Tuesday, March 23, 2010

Corporatization of Wet Markets ....Part 2

Part 1 is here : Link

So what is the aftermath of big corporations taking over the wet markets and monopolising them? Rent increase, of course, just as I wrote in part 1. However, I never guessed that they will hike rents by a whopping 30%. If govt lack the common sense to prevent monopolistic and anti-competitive behavior this is what will happen : customers end up paying more and stall holders lose part of their income due to rent hikes.

The stallholder who wakes up in the wee hours of the morning to set up his stall and works long hours now has to work harder to make up for the higher rent which the corporation just sits around to collect. ...hmmm our govt's idea of work for cheaper and faster....

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Sheng Siong rises rent at 5 wet markets by 30%
By Sharon See Posted: 23 March 2010 2000 hrs SINGAPORE:

Stallholders at five wet markets will have to pay 30 per cent more in rent from next month. They have been informed of the increase by supermarket chain Sheng Siong, which bought the markets over from a private property developer late last year. The five wet markets are in Choa Chu Kang, Bukit Batok and Serangoon. Currently, they pay about S$2,000 to S$3,000 in rent. Many stallholders feel that the 30-per-cent increase is too high, and a few said they may even give up their businesses. Some are thinking of passing the costs to customers but are also worried that this would hurt businesses, especially in the face of competition from other wet markets and supermarkets. Sheng Siong said it had no choice but to increase rental rates, as it had to pay bank interest fees, property tax and maintenance fees after buying over the five wet markets for about S$25 million. - CNA/yb

40 comments:

Clare said...

http://video.google.com/videoplay?docid=-3836296181471292925&ei=dMyoS6nRNYmsqAPc3YiBDA&q=walmart#

True. This issue have already happened in America. Sheng Shiong seems to be morphed out of a mini-version of Wal-Mart. We as the consumers like the convenience and prices they provide. Interestingly, along the web, someone pays a price, though as consumers, we gain in the short term.

Anonymous said...

fuck. 30%? fuck sheng siong. i'm NOT sorry for the expletives (though Lucky, please delete if you find it offensive)

or leave it if you find sheng siong's actions more offensive. and i would gladly say this on behalf of anyone else who shares the same view as me.

fuck sheng siong. again.

Anonymous said...

Clare 22:18

Hoping that it would not result in another teachable moment: Too Big To Fail..

Anonymous said...

I used to be supportive of Sheng Shiong when they were a small alternative against PAP business like NTUC.

Now Sheng Shiong has grown too big and I hear the boss has been inducted into the famiLee through marriage... time to support MCP or hey, go support the wet market uncles and aunties!

Anonymous said...

In support of the aunties and uncles in the wet markets, I will boycott all Sheng Siong outlets.

Anonymous said...

This is Singapore's basic economic pattern;

1) rent increases yearly, regardless the economic conditions

2) wage cut is the main form of cost control

3) If wages increase, they are only allowed to increase by 1-5%. Rent, can double or triple, or be raised by a measly 30% at one shot.

Anonymous said...

I don't understand how corporatization and economies of scale work.

They are supposed to make work more efficient and keep prices in check, supposedly by volume.

But when was the last time we saw a marked decrease in prices in Singapore? Food, petrol, housing, basic necessities, rent. They all only go up.

The companies make bigger profits, but the profits are rarely shared with rank and file workers. Rank and file workers in Singapore never get signficant pay raises. They are often and deliberately cut out from profit-sharing due to weak labour unions.

Instead, we see only the senior management sharing the profits amongst themselves.

What's the big deal about corporatization, when at the end of the day, it doesn't benefit the Average Joe?

Anonymous said...

When comes to renting or selling property, govt will award to whoever bids the highest.

When comes to building HDB flats and other projects, govt will award to whoever bids the lowest.

Govt will not judge the commercial sense or viability, or whether it will result in cost impact to consumers, or whether customer quality may be affected.

Nothing wrong with this mercenary approach. BUT when govt applies it BLINDLY to EVERYTHING under its care, then it will definitely affect the common people.

Only those elites and those with money to take advantage will benefit from the govt's mentality.

An example:
The new wet market cum hawker centre in Sengkang was awarded to Kopitiam for rental of $500,000 per month! There are 120 stalls, hence each stall needs to pay $4167/mth just for Kopitiam to cover its rental to HDB. The 2nd highest bidder was prepared to pay a much lower $260,000/month rental. Does HDB have warning bells that the highest bidder is SO MUCH MORE than the others? Does HDB care whether Kopitiam may have over estimated the business viability, or how the high rentals will result in high prices for consumers? It is simply profit first, and you die your business.

