The true confessions of a Chinese shadow banker
Joe Zhang, Bloomberg News | 13/07/09 | Last Updated: 13/07/09 1:08 PM ET
More from Bloomberg News
Between curbside lenders, microcredit institutions, pawnshops, trust loans, “wealth management products” from banks and other components, this murky and unregulated financial universe is now worth an estimated $5 trillion, challenging the dominance of the traditional banking sector.
Getty ImagesBetween curbside lenders, microcredit institutions, pawnshops, trust loans, “wealth management products” from banks and other components, this murky and unregulated financial universe is now worth an estimated $5 trillion, challenging the dominance of the traditional banking sector.
Shadow banking has flourished in China for one simple reason: financial repression
In the fall of 2010, as deputy head of China investment banking at UBS AG, I spoke to a group of wealthy investors in Beijing about the outlook for Chinese stocks. A rumpled, 50-something man from Hangzhou named Wang Zhigang pulled me aside afterward and asked for my advice about investing. Until then, he had made his money through curbside lending, not stocks. But, he lamented, his returns had dropped from more than 30% a year to a mere 23%. He worried about his personal fortune, which he had built up from nothing to almost 3 billion yuan (about $445 million back then).
He hardly needed my advice, I told him. “With your performance, even Ba-Fei-Te should farm out some money for you to manage!” I said, referring to Warren Buffett’s name in Chinese.
China’s shadow bankers are easy to demonize. Their methods are unorthodox, possibly even unsavory. They look like a disaster waiting to happen.
Intrigued, I flew to Hangzhou a few days later to find out how Wang had done so well. He drove me to the Haining Leather Market to meet some of his customers. They were merchants of leather shoes, handbags and accessories. Their network was wide and close-knit, and they sold products globally through traditional channels, as well as online.
Twenty years ago, these guys would have looked like small fish to a traditional bank. Even after their businesses had grown exponentially, they couldn’t supply the kind of collateral that banks demanded. Yet these merchants needed money, and they needed it fast. So they turned for help to “shadow” bankers, like Wang.
Shadow Portfolios
There has been a lot of talk lately about shadow banking in China. Between curbside lenders, microcredit institutions, pawnshops, trust loans, “wealth management products” from banks and other components, this murky and unregulated financial universe is now worth an estimated $5 trillion, challenging the dominance of the traditional banking sector. Such unrestrained growth naturally worries China’s central bank, which fears that a flood of bad shadow loans could prompt a financial meltdown similar to the U.S. subprime crisis in 2008. A liquidity squeeze in June, when the central bank allowed interbank lending rates to rise to as high as 20% before intervening, was widely interpreted as a warning to banks to clean up their shadow portfolios.
The threat to China’s financial system is right there — out in the open — not lurking in the shadows
The unrestrained growth of shadow banking worries China’s central bank, which fears that a flood of bad shadow loans could prompt a financial meltdown similar to the U.S. subprime crisis in 2008.
China’s shadow bankers are easy to demonize. Like Wang, many are nicotine-stained and seemingly unsophisticated. Their methods are unorthodox, possibly even unsavory. Their loans don’t show up on any balance sheets. They look like a disaster waiting to happen.
I believe these fears are misplaced, and I should know: Eight months after my visit to Hangzhou, I became a shadow banker myself. Since 2011, I have run a microcredit firm in Guangzhou, which provides loans to thousands of small-scale entrepreneurs: florists, restaurateurs, fish farmers, vegetable growers, roadside hawkers.
Although we charge about 24% annually for our money, demand remains virtually unlimited. Our customers are too small and too unstable to get traditional bank loans. At the same time, because we keep our loan amounts small — $20,000 apiece on average — and because we have close contact with our clients, the business has proved reasonably secure. Our bad debts have not strayed above 5% since the firm was founded five years ago.
This month, I visited Wang in Hangzhou again. A few borrowers had defaulted in recent months, he told me, but unlike some of his competitors, he had been “extremely lucky.” He was scrupulous about only lending to clients and businesses he knew well, and years of experience had given him a good eye.
“This is my hard-earned money; I have to be careful,” he told me. “My family was dirt-poor when I was a child. I am just so afraid of becoming poor again.” Wang’s fortune had almost doubled since I had last seen him.
