Last day - Hang Heung Factory, Home Sweet Home

After hearing much talk about the famous wife’s cake (Lao Po Bing) in Hong Kong, it was finally the day to visit the Hang Heung factory, which is one of the factories in Hong Kong that specialises in Lao Po Bing. To boot, it is also one of the local’s favourites! 

We visited the factory in order to learn more about the real-life application of Economics concepts including economies of scale, production and cost, market structure, as well as Geography concepts of Small Medium Enterprises. Before entering the factory, we were asked to wear a mask so as to keep to the hygiene standards of the factory. 

As we entered the building, we noticed that it was largely labour intensive, with rows of factory workers skillfully kneading the dough for the pastries and nimbly shaping them into the right size for baking. This is in contrast to what we saw at Coca-Cola plant yesterday. In Coca-Cola bottling factory, the entire production is highly capital intensive. The reluctance of Hang Heung to replace labour with machineries could be due to its long history as a family business. It could be due to their belief that such skills to ensure its superb quality can only be maintained by their loyal and skilful workers of many years. The personal touch of kneading and shaping the pastries by hand adds to the traditional belief that “home-made” pastries always taste better.

From the tour, we learnt that the production process of the factory is mainly produced on demand. For example, they only produced mooncakes during the Mooncake Festival. In addition, the pastries are produced accordingly to the Just-In-Time production method, where there is minimal wastage of resources. This is so that the amount of pastries produced will be adjusted according to demand in that period of time. This is to ensure that there will be no excess supply and hence, maximum profits can then be achieved.

We also observed specialisation (division of labour) at the factory. As seen in the photo above, some workers are tasked to knead the dough, some to put in the fillings and shape them, while some scrap the baking trays to remove residue and another worker is seen washing the trays. Specialist workers become quicker at producing goods as they can concentrate on what they are good at and build up their expertise. This results in increased in productivity of each labour, hence leading to falling unit cost of production. However, we also learnt that the workers are multiskilled. This implies that most of them actually know one another area of work. For example, the workers kneading dough for old wife’s cake are also capable of making mooncakes. Hence, during the mid-autumn festival where the firm needs to produce mooncakes, they can assign existing workers over. This reduces the need to train or hire new workers just for that period. Thus, the firm need not incur more cost on paying wages for additional workers. This also saves on administrative hassle to hire temporary staffs just for that period which also translate to monetary savings. This raises the productivity and efficiency of the factory and hence, unit costs of production are lowered. 

After a quick tour around the factory, we were each given a wife’s cake to eat. We then proceed to purchase the wife’s cake and also other pastries such as love letters.

By allowing visits to be made to their factory, this helps them to promote and advertise their product. In the traditional pastries market in Hong Kong, we only know of Kee Wah as the other firm. It seems that the secret recipes and ability to ensure superb quality over the years has been one of Hang Heung’s most significant barriers to entry that prevent any competitors from entering the market.  Strong branding through words of mouth has also creates loyalty in and out of Hong Kong. An interesting fact we found is that they did not see Kee Wah as their rival at all! They also mentioned that they do not really advertise their product as many know about them through words of mouth. They are confident of the quality of their products and their market position. We also found out that it is cheaper to buy here at their factory than at their retail outlets. This cost savings is most likely due to the savings on transportation costs (when pastries are delivered from factory to the outlets) which are then passed to consumers who buy at the factory. Another possible reason could be due to higher rental costs incurred at the retail outlets. Hence, Hang Heung is unable to offer the same price they offer at factory over at the retail outlets. We are amazed at how Economics come alive from this visit.  

After the visit to Hang Heung factory, we adjourned to Tung Chung Citygate Factory Outlet where we were able to shop leisurely as well as enjoy our remaining time spent in Hong Kong. 

Then, we made our way to the airport to return to Singapore, where we said our last goodbyes and expressed our gratitude towards our Tour Manager, Jack as well as to our teachers, Mrs Chan and Miss Huang, for putting in so much effort into the planning of this trip.

We sincerely thank everyone who made this trip possible, from the teachers-in-charge to the vice-principals and Ms Choo. It is truly because of them that this trip was made possible, and the memories and learning experiences gained from the trip are sure to carry us through the days of our lives.