Dear Shareholders,
The name of the Group has been changed to “Hong Kong Technology Venture Company Limited” in July this year. This new name reflects more accurately our overall business and future development. Apart from online shopping business in Hong Kong, the new name consists of “technology” and “venture”, which are exactly the two major elements instrumental to fostering the Group’s future development direction.
Over the past thirty years, “technology” has been the key to the Group’s success, and the cornerstone for our development. From the self-developed IDD long distance callback technology, to the improved Metro Ethernet with fibre-to-the-home broadband services, and now extended to eCommerce today, all these may appear as changes in business nature from telecommunications services to HKTVmall. As far as we are concerned, what have been changed are the ways of presentation. The underlying core has always been “technology”. We make improvements and enhancements with technology, thereby bringing betterment to this world.
Without inventions from new technologies, affordable IDD long distance calling service would never have existed; high speed 1000M fibre-to-the-home broadband services affordable to mass market would never have been possible; nor would there have been reachable online shopping mall and automated logistics and delivery services. More importantly, there would not have been any digital commercial ecosystem, including digital insurance services, open databank, etc.
The other important mission and motivation for the Group is “venture”, where we charter into unknown territory to look for new opportunities and to develop new businesses. While not all “ventures” will achieve final success, daring to imagine, daring to try and daring to face failure are indeed the guiding principles for which our team has always devoted full efforts. We also strongly believe that as long as we anchor society needs for our “venture” and that we always aim at improving human living, the chance of success will be much higher.
With our efforts made over the past seven years, HKTVmall has established firmly its position as the largest online shopping mall in Hong Kong. HKTVmall has built its unique business and operational model by making use of different technologies and as the pandemic lasts for over one year, the change in operational models for merchants and consumer behavior have been confirmed and become irreversible.
Over the past year, the number of online shopping platform surged, and some have even described HKTVmall as encountering enemies from all sides. Among all the competitors include corporate with many years’ experience operating large online shopping platform as well as multi-national corporate which runs fast delivery service of food and they all seem to set HKTVmall as their target. Some may pinpoint their delivery speed in order to shake the foundation of HKTVmall.
In the face of competition, the management of the Group remains confident. First, the more these late comers join the race, the more this confirms that the industry has changed their original mindsets and recognized consumer desire and needs for online shopping. However, these new competitors lack understanding towards Hong Kong eCommerce market. HKTVmall is not just an App. Its major difference stems from our accumulated experiences over the past years, the established systems, be it large or small, on sales, data analysis, warehouse management and picking, as well as our delivery team. These infrastructures provide end-to-end services to our customers, which represent an overall and perfect shopping experience. Most importantly, the mature team demonstrates our determination and power of execution. The management of the Group strongly believes that, until the emergence of a very serious investor who is willing to invest billions of dollars to build an infrastructure for online shopping, HKTVmall will maintain its leading position in Hong Kong eCommerce market.
Following the continuous development of our online shopping mall and further extension to digital ecosystem, the role of HKTVmall to the overall business of the Group will also transcend. Apart from revenue generation which HKTVmall will continue to bring being rooted in Hong Kong to serve our customers, it will also be a success case and role model demonstrating how an operational model using technologies and systems as the core achieves success. HKTVmall makes joint efforts with the Group’s technology enabler, Shoalter Technology Limited (“Shoalter”), to create synergy and mutual support.
Over the past year, Shoalter developed its team and business in full force, marching towards the goal of leading technology development and applications.
With our self-developed technology solutions, Shoalter supports the first large online shopping mall other than HKTVmall that will be launched in coming months. Operated by I.T, this large online shopping mall “EESE” will embrace different market positions with HKTVmall, aiming to attract customers with different merchants and retailers, bringing more product choices and different experiences to customers. In June 2021, the Group jointly organized the first online merchant acquisition webinar with I.T to introduce this new platform to HKTVmall merchants, of which hundreds of them have signed up already. EESE is now on track and reached the final stage for system optimization, targeting to do formal launch in Q4 this year. HKTVmall will continue to devote full efforts to support EESE, and will enable traffic diversion at a later stage.
We strongly believe that, in view of the penetration of smart device and consumer habits in Hong Kong, there should not be only one online shopping mall in the eCommerce market. With different value proposition between HKTVmall and EESE, we are of the view that no single online shopping platform will be able to acquire and monopolise the markets across all industries. From the Group’s perspective, while Shoalter would charge one-time implementation fee and also annual fee and sales turnover based commission fee within the contractual period, the actual return will be similar to the income generated by HKTVmall.
