Profits of harmony

By Fang Yunyu Source:Global Times Published: 2012-6-19 23:55:02


A feng shui compass Photo: IC
A feng shui compass Photo: IC



Feng shui is a well established concept, but it has had relatively little impact so far in commercial terms.

Literally translated as "wind and water," feng shui is a Chinese system of geomancy that guides the design and positioning of objects, so as to achieve maximum harmony. Various consultancies offer advice to firms and individuals based on feng shui principles, but it has remained something of a niche market so far.

However, New Trend Lifestyle Group (NTL), a Singapore-based company that runs a fortunetelling and feng shui business, is aiming to buck the trend. The company is scheduled to float on the Alternative Investment Market (AIM), a junior market of the London Stock Exchange, on June 28. 

According to the company's prospectus released by the AIM on June 14, NTL is aiming to raise up to 1 million pounds ($1.57 million) via its initial public offering (IPO), with the aim of expanding its business into China. The company expects that its market capitalization will reach 8 million pounds after the IPO.

"You can view our company as a feng shui chain store, like Starbucks, just where we sell feng shui products," Lawrence Cheung Chor Kiu, finance director at NTL, told the Global Times.

Unusual IPO 

Established in 2005, NTL offers a variety of products and services, ranging from Tarot card readings and marriage matchmaking analysis based on birth dates to feng shui products and face analysis.

"The London IPO can help strengthen NTL's credibility and give our business a higher international profile, given the transparent regulatory environment in the UK," said Cheung.

Cheung noted that the relatively cheap listing fees charged by the AIM were another factor in the company's decision to float in the UK, even though capital markets in Europe are undergoing a difficult time at the moment.

Due to the ongoing sovereign debt crisis in Europe, and rising economic growth in Asia, some European companies, like Italian luxury goods maker Prada, have chosen to seek listings in Asia in order to raise capital. 

"NTL will head to Hong Kong for a dual listing as well in the future," said Cheung.

"Considering the company's relatively small expected offering, achieving consumer recognition is believed to be the main purpose of its international listing," said Li Weidong, research director at consultancy China Venture.

NTL, which has both individual and corporate clients including Citigroup and Standard Chartered, made profits of 1.4 million pounds and total revenue of 6.1 million pounds last year in Singapore, where it has a head office and seven retail outlets. It entered the China market in 2009 and now has an office and six partnership outlets in South China's Guangdong Province.

"We plan to open 50 shops in China over the next three years," said Cheung, noting that the reason why the company is optimistic toward the Chinese market is that it believes demand will be strong, both from wealthy individuals and the developing real estate industry.

According to figures released in August 2011 by the Hurun Research Institute, a compiler of the Chinese rich list, by the end of April 2011 China had 960,000 millionaires with personal assets surpassing 10 million yuan ($1.6 million).

"China's growing economy will certainly provide some strong demand for feng shui businesses," said Li, while noting that he has some doubts over the sustainability of NTL's business model, because feng shui products are not like normal consumer goods such as clothes or medication that have guaranteed demand. 

"In addition, NTL's attempt to expand into the Chinese market will face pressure from stiff competition in feng shui," said Li, noting that many feng shui masters have already worked in the domestic market for some time.

However, Cheung said that because the authorities have not recognized feng shui as a standard business, feng shui masters usually work at individual workshops.

"NTL works as a chain store, like Starbucks or Tesco, where we offer standard feng shui products and services," said Cheung, noting that the company currently only offers commercialized feng shui concept products, such as crystals, rather than feng shui consultancy practices. A crystal can be sold for as much as 900 yuan in an NTL store.

Authorities skeptical

"NTL's entry will benefit the feng shui industry in China, because such a move can promote the industry to become standardized and industrialized," Lin Mingxian, a Guangdong-based Chinese feng shui master, told the Global Times.

Lin, who has been engaged in the industry for nearly 20 years, said most of his clients are businessmen, government officials and scholars.

But Lin said that due to the authorities' skeptical attitude toward feng shui as a business, there is no supervision or regulation of the sector.

"A feng shui company is currently unable to register with the government as an enterprise in the mainland," a source who works in the Chinese stock market told the Global Times, adding that it would be "impossible" for a feng shui consultancy company to float on a mainland stock exchange. 

"Many feng shui masters work on their own; even though some have registered with the authorities as companies, they present themselves as a consultancy rather than a feng shui company," said the source.

Earlier this month, the country's top religious authority announced its objection to temples listing on the stock market, an idea that has been put forward by some local governments.

Listing a temple on a stock exchange both harms the legal rights and damages the image of the religious community, said Liu Wei, a deputy department director at the State Administration for Religious Affairs, on June 5.

China's most famous Buddhist temple, Shaolin Temple in Central China's Henan Province, planned to go public in 2009. But it canceled its listing plan due to pressure from its abbot Shi Yongxin and other religious authorities as well as a public outcry over the temple becoming too commercialized.

The Hong Kong authorities in 2010 said at least $HK72 million ($9.2 million at that time) had been spent to compensate residents near construction sites for disturbing their feng shui. 

"When the Chinese authorities hold a more open attitude toward feng shui, we'll certainly offer feng shui services," said Cheung from NTL.

Posted in: Insight

blog comments powered by Disqus