Lower Leverage
One cannot defend a $5 trillion industry with a couple of examples. Two of Wang’s colleagues had been wiped out in the last year after large borrowers defaulted. Several other informal lenders in Hangzhou had ended up behind bars after disgruntled investors accused them of fraud. In recent weeks, news reports have described mass bankruptcies among small businesses that had borrowed heavily from shadow banks at exorbitant rates.
But neither should one condemn all of shadow banking because of stories like these. Shadow banking is well diversified, and serves a legitimate customer base. By and large, it has much lower leverage than banks or corporate China. Losses at shadow banks are often absorbed by entrepreneurs themselves, without affecting the taxpayer.
Even the “wealth management products” offered by regular banks are not to be feared, because they are just deposits, pure and simple, whatever the theoretical distinctions. I buy them myself.
Certainly, the sector could stand to be brought under greater supervision. But many of the regulations already in place are vague and unreasonable. Authorities have never clearly defined something as fundamental as what constitutes “illegal fundraising.” Microcredit operations, like ours, are allowed to borrow from no more than two banks for any more than 50% of their equity capital. Why only two banks? Why only 50%? These restrictions are arbitrary, and they severely limit our ability to lend to underprivileged customers.
The government and the media are scapegoating the wrong culprit. Shadow banking has flourished in China for one simple reason: financial repression. By keeping interest rates artificially low, authorities have forced savers to search for more lucrative financial products. By favoring banks — which, in turn, favor state-owned or well-connected private-sector companies with loans — they have forced small enterprises to seek out people like me and Wang.
Meanwhile, projects that might look sketchy at 9% interest rates suddenly look feasible at 6%. Under such conditions, traditional banks have steadily lowered their lending standards — from prime loans to subprime and then to simply silly loans.
Sound familiar? That’s how the 2008 financial crisis began, too. Leaders are right to worry about the possibility of a banking crisis in China. But instead of focusing their ire on shadow bankers, they should raise benchmark interest rates in order to reduce the amount of credit flowing to dodgy loans through the formal banking sector. The threat to China’s financial system is right there — out in the open — not lurking in the shadows.
Joe Zhang is the author of “Inside China’s Shadow Banking: The Next Subprime Crisis?”
Bloomberg.com
- wong chee tat :)
Showing posts with label blue ocean. Show all posts
Showing posts with label blue ocean. Show all posts
Sunday, July 14, 2013
Tuesday, April 2, 2013
Monday, March 11, 2013
MTI expects 3-4% economic growth in S'pore for rest of the decade
MTI expects 3-4% economic growth in S'pore for rest of the decade
By S Ramesh | Posted: 11 March 2013 1505 hrs
SINGAPORE: Trade and Industry Minister Lim Hng Kiang pointed out that Singapore's economy is expected to grow at an average of three to four per cent for the rest of the decade and for a country that has enjoyed twice that rate of growth since 2003, the slowdown will be a significant change.
He added given the weak external environment and the tighter labour situation domestically, Singapore expects a modest one to three per cent growth in 2013.
He said his ministry has two strategies for achieving quality economic growth.
The first is staying open and flexible to tap global and regional opportunities, and the second is restructuring the economy so that companies and workers can achieve higher productivity and sustainability.
Free trade agreements (FTAs) are also another way to help small and medium enterprises (SMEs) globalise through a large and comprehensive network of trade agreements with major trading partners such as China, Australia and India.
Mr Lim said: "These FTAs improve market access for our companies as they expand overseas. In 2012, more than 1,700 companies benefited from our FTAs, and we expect this number to increase as we expand our FTA networks and make them more user-friendly."
Mr Lim said the Singapore economy must remain open to investment and talent flow, to bring in new activities and bring companies out into the region.
Speaking in Parliament during the ministry's budget debate, he said the slowdown would be most acutely felt in the workforce as the population ages and the citizen workforce shrinks over time. To deal with this slowdown, companies must restructure and aim for higher productivity.
Mr Lim emphasised that restructuring is painful, but it is unavoidable.
Mr Lim said the government sees opportunities for Singapore companies seeking to tap Asia's growth and the continuing economic integration of the region in four sectors.
One is the pharmaceutical industry, which offers high wages and employs more than 5,700 people, where 80 per cent perform skilled jobs.
Mr Lim said biologics is one niche area within the industry that has been gaining momentum.
Over the next three to five years, the sector will create at least 500 highly-skilled jobs for chemists, microbiologists, biotechnologists, engineers and technicians.
The next sector is baby products and services - fuelled mainly by the population boom in Asia and the rising middle class.
