Author: Mei Ling Tan

  • Jin Air’s second-quarter profit falls 88 percent

    Jin Air’s second-quarter profit falls 88 percent

    Jin Air, the budget affiliate of Korean Air, said Friday that its second-quarter net profit fell 88 percent from a year earlier on increased fuel costs and a decline in travel demand.

    Net profit for the three months that ended on June 30 came to 1 billion won ($886,000), down from 8.1 billion won a year earlier, the company said in a regulatory filing.

    Operating profit dropped 50 percent to 6.2 billion won in the second quarter from 12.5 billion won a year ago. Meanwhile, sales rose 18 percent on-year to 226.5 billion won.

    The earnings results came as the South Korean government has been mulling whether to cancel the airline’s license over its illegal appointment of a foreign national to its board of directors.

    Under Korean aviation law, only Koreans can be registered as the directors of an airline.

    Jin Air named Cho Hyun-min – the younger daughter of Korean Air Chairman Cho Yang-ho – as its director between 2010 and 2016, even though she is legally an American citizen.

  • Singapore retail sales shows disappointing number in June

    Singapore retail sales shows disappointing number in June

    June Singapore retail sales remained static in June, rising a mere 0.2 per cent after motor vehicles were excluded from the data.

    Month on month, retail sales excluding cars fell by 1.8 per cent.

    Considering higher fuel prices drove a 9.3 per cent increase in sales year on year, traditional retail sales probably did not increase at all in June. Statistics Singapore said that in volume terms, after removing the price effect, the increase recorded by petrol service stations was 0.2 per cent.

    Sales of medical goods & toiletries increased by 5.8 per cent, due to higher sales of cosmetics & toiletries. Sales of recreational goods rose by 5.7 per cent, mainly from sporting apparel during the FIFA World Cup.

    Sectors to record declines in June Singapore retail sales included computer and telecommunications equipment (down 8.5 per cent), watches & jewellery (down 6.3 per cent) and optical goods & books (down 2.6 per cent). Following sales growths in the previous month, sales of department stores and furniture & household equipment decreased by 1.9 per cent and 1.1 per cent, respectively.

    Most food & beverage service industries achieved higher turnover in June this year, compared with last year. Fast-food outlets, food caterers and restaurants rose between 4.8 per cent and 8.4 per cent during this period.

    In contrast, sales of other eating places, such as cafes, fell by 1.9 per cent.

  • Jin Amy Yang appointed to lead Levi’s success in Greater China

    Jin Amy Yang appointed to lead Levi’s success in Greater China

    Effective 20 August, Jin Amy Yang will be taking over Nic Versloot’s position as Managing Director of Greater China as he moves on to a new role within the company.

    Alumni of the University of International Business & Economics in China with a Bachelor in Economics, Jin Amy Yang has over 20 years’ experience driving strategy and execution with top consumer brands.

    Formerly in charge of the global business development division of The Coca-Cola Company, Yang is now responsible for leading Levi’s commercial operations across all brands and channels while accelerating the brand’s growth in Greater China.

    Yang will report to David Love, Executive Vice President & President of Levi Strauss Asia, Middle East and Africa.

    Love says he is “confident she’ll unlock the company’s full potential in this market” which “represents a major growth opportunity for Levi Strauss & Co” and defines it as a “must-win market” for the company.

    Prior to joining Coca-Cola, Yang spent 13 years at P&G holding various global and regional leadership roles in both China and the U.S before becoming vice president of marketing for L’Oreal Paris.

  • Hyundai creates separate sound zones in cars

    Hyundai creates separate sound zones in cars

    Hyundai Motor has developed a sound system for vehicles in which passengers and the driver can hear different songs or make totally private phone calls.

    It is the first such system in the world, the carmaker announced Sunday, and will be offered in Hyundai Motor cars within a year or two.

    Korea’s largest carmaker calls the system a “separated sound zone” and unveiled it on its official website and on YouTube last Sunday.

    In the YouTube video, classical music plays in the front of the car where two parents are sitting, while pop music plays in the back for children.

    Separate sound zones are created by the artful placement of different speakers. There is also software that control the sound’s reflective wave and output level, the carmaker explained.

    Playing different types of music is the most basic thing the sound zones can do, according to the carmaker.

    A driver or passenger could have a private phone call as well. Calls on speaker are usually heard by all people in the car.

    With the system, passengers can enjoy individual choices of music while retaining the ability to converse among themselves, which isn’t possible if they are enjoying private music with earphones.

    Sounds that are necessary to the driver but that are disturbing to other passengers can be controlled too, such as audible directions from the navigation system or warning sounds from the driving assistance system.

