Hong kong market

1. Introduction to Hong Kong

The Census and Statistics Department estimated the population to be 7,389,500 people as of August 2017, with an average annual growth rate of 0.66% over the previous five years. 92% of the population is Han Chinese, the majority of whom are Taishanese, Teochew, Hakka, and a variety of other Cantonese peoples. It is the 33rd-largest economy in the world (the world's seventh largest trading entity in both exports and imports), with a nominal GDP of approximately US$320 billion ($43,528 per capital, ranked 16th). Hong Kong economy expanded remarkably in 2017 with the average real GDP growth reaching 3.9% year-on-year in the first three quarters, the fastest pace since 2011. The growth momentum in the first three quarters of 2017 remained largely steady with real GDP growth rate reaching 4.3%, 3.9% and 3.6% respectively. The BOCHK also raised the growth forecast for 2017 to 3.8%. Hong Kong’s electronics exports are likely to achieve sustained growth in 2018. According to an onsite survey at the 2017 Hong Kong Electronics Fair (Autumn Edition), 60% of buyers and 45% of exhibitors anticipated that their sales would increase in 2018, while only 3% of buyers and 8% of exhibitors were worried about a decrease. Emerging technologies, such as cloud computing, the Internet of Things, big data, artificial intelligence, wireless infrastructure, and so on are likely to boost the demand for semi-conductors (which account for more than 30% of Hong Kong’s electronics exports) and related parts and components. New technologies are likely to drive growth in Hong Kong’s electronics exports. Electronics products integrating with the latest technologies such as AR/VR applications and robotics are likely to prove very popular when they hit the market. Prospects for wearable electronics, especially those with smart home/smart living applications, remain positive. And electronics products for entertainment purposes are likely to do well in the coming year, with the imminent arrival of audio-visual items such as 4K Ultra HD TV, VR/AR headsets and gaming consoles. Table 1 shows the total exports of Hong Kong, electronic exports increased by 9.9% in the first 10 months of 2017, on top of a 2.5% increase in 2016. They constitute about 66% of Hong Kong’s total exports. Thanks to the surge in demand for electronic and video games, exports of toys were the biggest gainer, growing 30.1% in the first 10 months of 2017, while household electrical appliance exports also showed a significant increase of 8.8%. While exports of watches and clocks have showed signs of improvement in recent months, they still saw a dip of 5.3% over the period. Facing competition from other production bases, exports of clothing also recorded a decline.

2. WDIRC selling

The forecast of WDIRC selling can be shown in Table 2 during the first ten years since product launched. Here the assumptions of households, occupancy ratio, initial sale, selling price, and manufacture cost are 2,431,500, 0.0800%, 1,945, 350 and 200, respectively. The first year is set as the baseline for comparison with the following years, the sale volume, year penetration, revenue, cost and profit are 1,945 (sets), 800 (ppm), 680,820(USD), 389,040 (USD) and 291,780 (USD), respectively. As we think, the growth rate with years will be 1, 5.84, 7.16, 9.31, 11.43, 11.95, 14.74, 15.36, 15.91 and 16 times over the first year. The year penetration of WDIRC will be from 800 ppm to 12,800 ppm at the end of tenth year, the totally ownership (penetration) is close to 8.69%, it still is a low penetration ratio in Hong Kong even WDIRC listed in market for ten years. However the revenue, manufacture cost and profit these three also present an ascending trend, the profit earned from Hong Kong is about $ 4.668 million at the tenth year in an exclusive market, it owns a huge market and profit in this market. Totally according to our prediction and assumption, the selling in Hong Kong will be up to 211,439 sets, even this; the penetration ratio is still lower than other consumption electric products such as TV, Refrigerator, Air conditioner, and Wash machine.