Mr Lim said Singapore has become an established hub for commercial and innovation activities in baby nutrition and baby care.
The silver industry is also a potential growth segment, said Mr Lim, and Singapore is well-placed to tap the market.
High-end logistics services, which extend beyond the physical flow of goods, will also see much growth.
But Mr Lim cautioned that while Singapore strives hard to tap new opportunities, it continues to face domestic constraints in land, labour and energy.
However, the manpower and land constraints give companies no choice but to press on with the drive towards greater productivity.
Mr Lim said: "Nonetheless, we are mindful that drastic and sudden policy changes in our domestic business environment can impact businesses adversely."
Several Members of Parliament had also raised concerns about how SMEs could cope with the restructuring.
Mr Lim said: "We pay particular attention to our SMEs, as they are an important part of our economy and they provide good jobs for some 1.3 million Singaporeans."
He added: "This year, we will work with the Asian Development Bank (ADB) and private insurers to expand the ADB's Trade Finance Programme to enhance trade flows for Singapore-based companies. Many companies already benefit from this programme, which currently supports over US$1 billion of trade capacity. Given that our companies are exporting to Asia's emerging markets, demand for such trade financing programmes will continue to be high."
He said the government is committed to help SMEs through this difficult transition period, and many of the assistance measures introduced this year have been weighed to benefit SMEs more.
He said this was done consciously and deliberately to help them.
Mr Lim said: "Overall, we want to create a conducive business environment for SMEs to tap growth opportunities, drive productivity and innovation as well as build capabilities. Last April, Minister of State Teo Ser Luck led a committee of representatives from MTI, SPRING, IE Singapore and key industry partners to comprehensively review our schemes for SMEs. Arising from this review are eight strategies, which will be implemented to help SMEs."
One such programme is the SME Talent Programme, which was earlier announced at Budget. It will create a pipeline of local talent for SMEs.
Under the programme, SPRING will match over 3,000 promising polytechnic and ITE students with SMEs over the next 5 years.
Upon graduation, these students will start their careers with SMEs that can offer them good jobs and training.
Mr Lim said: "We will work through the trade associations and chambers (TACs) for this programme, since they know the industry best and will be able to identify progressive SMEs to work with. We hope that this will attract more local talent to join SMEs and encourage the entrepreneurial spirit in Singapore. The government will co-fund the programme, which will amount to more than S$70 million over five years."
Mr Lim said there are no quick fixes in addressing the challenges, and the path of restructuring will not be easy but the government is committed to help companies face the challenges.
- CNA/xq
- wong chee tat :)
By S Ramesh | Posted: 11 March 2013 1505 hrs
SINGAPORE: Trade and Industry Minister Lim Hng Kiang pointed out that Singapore's economy is expected to grow at an average of three to four per cent for the rest of the decade and for a country that has enjoyed twice that rate of growth since 2003, the slowdown will be a significant change.
He added given the weak external environment and the tighter labour situation domestically, Singapore expects a modest one to three per cent growth in 2013.
He said his ministry has two strategies for achieving quality economic growth.
The first is staying open and flexible to tap global and regional opportunities, and the second is restructuring the economy so that companies and workers can achieve higher productivity and sustainability.
Free trade agreements (FTAs) are also another way to help small and medium enterprises (SMEs) globalise through a large and comprehensive network of trade agreements with major trading partners such as China, Australia and India.
Mr Lim said: "These FTAs improve market access for our companies as they expand overseas. In 2012, more than 1,700 companies benefited from our FTAs, and we expect this number to increase as we expand our FTA networks and make them more user-friendly."
Mr Lim said the Singapore economy must remain open to investment and talent flow, to bring in new activities and bring companies out into the region.
Speaking in Parliament during the ministry's budget debate, he said the slowdown would be most acutely felt in the workforce as the population ages and the citizen workforce shrinks over time. To deal with this slowdown, companies must restructure and aim for higher productivity.
Mr Lim emphasised that restructuring is painful, but it is unavoidable.
Mr Lim said the government sees opportunities for Singapore companies seeking to tap Asia's growth and the continuing economic integration of the region in four sectors.
One is the pharmaceutical industry, which offers high wages and employs more than 5,700 people, where 80 per cent perform skilled jobs.
Mr Lim said biologics is one niche area within the industry that has been gaining momentum.
