will not be shelved in the travel related session. Instead, they are exhibited under Macao publications, and with such a “special” label attached, actually it hurts.
C: We have data to proof this point. The “Yellow House” is formerly the “Macao Creative Pavilion” ran by non-profit organisations and funded by the government, with the highest monthly sales turnover as MOP80,000. After MOD moved into the site, business turnover in just six months rose to six times that of the “Macao Creative Pavilion”. Even if we just focused on Macao products, our turnover would still exceed the predecessors by two to three times more. Some local suppliers we worked with told us that more than 60% of their total sales were made through us. Together, MOD and other suppliers provided more than 40 creative items for sale. I believe that we are the premise with the most centralised Macao creative items for purchase. Within one and a half years, we have organised more than a dozen product launches both local and abroad. Product sales will normally be doubled within the two weeks after the launch as a rule of thumb.
The first two years are just the starting phase. In the third year, when we discovered our development direction and prepared to go full swing, we were checked. The withdrawal of the shop gave us a huge blow. We had to harden our hearts to dismiss our staff members and suspend our business.
L: Although you have already completed a two years contract, have you even thought of continuing the business?
C: We have placed almost all our stakes in this business. Though we have the confident to keep running the business, we are forced to stop.
L: At most, how many staff members have you employed?
H: From design to sales, more than 30 people.
L: What about the flow of people?
C: To meet the needs of our clients for a “stamping” service, we have more than 200 different stamps carved with Macao Festivals and numbers for them to use. Our customers will buy postcards and notebooks to stamp their favourite chops. Once, there is a customer who stayed for two hours to stamp every page of his notebooks one by one. Stamping has become a signature act at MOD. After the customers stamped and made their own artistic creation, they would take photos or share them in social media or blogs which is an effective promotion. To attract more customers, we have increased our design variety. At peak times, our air conditioning is not strong enough to keep everyone cool.
L: Any figures on the customer source? Say the proportion of locals and tourists?
C: Yes, we do have. MOD was situated at the foothill of the Ruins of St. Paul with around 60 to 70% tourists; most of them are from mainland China, then Hong Kong, Korea, Singapore. In the evening when the number of tourists subsided, more local residents will appear after work. So, we extended the shopping hours for one to two hours longer to attract more local shoppers.
C: We also used social media to strengthen our promotion and hope the public will understand more about local creative industry and local design.
H: This kind of promotion is very good as more students come over. Students are our favourite customers. Though they do not spend much, they are the seeds of creativity. They may join us in the future.
C: Most important of all is that they will feel belonging to the place. And that Macao could make good design products.
L: About 60 to 70% of your clients are tourists and most of them are from mainland. Will this affect your design trend?
C: Yes, for sure. We started to launch the product MO:FEST, which was targeted towards tourists. We also designed ten different Macao Festival products, which could promote Macao and allow more understanding of Macao.
L: We always think that visitors of Macao are gamblers with not much quality. Isn’t it that only quality tourists could be interested in creative products?
C: In fact, we are greatly encouraged by them. For example, the MO:FEST magnet costs MOP58 each, while other magnets in other shops are just priced at MOP10 each. Tourists are willing to pay more to buy high quality products. They are not as bad as we think.
H: The price of the products cannot be too high. For general tourists, 80% of the purchased items cost around tens or hundreds of patacas, and very few people would buy more than 1,000 worth products. Hi-tech products will make overall quality higher, but could not make a product popular. So, we will first set the price range before designing our products.
L: How is the creative industry linked with tourism at present? Since many souvenirs of Macao are still low quality items, do you think creative industry development can be assisted by the robust tourism industry?
H: For tourists, they know quite well whether your products are “wishy-washy” or value for money ones. I believe in the future MOD will have most of its work related to tourism including how to use design to express the east-meets-west culture of Macao; and how to be marketised.
L: Retailers needs a shop and we know it is very difficult to have a shop in Macao. So, what is your way out?
H: The government’s policy can be used as a support. If the government notices that there are people who have the experience and is willing to work out something, and that there are also people in the industry who are willing to use their own funds to start doing it, and has seen results. Should the government be more supportive in the promotion?
L: Using the “Yellow House” approach?
H: Well, the “Yellow House” approach is too difficult since it is not a public property. The tenant and the government do not have the say. I think the government can give support in the rentals, for example, rental subsidies.
C: In terms of bank loans, we find it difficult to secure them too. Creative industry is a new startup and banks in general do not have much data to support the outlook, so banks are quite conservative in this sense.
H: If the government can be the guarantor and can tell everybody that “this industry is supported by us!”, then the banks could feel relieved to lend money to the creative industry. Here the banks nearly mean, “If the government backs you up, I will back you up too!”
C: We are not asking the government to lend us any money, but we hope that the government can be a guarantor.
H: Since we set up the company, we have been taking operational risks willingly and are willing to pitch in and use our “brains”. Shouldn’t the Government show some support in its policies?
L: If we are to start any creative industry, isn’t it very difficult to rent a place for retail sales of products?
C: Yes, it is difficult. In terms of operations, rents are soaring that only international brands could enter the market. Anyone who has the heart to kick-start a business will be discouraged when they discover that the rents are so high. If we are to encourage development of the creative industry, we are not requesting the government to give us long term financial support, but instead we hope the barrier to market entry could be slightly lower, to allow interested people to enter. If more people enter the market, the industry will gradually flourish, and the market will be more mature.