There is a Chinese saying, “It’s hard to start a business, but it’s even harder to keep it going and successful.” Once the business is on track, most founders are no longer willing to take risks and innovation. In addition, they tend to rely on past successful experiences, which makes their thinking become more conservative.
A recent business case is about HKTVMall in Hong Kong, where the CEO/founder has created a very successful e-commerce business during the past couple years. He established his own warehouse fleet, streamlined logistics, and introduced a “fulfillment” system to deliver goods as fast as the same day. He successfully changed Hong Kong’s online shopping market ecosystem. The total gross merchandise volume (GMV) in 2020 reached 5.95 billion HKD, more than double the 2.78 billion HKD in 2019 before the epidemic, and it turned from a loss to a profit for the first time, with a net profit of 180 million HKD.
Unfortunately, when the online shopping business stabilized (after the pandemic), the e-Commerce business was no longer growing at a high rate as Hong Kong is a small market space of 7.5 M population and is an open market for entry of new competitors. The past successful experience has caused the CEO/founder to think within the box and only focused on developing his business in a “red” sea, i.e. the known market space, where industry boundaries are defined, and companies try to outperform their rivals to grab a greater share of the existing market.
Another major mistake could be the spending 215 million HKD to repurchase shares to support the share price, which only made the company had less resources to develop new markets and/or new technological innovation in the e-commerce sector.
On the contrary, some locally established Hong Kong start-up companies failed to settle in Hong Kong, but successfully “exported” and even became unicorn companies in Southeast Asia.
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