Chan Kwok Man

Chan Kwok Man joined the electrical appliances industry after graduating from secondary school. At first, he worked in the installment payment department of an appliances company, handling cash settlements from customers who had bought items on hire purchase. In 1975, he joined forces with four partners and co-founded a company that produced electric water heaters. The partners included former colleagues, relatives and people who were familiar with factory operations. Each of the five partners had their own specific duties: one shareholder was responsible for administrative and financial matters; Chan Kwok Man and a relative were responsible for market planning; another shareholder was responsible for managing the plant; and yet another shareholder was responsible for installing the water heaters. Initially, the partnership set up a plant in the light well of a partner’s home.

Covering an area of less than 1,000 square feet, the plant accommodated the paint baking room and machinery for assembling the heater’s top and bottom covers. Back then, Chan Kwok Man and his friends used to outsource main production processes such as material preparation, metal cutting and pressing because these processes required the use of large machines. The sub-contractors involved in these processes were mostly family-run mould factories located nearby. In those days, many small factories in To Kwa Wan operated out of the back of grocery stores, with a few large machines placed around their ‘plants’. Each of these processes was handled by different factories. (Editor’s note: From the late 1960s to the 1970s, most plants in To Kwa Wan were small family-run businesses which mainly engaged in outsourced processing. Many of them were garment factories which tended to be concentrated in the area of what is now Wyler Gardens. At that time, To Kwa Wan was also home to a lot of spinning mills. As Hong Kong’s spinning industry went into a downward spiral, most of these mills have now vanished.)

Although assisted by around 10 experienced male workers they had hired, Chan Kwok Man and his partners did much of the paint spraying and assembling of the water heaters themselves in their light well plant. Chan Kwok Man points out now that it was very easy for employers to find workers at that time; rather, it was very difficult for workers to find a job. Whenever it needed to hire workers, the company could take its pick of those working at other electrical appliance manufacturers. As Chan Kwok Man oversaw marketing, he was responsible for visiting electrical shops all over Hong Kong to sell his and his partners’ products. Back then, most staff in electrical shops knew very little about water heaters and listened dubiously when Chan Kwok Man told them of a machine that consumers could put in their home and obtain hot water automatically. As a result of his marketing efforts, the water heaters became a must have item as more and more people bought them. At that time, Chan Kwok Man and his company purchased raw materials from Germany. The German suppliers therefore especially flew someone to Hong Kong to teach him and his partners about the application of the technologies. Such increased communication between the two parties was what eventually laid the foundations for Chan Kwok Man’s future setting up of his own business. He points out now that at that time the reason his company established its base in To Kwa Wan was that the location made their work easier as many small outsourcing plants were located nearby.

In 1975 Chan Kwok Man joined forces with several partners to set up an electric water heater factory in Chi Kiang Street. They subsequently moved their factory to the rooftop of an industrial building on the same street. The company found its plant via street bills. As the rooftops tended to be cheaper to rent than lower floors, the partners decided to use the roof as a factory. The new plant was only six street numbers away from the company’s previous plant! The front end of Chi Kiang Street back then was largely full of residential buildings, while the back end near Hoi Sham Temple mainly consisted of factory buildings which have now been converted into office towers. Space was the biggest difference between the new and old plants. Located in the light well of a residential home, the old factory had a smaller area. Not only was production volume very low, the old site had difficulties in serving as a warehouse. As it was located on the rooftop of a factory building, the new plant had more space and thus handling raw materials and large-scale production was easier and more efficient.

Although their plant had relocated, the company’s operation had not left To Kwa Wan. Chan Kwok Man and several of his partners had been accustomed to working in To Kwa Wan which was close by to where the partners lived and found it very convenient. (Editor’s ote: Their chosen site was also handy for the large number of mould factories that operated out of the district. As Chan Kwok Man and his partners often had to visit these factories to evaluate their work progress and quality, their plant could not be located too far away from them.) After relocation, the plant expanded and its workforce grew from about 10 to approximately 40 people. By 1982, the company had only two shareholders left – one of them Chan Kwok Man himself. He and the other shareholder had differing ideas about the company’s future development. As Chan Kwok Man now had enough capital and know-how to start out on his own, the two eventually parted ways. After looking around for a new base, Chan Kwok Man eventually found a relative who had a factory in Kwai Chung and took the man on as his new partner.