The other most impactful and important project among our thirty years’ commercial experience, is the “Automated Retail Store and System” under the Group’s subsidiary — Shoalter Automation Limited, which was announced several weeks ago. The Group has submitted its first Hong Kong standard patent application on 4 August 2021. The uniqueness of this project is to utilize cutting-edge technologies invented based on the Group’s extensive experience and knowhow of our online shopping mall platform’s fulfilment flow, combined with state-of-the-art robotics, self-designed machineries and software. “Unmanned Store” may not be a new concept, but we believe we are the first one in the world to leverage on this new invention and technology to achieve the effectiveness brought by unmanned store. The differentiating part of our Automated Retail Store and System lies in its entirely automated selling and fulfilment flow in an offline retail shop including order taking, stock out and inventory replenishment process such that no human service is required in the internal operations. The machine will fully utilize store floor space to store multi-temperature products in various sizes, shapes and weight.
We expect that this Automated Retail Store and System will bring new experience and hit to the global retail landscape, and we expect to have a trial launch in the first half of 2022. If all (including technology and market positioning) go smoothly, commercial launch will take place in the same year with primary target at developed countries such as Europe, the U.S. and Canada. The advantages of this “unmanned store” operational model include better utilization of store space to sell more products, while saving manpower and cost notwithstanding 24-hour operations.
On 23 August 2021, we have announced that we have entered into a share subscription agreement with PT Kalbe’s subsidiaries, the leading pharmaceutical company in Indonesia, to utilize our online shopping platform technology and software system to develop online shopping mall in Indonesia and set the framework for potential opportunities in other Southeast Asia countries, focusing on the selling of healthcare and wellness products. PT Kalbe is a company listed in Indonesia Stock Exchange with long history, which is engaged in the development, manufacturing and trading of pharmaceutical preparation including medicines and consumer health products, with annual sales turnover in 2020 reached US$1.6 billion. This collaboration signifies that Shoalter will combine its mature online shopping mall technologies with the expertise from other industries to explore different development opportunities from different industries across the world.
To cope with the business expansion of Shoalter, we are also expanding the team with around 300 Talents including software, hardware, mechanical engineers, research and development Talents in our Hong Kong and Taiwan offices, and we aim to expand to 400 by the end of this year.
The business development of the Group over the past years relies on the strong execution capability of the team. As we have mentioned in 2020 annual report, the Group has evolved into three major business units with respective operations and development targets. Chief Executive Officer (Hong Kong) — Ms. Jelly Zhou and Chief Executive Officer (International Business) — Mr. Kenneth Lau are leading business development strategies and executions in Hong Kong and overseas respectively.
As our business development has entered into the next stage, we must take care of the health and sustainable growth of the team, in order to adapt to technology and market changes. Therefore, we encourage our Talents to jump out of their comfort zones, as keep changing is our corporate culture. In fact, the capabilities of the above mentioned two senior management executives were gained from the training that they received in different positions and therefore we encourage our Talents not to view “career development” only, but to think about “personal capability development” fundamentally. At the same time, we encourage Talents to take long term or at least three months’ internal rotation, to get in touch with tasks that are completely different or where they have no prior knowledge. This will help to keep the learning ability, adaptability and “fighting power” of our Talents on the one hand, and we also hope to enrich our Talents on the Group’s business and different positions to build more comprehensive skillsets which will become an important milestone in personal growth.
On different occasions, we were asked whether we think HKTVmall is successful, and what will the future direction be. To us, HKTVmall is a success in terms of business performance, and it is one of the few online shopping operations globally, which can turnaround and make profit in just five years. In terms of technology innovation, HKTVmall successfully proved the operation model for eCommerce in Hong Kong, and how to change business and support operations with technology.
Most importantly, HKTVmall is not only a commercial operation, it is also a place for us and our team to demonstrate our capability and to realize our dream. We target to have approximately 50% profit coming from technology business under Shoalter in 5 years’ time, and our dream is to lead this Group to become an international technology enterprise valuing at multi billions dollars.
Cheung Chi Kin, Paul
Chairman
Wong Wai Kay, Ricky
Vice Chairman
Hong Kong, 26 August 2021