Over the next three to five years, the sector will create at least 500 highly-skilled jobs for chemists, microbiologists, biotechnologists, engineers and technicians.
The next sector is baby products and services - fuelled mainly by the population boom in Asia and the rising middle class.
Mr Lim said Singapore has become an established hub for commercial and innovation activities in baby nutrition and baby care.
The silver industry is also a potential growth segment, said Mr Lim, and Singapore is well-placed to tap the market.
High-end logistics services, which extend beyond the physical flow of goods, will also see much growth.
But Mr Lim cautioned that while Singapore strives hard to tap new opportunities, it continues to face domestic constraints in land, labour and energy.
However, the manpower and land constraints give companies no choice but to press on with the drive towards greater productivity.
Mr Lim said: "Nonetheless, we are mindful that drastic and sudden policy changes in our domestic business environment can impact businesses adversely."
Several Members of Parliament had also raised concerns about how SMEs could cope with the restructuring.
Mr Lim said: "We pay particular attention to our SMEs, as they are an important part of our economy and they provide good jobs for some 1.3 million Singaporeans."
He added: "This year, we will work with the Asian Development Bank (ADB) and private insurers to expand the ADB's Trade Finance Programme to enhance trade flows for Singapore-based companies. Many companies already benefit from this programme, which currently supports over US$1 billion of trade capacity. Given that our companies are exporting to Asia's emerging markets, demand for such trade financing programmes will continue to be high."
He said the government is committed to help SMEs through this difficult transition period, and many of the assistance measures introduced this year have been weighed to benefit SMEs more.
He said this was done consciously and deliberately to help them.
Mr Lim said: "Overall, we want to create a conducive business environment for SMEs to tap growth opportunities, drive productivity and innovation as well as build capabilities. Last April, Minister of State Teo Ser Luck led a committee of representatives from MTI, SPRING, IE Singapore and key industry partners to comprehensively review our schemes for SMEs. Arising from this review are eight strategies, which will be implemented to help SMEs."
One such programme is the SME Talent Programme, which was earlier announced at Budget. It will create a pipeline of local talent for SMEs.
Under the programme, SPRING will match over 3,000 promising polytechnic and ITE students with SMEs over the next 5 years.
Upon graduation, these students will start their careers with SMEs that can offer them good jobs and training.
Mr Lim said: "We will work through the trade associations and chambers (TACs) for this programme, since they know the industry best and will be able to identify progressive SMEs to work with. We hope that this will attract more local talent to join SMEs and encourage the entrepreneurial spirit in Singapore. The government will co-fund the programme, which will amount to more than S$70 million over five years."
Mr Lim said there are no quick fixes in addressing the challenges, and the path of restructuring will not be easy but the government is committed to help companies face the challenges.
- CNA/xq
- wong chee tat :)
Monday, November 9, 2009
Red Ocean and Blue Ocean
No more HRM lectures and tutorials. Remaining for the HRM is the HRM exam. Can we do a blue ocean?
- wong chee tat :)
Saturday, October 24, 2009
HRM Tutorial 4
Our group met up and discuss about the leadership theories and performance for the upcoming tutorial.
- wong chee tat :)
- wong chee tat :)
Monday, October 19, 2009
Blue Ocean Strategy Project
Well, since HRM tutorial 3 is now over, and we all have gone through the whole process from identifying the customer's profile, creating BUM, which is the buyer utility map, analyzing the value elements, creating and analysing the six pathe framework,4 action framework and the canvas.
What sums up the whole thing about BOS?
- wong chee tat :)
What sums up the whole thing about BOS?
- wong chee tat :)
Sunday, October 18, 2009
HRM tutorial 4
After the HRM tutorial 3 presentation,we have some days left to prep ourselves for the last tutorial, HRM Tutorial 4. This tutorial is mainly on leadership and performance and pay.
- wong chee tat :)
- wong chee tat :)
Saturday, October 17, 2009
Thursday, October 15, 2009
Presentation
This presentation is not the usual presentation that you and I know and would expect.
This presentation marks the ending of HRM tutorial 2 where understanding of the red ocean and its value offerings of the company currently have. This HRM tutorial 3 presentation introduces a new strategy: Blue Ocean Strategy. It uses the six path framework and 4 action framework to identify new value elements to be different from the competitors. The table above shows the red ocean and blue ocean differences.