During the new enterprise’s early days, Chan Kwok Man was responsible for providing techniques, specifications and parts which his relative’s factory then used to produce water heaters. Such a division of labour and expertise in operation was then very rare in Hong Kong. As Chan Kwok Man believed that his professional strength involved publicity and marketing, he felt leaving the production processes to other manufacturers would allow him more flexibility to build up the business. While there were many mainland, European and American suppliers the new business could choose from, Chan Kwok Man was most concerned about reasonable prices and guaranteed quality.

Chan Kwok Man now points out that when he set up German Pool in 1982, he was keen to focus on promoting products, rather than overseeing the internal and external plant matters as he had in his earlier company. During the early days German Pool’s plant was located in Kwai Chung in premises provided by Chan Kwok Man’s relative cum partner. Not long after, the factory moved to Zhuhai. After his relative emigrated in 1989, Chan Kwok Man had to set up his own factory. He stresses that a businessman needs to understand his own strengths in order to make a go of his venture. Chan Kwok Man feels that if one is good at producing, say, water heaters and have sufficient technologies and resources, then the products should be made at one’s own plant. Rather than being over-confident and attempting to assemble electrical appliances one is unfamiliar with, such work should be outsourced to factories that have the capability with that area. For example, German Pool currently produces its own kitchen cabinets as the company owns the best German-made fully automated machines. By simply entering the dimensions and other data, the machines will automatically assemble the finished products. Electrical appliances that require more complex technological requirements (e.g. water heaters and boilers) are also handled by Chan Kwok Man’s plant. As for other electrical appliances, German Pool is just like any other foreign company which identifies processing factories with whom to sub-contract production. The real difference between German Pool and other foreign companies is that most foreign companies are looking for accessories and factories in China, whereas Germany Pool is doing the same thing but in Europe. (Editor’s note: Chan Kwok Man adds that at the beginning German Pool’s applied production technologies from Germany.  The company brand has been registered in Germany. Today, the company’s instant hot water heaters are all produced in Germany.)

Chan Kwok Man points out that as there were inadequate production spaces in Hong Kong in the 1970s, it was common for local manufacturers to set up factories in residential units. As there were many grey areas about doing business back then, he stresses that the most important quality was having the vision and courage to try something new. Being fair, reasonable and lawful to customers and staff were other key steps in ensuring success. Faced with a constantly evolving market, Chan Kwok Man believes that one must rely on one’s own exploration and adapt to market changes in order to succeed. He is also of the opinion that there are no hard and fast rules about how to succeed in business or brand development. Having started his professional life in a small family manufacturing firm, Chan Kwok Man later founded his own factory and business. Due to insufficient funds, he could not hire too many workers and had to devote a lot of effort on production issues himself.

When Chan Kwok Man later created his own brand, he knew that the area he needed to focus on most was the building up of a strong image. He knew that establishing a brand personality is a very long-term investment. When Chan Kwok Man founded German Pool in 1982, he provided each new customer with an unprecedented 10-year warranty in order to establish creditability. He continues to believe that optimal product quality must be maintained. Businesses that do shoddy work and use inferior materials in production will end up losing customers’ confidence in their products. Chan Kwok Man remains a believer in the fact that investment in branding takes time and a full range of publicity materials to establish and that related costs cannot be haggled about in the short-term. He continues to ‘put his money where his mouth is’ by advertising German Pool’s products on leading local TV stations. Every year, the company also invests over HK$5,000,000 in participating in the Hong Kong Brands & Products Expo.

In the past, whenever Chan Kwok Man wanted to display and sell his products in department stores, he needed to go through many hurdles. If the goods were not selling well, the store’s buyers would scold him for wasting valuable display space. Today, however, all leading local department stores wish to display German Pool products. As a result, Chan Kwok Man can pick and choose which stores they want to do business with. Chan Kwok Man points out today that this is all down to his investment in advertising and image building. He also notes that his company’s products are now also being sold by airlines as duty-free goods as carriers understand that their passengers prefer to buy proven quality brands.