Life of Guangzhou - Macau's First Franchising Expo Begins

"Macau is a growing market with a lot of new businesses and hotels that provide great opportunities not only for Brazilian and American enterprises but also from the rest of the world," said the executive director of the Brazilian Franchise Association (ABF).

Speaking to the media yesterday during the opening ceremony of the first Macao Franchise Expo (MFE) at the Macau Tower, Ricardo Camargo explained the advantages of franchise business in the SAR and the positive opportunities because of the Portuguese and Chinese relationship.

"Since Brazil is the fifth country in the world in terms of franchising and China is the second, foreign investments are very strong in Asia and that contributed to the fast growth of this market," he said, adding that Macau can be an important platform for Brazilian enterprises.

"The financial cost of franchise is smaller than you might think and you have an exclusive network working just for you. Usually franchise companies have a death rate lower than the average as well as low interest rates granted by banks," he said about the advantages of franchising.

The experience of this type of business is also an advantage according to Camargo. "You will have enough background and support from brands and in one year can you can run your own business".

Camargo said the partnership with the Macao Trade and Investment Promotion Institute (IPIM) began last August when a delegation of around 30 people, visited ABF to co-organise the MFE event. The idea to introduce a franchising expo in Macau started when IPIM organised related activities at the Macau International Trade and Investment Fair (MIF) also last year.

According to IPIM this year's fair registered more than 70 companies from China, Taiwan, Hong Kong, Macau, Brazil, United States, Japan and other South East Asian countries.

"The objective is to open new business opportunities to small and medium sized companies (SME's) generating more competition and to help them face the difficulties in the current economic crisis," said the president of IPIM Lee Peng Hong.

"We are very pleased with the immediate results of this fair. I believe many contracts will be signed over these two days," he added.

In Macau franchising is believed to have started with the first McDonalds in the early 90's and is not yet a very well known type of business. "Many people are still unaware of franchise potential for local SME's," Lee explained.

IPIM's president plans to develop a continuity program as a priority, which will include more franchise related meetings starting with a visit to Brazil to attend a promotional seminar in Sao Paulo on August 10 and a business meeting between Portuguese speaking countries organised by IPIM, China and Brazil in Rio de Janeiro from August 11 to 13.

IPIM is working on an academic report with the Macau University of Science and Technology (MUST) to study the results gathered at the fair and the current franchising situation.

Macau as a future franchise platform

Relations between China and Brazil include the franchise business of Arezzo, the largest Brazilian women's shoemaker, and also an Arab restaurant chain, Habibs who are the largest investors in China. Habibs has an investment of US$1.6 million with more than 1000 outlets in China.

"Here in Macau we only have a barbecue restaurant named Samba currently running in the Venetian which is an American investment," said Camargo.

"I believe that with this franchise fair we can bring more Brazilian companies to invest here. Especially in the shoe, fashion, food and beverage and sport fashion sectors. "

During his second visit to Macau he also pointed to the rapid growth he saw in terms of casinos and retail areas and described the territory as a "strong tourism spot that is bringing a lot of fast growing business to the economy."

"In terms of investment China being a large market is already considered to have a lot of choices but franchise is becoming a big contender since it captures a different range of businesses such as underground parking, hotels, car accessories, travel agencies, flower shops, real estates, building management, even bank correspondence. In Brazil there are already franchised currency exchange branches. You also have a large scale of choice. "

Franchising not affected by economic crisis

In spite of the crisis in the world’s economy Camargo considers franchising business to be on the rise and a very low risk when compared with other commercial areas.

"In Brazil last year franchise registered an income of more 19.5 percent over the previous year. And this year we predict a 15 percent growth. At least six or seven percent are from new units still to be opened," Camargo affirmed.

"Just as an example in the United States the economy last year decreased around one percent but franchise business growth was almost three percent," he added.

In Brazil franchise generated 650 million direct jobs and 2.5 million indirect jobs, which is a total around 200 million people. Today the activity represents two percent of gross domestic product.

Camargo is also presently the secretary of the Ibero American Franchise Federation (FIAF) with 10 member countries; Portugal, Spain, Mexico, Guatemala, Peru, Equator, Argentina Colombia and Brazil. 35 countries are members of the World Council, including China which is the second largest market in the world.

(by Irina de Carvalho)

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