Our group spent lots of time, energy and effort on this tutorial 3 because it is hard to understand what values we can get out from the six path framework and what are the values we can eliminate and reduce in the 4 action framework.More details are discussed in the failure milestones.
The main part of the HRM presentation (on BOS) is over, but some portions need to rework and modified and have to submit it soon.
- wong chee tat :)
Wednesday, October 14, 2009
Tuesday, October 13, 2009
Blue Ocean
Differences between red ocean and blue ocean strategies. Can we create a successful blue ocean concept?
- wong chee tat :)
Monday, October 12, 2009
HRM Presentations
This week is hrm tutorial 3 presentation. Can we jump out from red ocean to blue ocean?
- wong chee tat :)
Monday, September 7, 2009
Blue Ocean Strategy
Saturday, September 5, 2009
NTU HRM Blue Ocean Strategy
Found this from youtube and hope it helps those doing this subject. Thanks to those who upload the video!
- wong chee tat :)
Sunday, August 30, 2009
Saturday, August 29, 2009
Alternatives and Substitutes
From BOS:
Alternatives go beyond substitutes. A restaurant, for example, is an alternative to the cinema. It competes for potential buyers who want to enjoy a night out, even though it is neither a direct competitor nor a substitute for the cinema in its functional offering. There are three tiers of noncustomers a company can look to.
Can we give have more examples?
- wong chee tat :)
Alternatives go beyond substitutes. A restaurant, for example, is an alternative to the cinema. It competes for potential buyers who want to enjoy a night out, even though it is neither a direct competitor nor a substitute for the cinema in its functional offering. There are three tiers of noncustomers a company can look to.
Can we give have more examples?
- wong chee tat :)
Spa industry research for Singapore
Spa industry research for Singapore
Monday, September 20, 2004
The latest research findings relating to the Singapore spa industry was released, observing some downturn during 2003 however renewed growth in the demand for spa treatments during 2004.
The Spa Industry Survey Singapore 2003 report estimated average employees per spa decreased by 17.2% in 2003 compared to 2002, however there was an overall increase of 6.3% in employee numbers between 2000 and 2003.
Singapore Spa Industry Survey results include:
* Approximately two thirds of the spas surveyed were operating as private companies.
* Day spas made up 27% of spa types.
* 68% of spa visitors were female and 32% were male.
* 21% of spa visitors were international tourists.
* The majority of Singapore spa owners and managers surveyed predicted sound performance during 2004.
Julie Garrow, Director of Intelligent Spas, stated Singapore’s spa market is quite saturated with an abundance of supply of spa services available ranging from luxury, full service spa experiences to spa treatments offered at limited service beauty salons. Spa visits and employment were negatively affected last year by the SARS outbreak, however there seems to be continued growth in the demand for spa services by both females and males.”
Peter Sng, President of the Spa Association Singapore stated “The Singapore spa industry is experiencing interesting change as it recovers from a general downturn in 2003 and adapts to an influx of new supply, a positive sign for the industry. Both Singaporeans and international visitors are increasing enjoying spa visits which is generating renewed confidence in this niche market.”
- wong chee tat :)
Monday, September 20, 2004
The latest research findings relating to the Singapore spa industry was released, observing some downturn during 2003 however renewed growth in the demand for spa treatments during 2004.
The Spa Industry Survey Singapore 2003 report estimated average employees per spa decreased by 17.2% in 2003 compared to 2002, however there was an overall increase of 6.3% in employee numbers between 2000 and 2003.
Singapore Spa Industry Survey results include:
* Approximately two thirds of the spas surveyed were operating as private companies.
* Day spas made up 27% of spa types.
* 68% of spa visitors were female and 32% were male.
* 21% of spa visitors were international tourists.
* The majority of Singapore spa owners and managers surveyed predicted sound performance during 2004.
Julie Garrow, Director of Intelligent Spas, stated Singapore’s spa market is quite saturated with an abundance of supply of spa services available ranging from luxury, full service spa experiences to spa treatments offered at limited service beauty salons. Spa visits and employment were negatively affected last year by the SARS outbreak, however there seems to be continued growth in the demand for spa services by both females and males.”
Peter Sng, President of the Spa Association Singapore stated “The Singapore spa industry is experiencing interesting change as it recovers from a general downturn in 2003 and adapts to an influx of new supply, a positive sign for the industry. Both Singaporeans and international visitors are increasing enjoying spa visits which is generating renewed confidence in this niche market.”