How about the annual growth rate for selling WDIRC in Hong Kong market? Fig. 3 shows the result. Here the calculation of revenue can use this equation as “WDIRC’s Revenue = Annual growth rate * Year + Baseline”, the formula can be written in a mathematic equation in Figure. According to this regression by data simulation, the annual growth rate it take about 1M per year (r² =0.9245), in other words, by averaged the annual revenue is 1M in Hong Kong market for selling WDIRC product.

3. Rice selling

A ten-years forecast to WFR sale, after WDIRC launched in Hong Kong market, is presented in Table 3. The first year since the marketing of WDIRC, online/offline deals for WFR sale are 17,410 kg, here the assumptions of population, rice consumption, sharing of WFR, online buying rate and market sharing are 7,346,248, 47.40, 0.10%, 10.00%, and 50%, respectively. How to calculate the WFR volume by online/offline sale, Eq. 1 is the equation for calculating the WFR sale volume.

Eq. 1 SaleVolume=Population x RiceConsumption x WFRratio x On/OffBuyingRatio x MSharingRatio

(eg. 17,410 = 7,346,248 x 47.4 x 0.001 x 0.1 x 0.5)

The use rate of WFR is set as 0.0024 kg/person-year. Based on this, we can get the annual revenue is $ 17,410 (WFR priced as $1), and the profitability is set to 10%, so the profit that will earn $ 1,741. Changing with the time, the ratio of WDIRC in kitchens will increase and cause the use of WFR increasing. We assumed the series of growth rate (G.R.) by years is 1, 2.33, 3.52, 11.03, 11.47, 27.40, 37.37, 42.04, 56.09 and 64.44. G.R. it is based on the prediction of WDIRC’s growth. By this series of G.R., both revenue and profit, they will also be presented like this serial when the dealing cost of WFR through online/offline transaction is keeping constant. Whatever the cost of online/offline transactions depends on the volume of WFR’s selling, so if the volume with time is scaling up, the dealing cost will be significantly lowered, in other words, the profitability with time will increase more than our prediction. If all hypotheses are true, the profit in tenth year will approach to $ 112,196. Eq. 2 calculates the penetration of WFR which to be used in this country by people. From this indicator (URate of WFR), we can see the level of penetration of WFR, even at the tenth year, the level of WFR use rate in Hong Kong is still underestimation, that’s meaningful for us to optimistically think, the use rate of WFR can be easy completed and it will be grew up more than our prediction.

Eq. 2 URate of WFR = SaleVolume of WFR / Population

(eg. 0.0024 = 17,410 / 7,346,248)

Regarding the revenue of WFR selling in Hong Kong, Fig. 4 shows the result. This is a prediction by data simulation according to our assumption, the regression could be calculated as “WFR’s revenue = Annual growth rate * Year + Baseline”. The result shows the annual growth rate is 130.296k per year (r²=0.9437), in other words, the increasing of revenue of WFR selling in Hong Kong is $130.296k dollar per year. This growth can help the company to maintain its team in the local market for servicing customers.

4. To summarize the revenue and profit

Here according to the estimations above, we summarize the incomes from sales of WDIRC and WFR in Hong Kong. Both revenues and profits are presented in Table 4. In the first year, the products of WDIRC and WFR are unfamiliar with Hong Kong people; namely the recognition and acceptance aren’t well to local consumers, so on the beginning (1^st year) sales would be not good and the totally revenues and profits will be $ 698,230 and $ 293,521, respectively. Both of them will increase with years when selling with good experiences and promotions. Through our forecast, at the end of tenth year, the profits of WDIRC and WFR will be up to $ 4,668,450 and $ 112,196, and the totally profit will be $ 4,780,646, this is a huge profit which be created in Japan market by our novel products and services.

Totally the revenue of WDIRC and WFR (2W) selling in Hong Kong market can be shown in Figure 5. The 2W revenue in first year is $698.230k dollars, after that the growth rate of revenue is $1M per year, this is a simple regression by mathematic model to predict the revenue on product selling. In practice, there are other factors that need to be considered much more, it could be higher than this or lower. Whatever by this calculation let us to trust that the market it always be there.