Hence this Sengkang wet market has the dubious honour of being probably the most expensive in Singapore. Its non-air-con hawker centre sells food at same prices as air-con food courts in big shopping malls. Residents are now seeing which individual stalls will die first, and maybe even see Kopitiam throw in the towel after 2-3 years.

Anonymous said...

When the rent increase, the cooked food become more expensive and also sucks. But bo pian have to eat at work because no cheaper and nearer alternative. Unless bring home cooked food for lunch or skip lunch.

Besides hawkers and food, a lot of things here also bo pian. Lan lan have to take it and can only grumble on the internet. Also good lah as long as can release steam.

Anonymous said...

Why did they buy over if they cannot afford? In the first place, I do not think the people would need an air con dry market.

Sheng Siong, do not ever come to Jurong. I do not welcome you. You inflate cost of living.

You borrow so much from the bank is your own business. Do not transfer the burden of your bad decision on the consumer.

It seem like Sheng Siong is trying hard to monopolise this industry.

genghis said...

i used to shop at sheng siong at bedok north. prices were low, the fish were fresh, the elderly checkout women were the fastest i'd ever encountered. the supes were great. the vegetables dint last as long as tt from big supermarts or wet markets, but prices were lower.

i don't patronise the place anymore. the fish is not fresh, the veg still doesn't last as long, prices are Much higher and most of the old aunties no longer work there.

sheng siong has sold out.

as for all this selling of wet markets to private companies who then raise rents, it's called keeping the standard of living up.

it's also probably a ploy to put an end to wet markets. in five yrs time, we'll no doubt be looking at sheng siongs where those 5 wet markets now stand...

Anonymous said...

genghis,

Don't confuse cost of living with standard of living. Cost of living may go up and up but standard of living may stay the same or drop. In Singapore it seems that the cost of living is rising higher than the standard of living.

kilroy said...

i think the objective is to get rid of competition through raising rents so that SS can eventually set up their own supermarket on the sites....nothing more nothing less

Anonymous said...

thank goodness, i very seldom eat out.

but, don't worry, i'll vote against pap on this count for you too.

pap = privatization and profit. and i haven't forgotten how our energy supplies/smrt/telco were privatised, leading to increased prices.

Anonymous said...

I do not blame Sheng Shiong for this rental increase. No, the fault should fall squarely on the Government for devising and allowing a system - the tender system - which invariably led to higher costs all round.

Anonymous said...

The sooner ordinary Singaporeans wake up to the extreme righwing ideology of the current group of papist gangsters, the better it is for them.
The papist is very willing to support, subsidies and give outright grants to the rich and successful in the belief that these people generate wealths which they argued will flow naturally down to the masses. Evidences so far does not support the natural distribution of wealth. The small group of rich are increasing their share of the total wealth.
The papist gangsters also think helping the masses is a waste of resources. They wrongly argued that spending on "useless Singaporeans" dilutes wealth.
No amount of dialogue and debate with the papist will ever changed this fanatical stand of LKY and his papist gangsters. The only way is to remove them or wait till LKY the chief proponent of this ideology is safely buried in the ground.

Anonymous said...

I will never go to a Sheng Siong outlet anymore. Will more take the pledge.

Anonymous said...

boycott sheng shiong.

they used to be cheaper than fairprice, but now prices are on par i.e. equally ex.

Anonymous said...

Pray the former stallholders NEED NOT have to apply for PA (which success is harder than kena 4-D)...sigh.

Anonymous said...

Like MIWs...Sheng Shiong is dishing out "bitter medicine"

Anonymous said...

I believe the 30% rent increase is part of their strategy to drive out the hawkers in these wet market.

When Sheng Siong bought these wet markets, their plan was to convert all these into supermarkets, which is their core business.

Since there was an uproar which the authorities responded to thwarted their plan, they have no choice but to keep these wet markets as it is.

They are now increasing the rent exorbitantly so as either force out the hawkers who cannot stomach the rent increase or force the hawkers to raise their prices to cover the increase.

The end result they wanted is a decrease in patronage to these wet markets so that they can justify the conversion to super-markets by using the low patronage as an excuse after a year or two.

And probably at no loss to Sheng Siong as I'm sure the 30% rent increase will have factored in the possibility of the occupancy rate less than 100%.

Anonymous said...

Sheng Siong to stallholders:
"All for YOU"! [living up to their motto]

Anonymous said...