- wong chee tat :)
Asia Insider: Singapore Spa Trends
Asia Insider: Singapore Spa Trends
By: Melinda Taschetta-Millane
Posted: June 5, 2007, from the June 2007 issue of GCI Magazine.
The spa industry in Singapore is booming. The country has been positioned as the urban spa hub of Southeast Asia by the tourism board, despite its relatively small size and reported economic downturn.
The island city-state of Singapore is located on the southern tip of the Malay Peninsula, and consists of one main island area of 263 square miles surrounded by 63 islets. Aside from Monaco, it is the most densely populated independent country in the world, with a population of 4.48 million, according to government statistics. Tourism is huge. The Singapore Tourism Board said Singapore had 8.85 million international visitor arrivals in 2006, and Singapore’s spa explosion is due, in part, to this increase in steady tourism.
I wanted to see this urban spa hub up close and personal, so I recently spent a week in Singapore visiting some of the top local spas and sharing views on the industry with the professionals who run them. My journey was eye-opening and enlightening as I learned more about the trends and consumer demands that drive these businesses.
Advance Treatments, Back to Basics and Healing
Intelligent Spas’ Spa Industry Profile Singapore 2003–2008 identified that a key trend in the Singapore spa industry, indicated by managers and owners, is the competitive and affordable pricing currently being offered. The increase of medical-related treatments being introduced is another trend, and, as with the U.S. market, spa-goers in Singapore are looking for a total spa experience.
As for client trends, these Asian spas are seeing more male and younger clients, as well as more couples’ services, and gift certificate sales are on the rise.
At Estheva Spa, Tan Wee Tech, the spa’s director, sees the future trends combining antiaging treatments and massage.
“It’s all in the package,” he states. “The trend really is to put together comprehensive packages. It needs to be viewed as a lifestyle to help the client look good, and younger. Natural is also a trend. The spa industry is very competitive in Singapore; spas here must rise up in order to stay on top.”
Doris Sinnathurai, manager of RafflesAmrita Spa, feels that a big trend is the return to basics.
A lot of Asian treatments are going back to ayurveda and Chinese traditions,” she explains. “Most of the treatments are hands-on—look at Thailand and India for examples. A lot of people come to Asia as a retreat and for detox programs, plus as a way of their lifestyle.
“In addition, a lot of America is coming to Asia. This includes old, traditional treatments. Singapore turns to the States for esthetics, products and technology,” she says.
My recent trip to Thailand proved this to be true. In Thailand, the trends are all about culture and remaining true to the land. “Those fortunate enough to have experienced the warmth and hospitality of Thailand will know all too well the genuine care and excellent service that are delivered here,” says Richard Williams, spa director at The Peninsula Bangkok. “As a culture that lives from the heart—even having ‘heart’ words in their vocabulary—therein lies the unique advantage to spas developed in Thailand. To have team members who take a genuine interest in their clients, care about their jobs and are proud to work in their respective fields is certainly a plus to the spa industry. All who return to Thailand will be welcomed with the warm wai, which is a prayerlike greeting—just like namaste in India—that offers respect and warmth to all who visit.”
What’s hot in Singapore? Sinnathurai is seeing a surge in body treatments using chocolate, tamaran scrub, papaya wrap, saffron and coffee as main ingredients.
To be honest, I found this to be a bit surprising, having come to this unique little island hoping to find something new and indigenous that couldn’t be found in the U.S. Thailand’s rich resources—including sugar cane, rain forest honey and jasmine rice—left me a bit spoiled.
The high turnover in service is a problem with spas in Singapore, according to Stella Yfantidis, founder of Whatever Yoga & Healing Space, who notes that it is a very business-focused country. She sees the industry evolving toward holistic therapy and wellness. To better position her spa for the future, she would like to franchise it and increase the focus on healing.
“I’d like to make it more spa-oriented and bring in more organic products, all natural-based. It’s all about going back to nature,” Sinnathurai says, adding that spas in Singapore are going away from pampering and moving more toward healing.
One major challenge that Asian spa owners face, says Tech, is that the industry is growing in all directions, and there is a lot of competition.
“They need to differentiate, and that is where the spa owner must get creative,” Tech stresses. “Spas need to have a mainstay treatment, in addition to developing signature treatments. Innovation is the key. Spas must be able to stand out in the crowd, and clients need to be able to differentiate between spas.”
