A Brief Discussion on the Development of Hong Kong's Laundry and Dyeing Industry

November 22, China Laundry Industry New Quality Productivity Development Forum was successfully held in Tianjin. This forum invited many colleagues from the domestic and international laundry industry to participate. In the high-end dialogue session of the daily clothing washing sub-forum, the organizer invited Lian Shiwei, Chairman of the Hong Kong Laundry Service Industry Association, to discuss the theme "New Momentum in Laundry Marketing, Digital Empowerment for Brand Development," sharing the current situation of the Hong Kong laundry industry and digital marketing practices in laundry operations. These valuable experience shares provided useful insights and references for attendees. Below is a sharing of Chairman Lian Shiwei's speech at the meeting.

1. Please briefly introduce yourself, your association, and your company.

I am Lian Shiwei from Hong Kong Isa Laundry. Since opening a laundry shop in 2000, I have joined the laundry industry. Besides operating laundry chain stores, I also run laundry factories, cleaning work uniforms and linens, promoting diversified development of the company. Since 2003, I have expanded into laundry equipment sales and laundry room engineering. I joined the Hong Kong Laundry Service Industry Association in 2012 and currently serve as the chairman of the seventh board. While developing my own business, I also serve the industry's interests and contribute to improving operational service levels and technological development.

The Hong Kong Laundry Service Industry Association was established in 2012 with the purpose of gathering the elites of Hong Kong's laundry sector to set up a professional mutual assistance platform for the laundry industry. Through this platform, we unite the industry, represent it to the government and society, fight for industry rights, establish professional and safety standards for Hong Kong's laundry industry, enhance public image, and define qualification frameworks. Currently, over 200 practitioners have obtained government-recognized industry qualifications.

With this association platform, over the past few years, we have secured many rights for Hong Kong laundry enterprises. For example, everyone knows about the 2019 social unrest in Hong Kong and the following three years of the pandemic, which brought unprecedented impact to the laundry industry. We actively communicated difficulties to the government through various channels and successfully obtained two rounds of cash subsidies for the industry. Depending on company size, the subsidies ranged from hundreds of thousands to over a million, solving urgent problems.

Currently, our association has over 200 members, including individuals and corporate units, with 25% being mainland members. To better serve mainland members and strengthen ties with the mainland laundry industry, we established "Shenzhen Hong Kong Laundry Service Co., Ltd." on October 26 this year to further promote laundry association affairs in the mainland.

2. As a laundry industry association, how has the development of Hong Kong enterprises been in recent years? How do they differ from mainland enterprises?

The laundry industry is one of Hong Kong's traditional industries with a history of over 100 years. Hong Kong's laundry industry originated from family workers providing laundry services on Laundry Street in Mong Kok. Laundry Street was originally a small creek near Mong Kok Village. In the 1920s, with nearby land developed for buildings, housewives near the creek began door-to-door laundry pick-up and delivery. It gradually evolved into shops and factories providing laundry services for residents, commercial, and industrial clients.

There are usually three business models for daily laundry in Hong Kong: first, independent traditional laundry shops; second, franchised and chain laundry shops; and 24-hour self-service laundries. The laundry service model differs somewhat from the mainland. Typically, there are dry cleaning and pound washing services. Hong Kong is small and busy; besides suits and coats needing dry cleaning, ordinary clothes are also taken to laundries for pound washing. Laundries are equipped with washing machines and dryers, and pound washing is done on-site, while dry cleaning is outsourced to laundry factories, mainly serving general customers. Franchised and chain laundries, as well as 24-hour self-service laundries, have their dry cleaning processes handled by their own central laundry factories. Generally, laundry factories mainly serve commercial markets such as hotels, catering, and airline services.

In recent years, especially after social events and the pandemic, work patterns have changed significantly. Most people work from home, reducing clothing purchases. Material changes and climate shifts, along with strong social advocacy for environmental protection, have shifted consumption towards lightweight and sportswear, causing dry cleaning business to decline continuously. Ten years ago, the ratio of dry cleaning to pound washing was about 6:4; now it has reversed to approximately 3:7. Additionally, rising rents and wages in Hong Kong have increased the cost of operating physical stores, so many businesses hope to save labor costs and increase profits through unmanned stores. Coupled with Hong Kong's limited space and dense population, with smaller living areas lacking space for washing machines, self-service laundries have seen explosive growth in recent years. According to our market research, there are about 1,800 laundry enterprises in Hong Kong, employing over 15,000 people. Among them, self-service laundries account for about 12% to 15%, with over 200 stores.

Another difference from the mainland is that shoe cleaning and luxury goods maintenance services have developed rapidly in the mainland, while this area remains blank here, representing a business opportunity.

Compared with mainland enterprises, Hong Kong's laundry market places more emphasis on service quality and customer experience, while the mainland focuses more on scale expansion and cost control.

3. What are the characteristics of Hong Kong enterprises in marketing? What good initiatives do they have? How do they differ from mainland enterprises? What impact does digitalization have on local industry enterprises?

Most Hong Kong laundries are located in residential areas for customer convenience in picking up and delivering clothes. They usually place promotional materials in places frequently passed by pedestrians. Additionally, they implement membership systems offering discounts, seasonal special laundry discounts, and laundry discounts for employees of large organizations.

Unlike the mainland, prepaid laundry vouchers are not popular in Hong Kong. To protect consumer rights, the government even discourages prepaid consumption.

In terms of digital transformation, mainland China has steadily developed online laundry ordering, with large logistics companies involved, making the online order and offline laundry model well established. In Hong Kong, due to the small area, dense small laundry shops, and the need for many staff to handle follow-ups, this model is still in its early development stage.

