Thomas Fung is betting that success expanding retail brands in China will be an insurance policy against any potential loss of sales at his Aberdeen Centre from increased Richmond retail competition.
The Fairchild Group owner who spent $100 million to rebuild Aberdeen Centre in 2003 and has an ownership stake in dozens of that 500,000-square-foot mall's 200-plus retail tenants is not worried by IKEA recently opening a 334,000-square-foot mega store nearby.
Nor is he concerned about the 2.5 million square feet of retail space proposed for Richmond within the next decade that includes:
- McArthurGlen Group's plan to build a 340,000-square-foot outlet mall next to the Vancouver International Airport;
- Jingon International Development Group's plan to build 1.2 million square feet of retail space as part of a mega-development connected to Bridgeport Station; and
- several smaller projects along the Canada Line.
Some of that planned future retail space is Fung's.
The third phase of his Aberdeen Centre, which will have 300,000 square feet of retail space, is slated to be complete by spring 2013.
"The only way to survive, to compete, is to look for unique tenants that they don't have in the other malls," he said. "That's the only [way to] compete with the big boys."
Offering destination retail outlets with loyal customer bases has kept Fung afloat since he built the original Aberdeen Centre in 1990 and failed to lure established brand-name tenants.
He entered into joint ventures with small, largely Hong Kong-based brands that were often so successful the other principals bought him out.
Born in Hong Kong, the son of successful financier Fung King Hey attended high school and has lived most of his adult life in Metro Vancouver.
Now 60 years old, Fung travels frequently to Asia, primarily Japan, scouting for brands to become tenants at his expanding mall.
Recently, he has noticed a trend.
Before 2008, brand owners required that Fung commit to opening a location in the U.S if he wanted to own their first North American franchise – something he was not comfortable doing.
They now ask that he commit to opening a franchise in Beijing or Shanghai after he opens a location at his Richmond mall.
Fung said Hong Kong-based brand holders usually already have the contacts to expand in those large Chinese metropolises, but their Japanese, Thai and Singaporean counterparts often don't.
Fung has been making commitments to non-Chinese brand-holders and plans to negotiate with Beijing and Shanghai mall managers to have those brands in the malls.
"If I have a bundle of brands on hand, the bargaining power is better," Fung told Business in Vancouver while sipping tea inside his mall's Chef Hung Taiwanese Beef Noodle restaurant.
The franchise, which he owns, has a new location in West Vancouver and, in April, won honours from Vancouver Magazine as Metro Vancouver's best noodle house.
As Daiso and Giordano have done, Chef Hung Taiwanese Beef Noodle launched its first North American franchise at Aberdeen Centre and was noticed by North American mall operators who were scouting Fung's mall for potential business opportunities.
They then bought franchise rights for the U.S., which didn't interest Fung.
Outside of the fistful of brands that Fung plans to launch in China, he also intends to launch a high-end Canadiana-style store chain that, in China, would sell cliché Canadian items such as smoked salmon, maple syrup and ice wine along with high-end Canadian pork from a prominent location.
He has previously operated that kind of shop but never in a prominent location.
The plan is to launch it on the ground floor of a major centre in either Beijing or Shanghai to spur brand recognition.
Fung said he would then expand the brand throughout China's major centres.
"We would be promoting Canada as clean and environmentally friendly with lots of natural resources," Fung said. "It would show that [Canada] is something unique – better than other countries."