Despite the challenges, the spa future looks promising for this business-savvy country, and with tourism on the rise, spa managers will be putting more marketing power into working on capturing this affluent market.
There is a lot that American spas can learn by looking to their Asian counterparts for guidance. “I think the Asian spa industry now is widely recognized—particularly in the hotel, resort and destination spa environment—and that guest will be looking for a cultural experience that embraces the local culture, and services and products will be developed to reflect this,” adds Williams.
By looking East, the American spa industry can gain new insights into up-and-coming trends, as well as a fresh perspective on standard treatments. This is a profession in which the human touch will never go out of style.
- wong chee tat :)
By: Melinda Taschetta-Millane
Posted: June 5, 2007, from the June 2007 issue of GCI Magazine.
The spa industry in Singapore is booming. The country has been positioned as the urban spa hub of Southeast Asia by the tourism board, despite its relatively small size and reported economic downturn.
The island city-state of Singapore is located on the southern tip of the Malay Peninsula, and consists of one main island area of 263 square miles surrounded by 63 islets. Aside from Monaco, it is the most densely populated independent country in the world, with a population of 4.48 million, according to government statistics. Tourism is huge. The Singapore Tourism Board said Singapore had 8.85 million international visitor arrivals in 2006, and Singapore’s spa explosion is due, in part, to this increase in steady tourism.
I wanted to see this urban spa hub up close and personal, so I recently spent a week in Singapore visiting some of the top local spas and sharing views on the industry with the professionals who run them. My journey was eye-opening and enlightening as I learned more about the trends and consumer demands that drive these businesses.
Advance Treatments, Back to Basics and Healing
Intelligent Spas’ Spa Industry Profile Singapore 2003–2008 identified that a key trend in the Singapore spa industry, indicated by managers and owners, is the competitive and affordable pricing currently being offered. The increase of medical-related treatments being introduced is another trend, and, as with the U.S. market, spa-goers in Singapore are looking for a total spa experience.
As for client trends, these Asian spas are seeing more male and younger clients, as well as more couples’ services, and gift certificate sales are on the rise.
At Estheva Spa, Tan Wee Tech, the spa’s director, sees the future trends combining antiaging treatments and massage.
“It’s all in the package,” he states. “The trend really is to put together comprehensive packages. It needs to be viewed as a lifestyle to help the client look good, and younger. Natural is also a trend. The spa industry is very competitive in Singapore; spas here must rise up in order to stay on top.”
Doris Sinnathurai, manager of RafflesAmrita Spa, feels that a big trend is the return to basics.
A lot of Asian treatments are going back to ayurveda and Chinese traditions,” she explains. “Most of the treatments are hands-on—look at Thailand and India for examples. A lot of people come to Asia as a retreat and for detox programs, plus as a way of their lifestyle.
“In addition, a lot of America is coming to Asia. This includes old, traditional treatments. Singapore turns to the States for esthetics, products and technology,” she says.
My recent trip to Thailand proved this to be true. In Thailand, the trends are all about culture and remaining true to the land. “Those fortunate enough to have experienced the warmth and hospitality of Thailand will know all too well the genuine care and excellent service that are delivered here,” says Richard Williams, spa director at The Peninsula Bangkok. “As a culture that lives from the heart—even having ‘heart’ words in their vocabulary—therein lies the unique advantage to spas developed in Thailand. To have team members who take a genuine interest in their clients, care about their jobs and are proud to work in their respective fields is certainly a plus to the spa industry. All who return to Thailand will be welcomed with the warm wai, which is a prayerlike greeting—just like namaste in India—that offers respect and warmth to all who visit.”
What’s hot in Singapore? Sinnathurai is seeing a surge in body treatments using chocolate, tamaran scrub, papaya wrap, saffron and coffee as main ingredients.
To be honest, I found this to be a bit surprising, having come to this unique little island hoping to find something new and indigenous that couldn’t be found in the U.S. Thailand’s rich resources—including sugar cane, rain forest honey and jasmine rice—left me a bit spoiled.
The high turnover in service is a problem with spas in Singapore, according to Stella Yfantidis, founder of Whatever Yoga & Healing Space, who notes that it is a very business-focused country. She sees the industry evolving toward holistic therapy and wellness. To better position her spa for the future, she would like to franchise it and increase the focus on healing.
“I’d like to make it more spa-oriented and bring in more organic products, all natural-based. It’s all about going back to nature,” Sinnathurai says, adding that spas in Singapore are going away from pampering and moving more toward healing.
