Looking Like a Billion Bucks with Sa Sa
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Image: David Hartung for Forbes
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BEAUTY BUSINESS “The opportunity for growth is almost assured”: Simon and Eleanor Kwok at one of their 80 Hong Kong
outlets
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leanor Kwok was working at a Hong Kong pharmacy selling cosmetics when opportunity knocked: The owner of a cosmetics store in the basement of a Causeway Bay mall offered to sell it to her. It was barely 40 square feet, but the price was right—around $2,500. Her husband, Simon, liked the idea, but the couple had doubts about the name, Sa Sa, which in Chinese evokes a happy young girl. “But we didn’t have the money to change it,” says Eleanor.
That was 1978. Today that one store has become 240, spread not only all over Hong Kong but also around Asia from Taiwan to Singapore and Malaysia. In Hong Kong it’s the largest specialty cosmetics chain, and total sales at the Kwoks’ Sa Sa International Holdings are approaching $1 billion a year, with annual profits nearing $100 million. This has put the couple on the Forbes Asia list of Hong Kong’s 40 richest for the second straight year; they rank No. 35 with a net worth of $1.09 billion.
Sa Sa is booming because tourism from the mainland is booming. The company makes fully half of its Hong Kong sales to mainland tourists, and Chinese tourism is exploding. In 2010, the number of tourists crossing the border jumped 26 percent, to 22.7 million—almost three times the city’s population. (The year the Kwoks bought the shop, only 24,291 visitors arrived from China.) At the door of a Causeway Bay Sa Sa last month a greeter called out “Welcome!” in Mandarin to mainland shoppers who don’t speak the local Cantonese dialect.
Chinese women are searching for bargains and a selection of products they can’t find at home. They walk into stores with a wish list, and Sa Sa delivers what they want. Each outlet is crammed with a mix of the 16,000 different items and 600 brands, ranging from global ones such as Estée Lauder to Asian favourites such as Dr. G from South Korea. Prices are lower than in China because China imposes big taxes on cosmetics and the cost of doing business in Hong Kong is lower.
What makes the Kwoks’ success more remarkable is that nothing in their background suggested an entrepreneurial streak. When they purchased the shop, Simon was working in a government job. To this day neither speaks English well, but Simon is working on both that and his Mandarin (Cantonese is their main language).
They had innate skills, however, that helped them make the right call at key points and keep growing. One was a willingness to take risks, and another was a good instinct for hiring the right people and figuring out what customers want. Some lucky breaks along the way also gave them a boost.
These days the once basement- dwelling Kwoks are high-profile members of the Hong Kong Jockey Club and own six racehorses. They’re respected philanthropists and hold honorary doctorates. But the two—who are both 59—still put in the same long hours and still get the same out of their staff, so a question about their personal lives brings a gaze, a pause and then a smile. They don’t have much of a personal life, Eleanor finally replies.
The hard work continues to pay off. For the year ending on March 31 analysts expect Sa Sa to report $83 million in net profit—up 26 percent from fiscal year 2011—on $802 million in sales, up 27 percent from last year. Its stock has lost around 11 percent in the past year, not bad compared with a one-quarter plunge in Hong Kong’s Hang Seng Index. Of the Sa Sa name that the couple wished to drop three decades ago, Eleanor says: “It was fortunate that we didn’t change it.”
The publicity-shy Kwoks don’t talk to international media much. But on this day last month they’re sitting around a small conference table in a cozy Hong Kong hotel meeting room—along with a retinue of public relations and other Sa Sa executives—for a relaxed two-hour conversation that flows from Cantonese to Mandarin to English. Simon’s wearing dark, geeky eyeglass frames without lenses, a fashion fad among the young in Hong Kong now. He notes that the growing ties between Hong Kong and the mainland that have helped fuel Sa Sa’s sales seem poised to expand even more, with authorities on both sides liberalising transportation links and building new infrastructure to encourage greater flows of people. “The opportunity for growth is almost assured” in Hong Kong, he says.
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