Neway, the family business of Fala Chen’s (陈法拉) ex-husband Daniel Sit (薛世恒) is now on the brink of winding up. The largest karaoke operator in Hong Kong, which saw declining revenue due to the pandemic, owes three major record labels 90 million Chinese yuan in debt. The creditors have applied for liquidation of Neway Music Limited, a subsidiary of the chain karaoke operator from the courts.
Founded in 1993 by Christopher Sit (薛济杰) with its first location in Tsim Sha Tsui, Neway quickly gained a large market share and grew to become the trendiest go-to karaoke spot in Hong Kong over the last 30 years. Part of its rise was due to the popularity of karaoke at that time as the default entertainment for youths, while it also met the golden age of Hong Kong music industry, with quality Cantonese tunes being produced regularly, which led to booming karaoke demand.
Rivalry Among Brothers
However, Neway’s downward spiral sneakily started since Christopher Sit handed over business operations to his sons. His elder son, Daniel Sit married then-popular TVB actress Fala Chen while his younger son Ernie Sit (薛嘉麟) married supermodel Marie Zhuge (诸葛紫岐). Aside from the alleged rivalry between Daniel and Ernie, there were also rampant reports of Fala Chen and Marie Zhuge fighting for favor.
The elder Mr. Sit was apparently annoyed by Daniel’s focus on romantic relationships during the financial tsunami, and aggrieved at his inept handling of the company, partly due to the poor performance of its subsidiary Star Entertainment, which caused the group to bleed losses. Daniel and his father’s public spat also affected the business.
Eventually, younger brother Ernie was made heir. Unfortunately, Ernie lacked his father’s drive and acumen, and was more interested in enjoying the perks of a wealthy lifestyle than managing the business efficiently.
The poor management of the business – its dependence on aging tunes in its library instead of focusing on acquiring exclusive rights to trending new songs – meant that it had been unable to attract patrons, while pandemic regulations at karaoke lounges further shaved its profits.
Its outlet numbers shrank from 29 to just 14. Worse yet, its remaining lounges have been unable to maintain daily operations nor pay its employees. In April, Neway put 500 employees on furlough.
Once raking in CNY 1 billion a year, the now struggling karaoke chain was unable to pay the CNY 90 million license fees it owed Sony Music Entertainment Hong Kong, Warner Music Hong Kong and Universal Music. Unable to clear outstanding debts for five years, Neway was taken to court by creditors, who demanded liquidation of its assets.
The case is scheduled for a hearing on July 28, 2021.
This article is written by JoyceK for JayneStars.com.