Sa Sa International: The Hinterland Barrier
Sa Sa International, founded in 1978 by Eleanor and Simon Kwok, is the largest cosmetic retailer
in Asia. Based in Hong Kong, it markets, distributes, and sells more than 600 brands covering
skincare, fragrance, make up, and body care products, and health and beauty supplements. The
brands it carries include Elizabeth Arden, Estée Lauder, Lancôme, and Crabtree & Evelyn, as
well as private brands such as Suisse Programs. Sa Sa works on the basis of selling cosmetics at
a discount, believing that more sales will result depsite the decrease in profits. To offer low
prices, Sa Sa stores stock merchandise available through parallel imports. It also enjoys cost
savings by buying in large quantities. Instead of buying from the brands themselves, Sa Sa deals
with agents who market products for manufacturers like L’Oréal, Hence, by purchasing these
products from an agent, say in Malaysia, selling L’Oréal products, Sa Sa is able to offer a lower
price than those found in Hong Kong’s L’Oréal counters. It has over 280 stores, spread across
China, Hong Kong, Macau, Malaysia, Singapore, and Taiwan. All its stores are solely owned and
operated by Sa Sa; there is no franchising. Its sales across its 107 Hong Kong and Macau stores
have been phenomenal. In 2014, it experienced an 8 percent profit margin on a six-month
turnover of HK$4.2 billion ($540 million). Estimates suggest that that about 65 to 70 percent of
its Hong Kong sales are from mainland Chinese tourists, who have been crossing into Hong
Kong in large and increasing numbers. Chinese tourists make up three times the city’s
population. Spurred by inflation in China and the strengthening of the Chinese currency,
renminbi, Chinese spending in Hong Kong has increased. Market research has shown that female
