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No Escape from The Slaughter House: Why Is Pork So Expensive In Hong Kong?


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In Hong Kong, the retail price of fresh pork is five times higher than in its neighboring city, Shenzhen. This significant increase can be attributed to a single bottleneck in Hong Kong's pork supply chain: slaughtering, which is monopolized by Ng Fung Hong.

Ng Fung Hong expanded into the slaughtering business by leveraging its established position in sourcing and transporting live pigs from China. As the slaughtering industry underwent modernization and consolidation in the 1990s, the company emerged as the sole operator of Hong Kong's primary slaughterhouse. Although the government auctions off exclusive operating rights every 10 years, the company has managed to secure every contract since 1999.

This case illustrates how extraordinary profits can result from a bottleneck within an industry's supply chain, and how monopolization may occur due to a series of historical events. It also highlights the shortcomings in public administration, whereby the government unintentionally creates a monopoly by establishing a large-capacity processing facility and awarding the lucrative business to a single company.

Learning Objective:

The case is suitable for courses in economics, managerial economics, and public policy. Students can understand:

  • why bottlenecks exist in an industry's supply chain;
  • how public policy should respond.

The case is also highly relevant for strategic management. Students can explore how a company can:

  • leverage its legitimate power in one part of the supply chain and extend it to other parts;
  • create and maintain bottlenecks in the supply chain.

Year of Publication: 2024
Ref. No.: 24/795C
Discipline: Economics & Business Policy, Public Policy and Strategy, Strategy & General Management
Industry: Food, Beverage & Tobacco
Country: China (People's Rep. of), Hong Kong SAR
Company: Ng Fung Hong
Languages: Simplified Chinese
Pages of Text: 10