Many wish or are boycotting Sheng Siong,

it is time to boycott everything our selfish and self-serving political leaders call or exhort us to do.

Do not volunteer for any activity organize by the RULING POLITICAL LEADERS and DO NOT DONATE TO CHARITIES ANYMORE !!!

Anonymous said...

Maybe SS's management can give reason similar to Acting Minister for Information, Communication and Arts Rear-Admiral Lui Tuck Yew's on property tax:

“The problem is, the longer you defer it, the larger the increase will be….”

HA HA HA

Anonymous said...

SS to stallholders : "Is it better to take your medicine sooner or stretch it out? Take medicine once or two times? I prefer to make (sic) my medicine early, why? This is something we need to do, once we have done it, we can move on"

[who spoken the above? google to find out..ha ha ha]

Cat said...

I try to buy from small shops whenever I can. I find that many can give good value-add by providing good advice that serves customer's interest. One lighting shop pointed out that I miscounted the number of lighting points in my new flat.

However, they are slowly being squeezed out. Where I live, we are undergoing SERS. I had this conversation with a hardware store owner who was closing down her shop. She told me that she had explored the possibility of continuing her shop in the place where everyone is moving to, but the rental was simply too high. "pai tan", she said.

Anonymous said...

Sheng Shiong is now backed by Temasek. LHL's daughter and his son are an item. Rumour that they r oledi married. Part of the famiLEE lah.

Anonymous said...

This corporatization of basic governmental functions has be repeated ad naseum over the last 10-15 years or so.

This is just the end result of the PAP government shedding it's responsibilities to the people and monetising their role by selling the scheme under the veneer of corporatisation.

So now, they benefit from collecting income from issuing the rights to a provide a basic governmental function when in the past, they'd have to consider that as an expense.

The basis any government to corporatise a governmental function should be to benefit the people from the savings from increased efficiency or cost savings. When those end results cannot be met, corporatisation should never be even considered.

Corporatisation can be good if there is a free market to ensure the players are kept in check.

However in Sg, due to he small domestic market, corporatisation inevitably results in a monopoly or an oligopoly which results in the consumers being worse (paying more) off after the corporatisation exercise.

The winning bidders will naturally seek to maximise their profit. Think of all the instances where such companies raised their rates. Was anything effectively done to keep rates down? This is unacceptable especially when the majority shareholders of those privatised government functions are in fact, the governments GLCs or investment vehicles themselves.

This corporatisation of wet markets is not the first of such measures. Think of other expensive governmental functions -

Public transport (SBS, Comfort Delgro, TIBS,SMRT)
Electricity & water (Huaneng ,etc. Power produced by cheap gas, but priced according to expensive oil)
Telecommunications (Singtel-Starhub's crazy bids for football resulting so that no we have no World Cup coverage in Sg)
SGX (now becomes both a regulator cum business. Who allowed those recent cases of busted China-listed firms to be listed here?)
Parking wardens
SingPost

It seems that the government keeps repeating this failing forumula without learning from its mistakes.

How long will Sgians have to endure this until enough og them see the light?

We Con You said...

It really stinks when you see that costs are eventually passed over to the consumers in the name of development and open competition.

You see it happening everywhere internet & telecomunications, HDB flats & shops, taxis & public transport, hospital & medical care, hawker centres & now wet markets.

It really stinks when you see that behind all these price increases, the PAP govt has a hand in it -a landlord and surf system. All in the name of open competition and the highest bidder gets it.

But there is no real open competition when one limit it only 2 or 3 contenders allowed to bagged each prize eg. Genting & Sands; Singtel, Starhub & M1 and SMRT & SBS, HDB & NTUC Choice Homes, etc.

And behind each of these large corporations, some PAP proxy is in charge. Can we expect our PAP govt to change for the better ?

Anonymous said...

http://www.youtube.com/watch?v=wTrL2-ocqKc

Anonymous said...

"Do not volunteer for any activity organize by the RULING POLITICAL LEADERS and DO NOT DONATE TO CHARITIES ANYMORE !!!"

This is exactly what I am doing. It is part of my civil disobedience campaign.

Anonymous said...

They Have No Choice? that is crap. they loan the money with choice to takeover the markets with profit minded. Crap reason.

Clear eyed said...

Anon at 12.18: "It seems that the government keeps repeating this failing forumula without learning from its mistakes."

It's certainly NOT a failing formula as far as the govt is concerned! It's a formula for raking in the $$$$$! So they are not mistakes but are there by design.

Sylvester Lim said...