In view of this, our association invested over 700,000 HKD three years ago to conduct the "Hong Kong Laundry Service Industry Sustainable Development and Digital Transformation Survey." This helps the industry understand the current operation status and digital transformation progress of Hong Kong's laundry industry, providing various supports to encourage industry upgrading and transformation.

According to our survey data, Hong Kong's laundry industry's digital transformation is still at the initial stage. Among responding companies, those not using digital applications account for 48%, the in-store computer order system accounts for about 11%, and the customer order warehouse management system, RF ID system, Customer Relationship Management system (CRM), logistics information management system, and ERP system each account for less than 10%. Therefore, we are vigorously promoting digital transformation.

Currently, many companies in our industry mainly use social media real-time communication software, such as WhatsApp, Facebook, and WeChat for order placement and delivery services. WhatsApp has over 1.5 billion monthly active users worldwide and is the most widely used real-time communication tool in Hong Kong. It features quick responses and accurate replies, and can also target specific customer groups for appropriate promotions and product information distribution, effectively enhancing customer experience and business promotion. In terms of payment, electronic payments and cash are generally used in parallel. For example, popular electronic payment platforms in Hong Kong such as Octopus Card, Apple Pay, and Alipay.

4. What difficulties do industry enterprises face in continuously adapting to market changes? How to overcome the main difficulties encountered by the industry?

1. High local rental costs and severe labor shortages. Most practitioners are older in age. Due to the nature of the industry, laundry wages are not very high, the work is relatively hard, and the working environment is quite hot, making it difficult to attract young people to enter the industry.

2. Changes in work and consumption patterns. The greenhouse effect causes climate warming, resulting in fewer people wearing suits and sweaters, thus reducing the demand for dry cleaning accordingly. Additionally, fast fashion has emerged, with low clothing prices and high replacement rates. Changes in professional dress habits and an increase in casually dressed office workers have greatly reduced the demand for professional laundry services.

3. High production and operating costs. The laundry industry involves many different processes, especially traditional factories. Moreover, modern society emphasizes environmental protection, and the government has strengthened legal requirements for sewage and waste treatment, requiring the purchase of compliant equipment, which increases laundry industry costs. Laundry itself is not a high-profit industry, causing many peers to find it difficult to continue operating.

In response to these situations, our industry association has lobbied the government to open up foreign labor input to alleviate labor shortages. Within enterprises, improvements are made to employee benefits and working conditions, such as adding air conditioning to reduce factory temperatures, adopting more automated equipment to reduce workers' workload, and using intelligent factory management to enhance the industry's professionalism. At frontline stores, a hybrid approach is adopted. 24-hour self-service laundromats, combining traditional staffed service with self-service laundry, applying digital technology to improve store operation efficiency, reduce labor, and increase efficiency.

Finally, strengthening employee training. Our association assists the industry in training technical talents by organizing classes on laundry stain removal and ironing. Currently, we cooperate with the Garment Industry Training Board to promote the industry qualification framework, recognize experienced employees' qualifications, issue certificates, and improve corresponding benefits.

5. In the next five to 10 years, what do you think will be the future development of laundry and dyeing industry enterprises?

1. Rapid development of technology upgrades and automation.

It is expected that the degree of digitalization and intelligence in the laundry industry will increase, and the use of automated equipment will grow rapidly, such as intelligent washing machines capable of automatically identifying fabric materials and adjusting washing programs and parameters. Using robots and AI intelligent technology to reduce reliance on manpower and improve productivity.

2. Promoting environmentally friendly laundry.

Under government policy promotion, laundry enterprises pay more attention to adopting environmentally friendly washing processes, equipment, and materials to reduce environmental pollution, energy consumption, and chemical emissions. Environmental awareness will further promote the use of sustainable materials and processes, and the market will develop towards high-end and personalized services. Additionally, recycling and reuse of old clothes align with environmental concepts and can bring new business growth points to enterprises.

3. Continuous expansion of market scale and further innovation in business models.

With increasing consumer demand, improved living standards, and changing consumption concepts, the demand for laundry services will continue to grow. The aging population trend, increase in elderly care homes, and growing medical service needs also drive the demand for laundry services. Therefore, business models will continue to innovate accordingly. From traditional laundry to online and offline internet platform operations, from front-store back-factory to centralized processing in central factories, in the future, stores may only need simple collection and delivery before central factory processing, achieving large-scale and professional production in back factories, improving laundry efficiency and quality while reducing costs. Additionally, with changing consumer concepts, the emergence of shared laundry models is also worth industry attention.

4. The trend of specialized and high-end services is significantly strengthening.

With industry development, the demand for professional laundry technical talents will increase, and enterprises will place more emphasis on talent cultivation and introduction. Corresponding training and certification systems will also be continuously improved.

Moreover, high-end services drive market growth. Targeting high-income groups and customers with higher quality requirements, the high-end laundry service market will continue to expand. Enterprises tend to provide more personalized and customized services, such as luxury goods care and special garment handling to meet differentiated customer needs.

5. Industry integration and brand development.

With intense industry competition, the speed of industry integration will accelerate in the future. The market will eliminate the weak and retain the strong. Some stronger enterprises will expand market share through mergers, acquisitions, and chain franchising, strengthen brand building, and form brand effects. Enhancing brand influence and reputation, while promoting brands, will improve service quality to strengthen market competitiveness.

This article is based on the dialogue session of the "2024 China Laundry Industry New Quality Productivity Development Forum".

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