One major challenge that Asian spa owners face, says Tech, is that the industry is growing in all directions, and there is a lot of competition.
“They need to differentiate, and that is where the spa owner must get creative,” Tech stresses. “Spas need to have a mainstay treatment, in addition to developing signature treatments. Innovation is the key. Spas must be able to stand out in the crowd, and clients need to be able to differentiate between spas.”
Despite the challenges, the spa future looks promising for this business-savvy country, and with tourism on the rise, spa managers will be putting more marketing power into working on capturing this affluent market.
There is a lot that American spas can learn by looking to their Asian counterparts for guidance. “I think the Asian spa industry now is widely recognized—particularly in the hotel, resort and destination spa environment—and that guest will be looking for a cultural experience that embraces the local culture, and services and products will be developed to reflect this,” adds Williams.
By looking East, the American spa industry can gain new insights into up-and-coming trends, as well as a fresh perspective on standard treatments. This is a profession in which the human touch will never go out of style.
- wong chee tat :)
Singapore Spa Industry Set for Double-Digit Growth
langkawi magazine
Archives SECTION
Singapore Spa Industry Set for Double-Digit Growth
The spa industry in Singapore is in the pink of health, judging by the growth potential of local players, the Spa Association Singapore has said.
During a three-day industry event, the association said Singapore, Langkawi, Phuket and Bali could work together to grow Southeast Asia as a preferred spa destination.
The size of the spa industry in Singapore is valued at some S$140 million a year, and it is said to be growing fast.
Spa Association Singapore says annual revenue growth can be in the double digits, and it is unfazed by competition from spas in Thailand and Indonesia.
The association says Singapore spas give good value for money because of the high quality of the services provided.
Said Peter Sng, president of Spa Association Singapore, "On a ratio of one to 10, Singapore ranks as high as nine. Whilst we may not have the ambience, the natural scenery, what we have are the service standards, the education standards, career advancement, the development of the spa concepts. All of these give us a plus one."
The association also noted that all the big local spa players have a presence in key regional resort areas, such as Bali, Phuket and Langkawi, so they have a share of the growing pie in the region.
St Gregory Spa is setting up shop in Seoul, while The Aspara will be steaming up Japan with 100 new outlets.
Banyan Tree is another spa operator which has a strong regional presence.
Instead of competing with other resorts to be the region's spa capital, the association says the spa industries in Singapore, Langkawi, Phuket and Bali should work together to grow Southeast Asia as a preferred spa destination.
And in the light of growing demand, the association says it plans to launch structured training programmes to meet the manpower shortage in the industry in Singapore.
Singapore 06/05/2005
* Although the article is slightly dated, it provides some information about the local industry.
- wong chee tat :)
Archives SECTION
Singapore Spa Industry Set for Double-Digit Growth
The spa industry in Singapore is in the pink of health, judging by the growth potential of local players, the Spa Association Singapore has said.
During a three-day industry event, the association said Singapore, Langkawi, Phuket and Bali could work together to grow Southeast Asia as a preferred spa destination.
The size of the spa industry in Singapore is valued at some S$140 million a year, and it is said to be growing fast.
Spa Association Singapore says annual revenue growth can be in the double digits, and it is unfazed by competition from spas in Thailand and Indonesia.
The association says Singapore spas give good value for money because of the high quality of the services provided.
Said Peter Sng, president of Spa Association Singapore, "On a ratio of one to 10, Singapore ranks as high as nine. Whilst we may not have the ambience, the natural scenery, what we have are the service standards, the education standards, career advancement, the development of the spa concepts. All of these give us a plus one."
The association also noted that all the big local spa players have a presence in key regional resort areas, such as Bali, Phuket and Langkawi, so they have a share of the growing pie in the region.
St Gregory Spa is setting up shop in Seoul, while The Aspara will be steaming up Japan with 100 new outlets.
Banyan Tree is another spa operator which has a strong regional presence.
Instead of competing with other resorts to be the region's spa capital, the association says the spa industries in Singapore, Langkawi, Phuket and Bali should work together to grow Southeast Asia as a preferred spa destination.
And in the light of growing demand, the association says it plans to launch structured training programmes to meet the manpower shortage in the industry in Singapore.
Singapore 06/05/2005
* Although the article is slightly dated, it provides some information about the local industry.
- wong chee tat :)
Subscribe to:
Posts (Atom)