SDP spoke strongly against this but it felled on deaf ears.

http://www.yoursdp.org/index.php/news/singapore/3528-sdps-worst-fears-about-sheng-siong-come-true

Anonymous said...

There is a method to the madness, my friend.

Anonymous said...

No i'm not pro-PAP or pro-Sheng Shiong...but just to counter the points discussed here.

1. With the increased in rent, did it come with newly renovated facilities - more hygienic places, with better, methodological cleaning of the premises? i.e. did and will things improve for the stall owners, in terms of hygiene, comfort, ease-of-use?

2. I have not followed it closely but did Sheng Shiong justify their reasons for increasing rent?

3. For stallholders, whats to stop them from increasing their wares by 30%?
Maybe this is a harsh way to do things, but perhaps letting the free market decide.
If things get too expensive at Sheng Shiong, then consumers look elsewhere. Stallowners go out of business, eventually Sheng Shiong wont make any money, and thus forced to drop their rents.
Alternatively, stallowners who cannot pay rent will be replaced by other stallowners who have a better pricing model, that is attractive to consumers.

in the end, its up to consumers to look for food items at lower priced places. You dont have to boycott for the sake of boycotting. We just start to shop wisely, and eventually Sheng Shiong will do what they need to do.

I do agree the problem is in the tender system - where its geared towards profit.

If the tender system is geared towards providing the best for consumers, then it'll be a different thing.

e.g. in HK, there are NGOs (Consumer Council) and district counsellors who will challenge the govt when they do things that help businesses and not consumers.

Anonymous said...

I do not personally know the SS management. My mum's friend is a distant relative of the brothers who started the SS chain, and she told me this side of the story.

SS was started by three brothers who didn't finished secondary school education. It was through hard work, thrift and business sense that they grew the business over 25 years. When the business grew bigger, they employed an educated, experienced Mgr as consultant to helped expand their business. The Mgr advised the SS brothers that they had to grow the business and to buy over the wet markets for S$25.55 million. The SS bros didn't know how to read feasibility studies, but they respected and trust the Mgr who had decades of experience in the retail chain.

(I don't know who brokered the deal but I'll leave it to your imagination.)

SS bought the markets from a boutique property developer, not the govt. The previous owner would no doubt have been glad to get rid them. The wet market business model is becoming obsolete, much as we hate to admit. This was a bad business decision by SS and the bros regret it very much.

Like what the news reported, they had to pay very high bank interest, property tax and maintenance fees. But most of all, they regretted the purchase because they had to increase the rent by 30% to finance the investment, and that meant they broke people's rice bowls. If you know their background, you'd know they grew up in the pig farms in Punggol, and they're down-to-earth people who value kampung spirit. The wet market saga tarnished their reputation entirely. Many of their long time friends and associates call them heartless and cruel. But they are now stuck between a rock and a hard place. It doesn't make business sense to sell the markets, and even if they want to get rid of the wet markets, no one would want to buy it over.

Much has been said about the 30% increase in rental. Many people on facebook called for a boycott. In everyone's mind, the SS management are profiteering businessmen seeking to monopolise the market. That's what happens when a company grows big.

I want to share the other side of the story, as told to me by my mum, passed through two middle-aged aunties who would have no doubt added their own intepretation.

Anonymous said...

To Anon 00.32,

Thanks for that.

Yup, in the CNA article, when they said they had no choice but to increase rent by 30% to cover interest rates etc etc, it clearly was a poor business decision.

well, the only way is to increase the rent, and bring new stallholders who can come up with a better pricing scheme for their wares.

if noone comes in, then unfortunately they have to reduce the rents...and cover their losses from elsewhere.

It would be very interesting to know more about the "experienced, educated manager", with his "decades of experience in retail chain".

When you said you'll leave it to my imagination on who brokered the deal, i have a faint idea of who it might be.

Sheng Siong should go to the press and tell their side of the story.

Anonymous said...

To Anon 26/3/10 10:05:

Agree with your point if they realized it's a mistake, admit it in public and then work out a solution..

Somehow, I'm thinking that SS still nvr give out the thought of converting it to a hype mart. Just that the timimg for now is not right, for eg:

1) GE is coming and hence MPs could have influence them saying give the stallholder one year rental and them after do whatever you want as GE is over by ten (2011 the contract ends)

2) By increase 30%, some stallholders had given up the stall as simply can't earn a decent profit after the deducting the rental..Now if stalls empty and lack of variety...who would wan to go to the market..That's why some stallholders are saying SS
is lack of sincerity when offer the contract...1year is juz too short

And sorry I don't buy that SS also a victim in this case...

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