According to a report in the Hong Kong iMail online newspaper, Hong Kong's online brokerages - particularly the smaller ones - are facing such a tough time in the face of mounting competition that they are resorting to extreme forms of advertising to bring in the customers.
Peter Y H Wong, executive director of Tai Fook On-Line Services, is reported to have enlisted the help of a voluptuous top model. Together with 200 of Mr Wong's colleagues, they donned red vests and handed out packets of tissues in the streets of Hong Kong as a promotional gimmick. Not the most obvious connection - tissues and stockbroking - but Mr Wong seems to think that it should do the trick as he hopes to have 60,000 online customers by the end of March 2001, and 20,000 more by the end of the year.
As more and more brokerages have sprung up in Hong Kong, some firms have turned to online broking as a means to stay afloat, although not all firms can really afford to finance such a big investment. Mr Wong, however, has opted to go down this road as a way of persuading his customers to stay and not defect to his competitors, who include international firms such as Charles Schwab and E*Trade as well as home-grown efforts like Boom Securities and SHK Online, the securities arm of property group Sun Hung Kai.
The situation will be exacerbated by the lowering of broker commissions in 2001, which will bring brokers' revenues down by as much as 30 per cent in some cases.
Mr Wong remains committed to online broking, however, saying it is good for both brokerages and investors. He commented: 'It's a win-win situation where our customers can get information for free, and we can also cut down on the level of inquiries. Our margin will be thinner [after commission rates decrease], this is why everyone wants to break into the new market, and get more customers. At the same time we have to streamline our process'.
Tai Fook's online investors range from taxi drivers and housewives to accountants, Mr Wong said. However, the firm is keen to attract more sophisticated investors with higher disposable incomes. Tools planned for Tai Fook's online service include ones which will allow investors to do their own analysis, and create detailed charts and portfolios. The company has even introduced a promotional game - the iGame - which encourages investors to guess what the Hang Seng Index will be at a certain date, and win a car.
Mr Wong is confident that Tai Fook can compete with the likes of Charles Schwab and TD Waterhouse. He said: 'I will not underestimate what they can do. But they will not necessarily have local knowledge and understanding of how to manage the securities business here.' However, it's obvious that he is taking no chances - his office has been feng shui-protected to create the best possible vibes for success!
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