    Music or direction guides that a driver is listening to won’t be heard by a sleeping child in the back seat.

    Hyundai Motor said it started developing the system in 2014 and is almost ready to install it in mass-produced cars.

    “This sound system will become necessary as the autonomous driving era nears and demands for entertainment inside a car evolve,” said Ih Kang-duck, a researcher in charge of developing the system.

  • Samjin makes debut in the Philippines market

    Samjin makes debut in the Philippines market

    South Korean fish cake brand Samjin has opened in the Philippines as part of a broader expansion plan for Asia.

    Its first store opened in Makati at the Ayala Malls Circuit, and is operated by South Korean entertainment and logistics company Wevenine.

    A spokesperson for the firm said: “We plan to market some 40 different kinds of fish cakes, including both semi-manufactured and completed products, using ingredients entirely from South Korea”.

    The brand has announced plans to follow up on the opening with four further branches in the territory by the year’s end, as well as establishing a presence in Indonesia.

    It has already opened in Singapore and is eyeing locations in China.

  • Online grocery shopping made easy with Shopee Mart

    Online grocery shopping made easy with Shopee Mart

    E-commerce platform Shopee Philippines has launched Shopee Mart, selling groceries online via smartphones.

    As Shopee grows its Asian footprint – it is now operating across Southeast Asia and in Taiwan – it is expanding the services offered in selected markets. Groceries was a logical extension in the Philippines.

    A raft of consumer packaged goods brands have signed up to the platform, including Nestle, Unilever, Lysol, Coca-Cola, Nivea, Colgate, Pampers, Garnier, Mamypoko and Olay.

    The grocery foray was launched with a special offer to consumers of up to 90 per cent off selected grocery items, ranging from food and beverages to toiletries and skincare products from Monday through Wednesday this week.

    “At Shopee, we … are committed to continuously innovating our platform in order to meet the different needs of our users,” said Shopee Philippines director Jane Lim.

    “For the launch of Shopee Mart, we hope to be able to cater to users who prioritise the ease and convenience of doing their grocery shopping online, and will continue to work closely with brand partners to bring them even more value-added deals and exciting campaigns going forward.”

  • M Bakery plans its debut in Southeast Asia

    M Bakery plans its debut in Southeast Asia

    New York’s Magnolia Bakery is opening its first Southeast Asia outlet this month, in the Philippines where it is branded M Bakery.

    Set to open on August 22 on the ground floor of One Bonifacio High Street Mall, M Bakery Philippines has an open kitchen that allows customers to watch as bakers make different cakes and cupcakes. The interior is full of pastel pink and teal, and hand-painted labels of baked goods.

    “We wanted to keep the same vintage feel of our flagship in New York’s West Village,” says Erick Larios, director of franchise operations for Magnolia Bakery.

    Founded in 1996 in New York City, Magnolia Bakery is best known for its signature Banana Pudding. The bakery has expanded around the US and internationally, before landing in Manila.

    “We love our sweets,” says Stewart Ong, managing partner of Phil Jacobe Ventures, which brought M Bakery to the Philippines. “We also have this very unique practice of pasalubong so I think M Bakery will be a good fit here.”

    The menu includes the classic Key Lime Pie, Banana Pudding, Vanilla Cupcake With Vanilla Buttercream, Ombre Ruffle cake.

  • The revival for brick-and-mortar fashion retailers?

    The revival for brick-and-mortar fashion retailers?

    These are dark times for brick and mortar fashion retailers. As e-commerce grows and consumer behavior changes, the US has seen over 7,000 store closings in 2017.

    Investment bank Credit Suisse even predicts 25% of American shopping malls to close by 2022. The UK is no different, with an average of 16 high street stores closing every day last year. In this scenario, many brick and mortar retailers are finding that a couple mannequins, clothing racks and nice lighting no longer suffice to lure shoppers into coming inside, let alone to turn them into loyal customers.

    In a quest to look more attractive, a growing number of fashion retailers are drawing inspiration from art galleries, museums and magazines to plan their stores’ architecture, décor and product display.
    “By presenting goods for sale in a ‘highbrow’ setting, they increase the perceived value of products, which also creates more of an experience for the consumer”, said Petah Marian, Senior Editor of Insight at the trend forecasting company WGSN.

    However, in the fast-paced times we live in, even the most eye-popping of shops still needs to revamp itself from time to time to keep consumers interested. While museums and art galleries may be a source of inspiration, the pace in which pieces are replaced shouldn’t resemble a museum at all. A recent study revealed that online stores which constantly launch new products tend to sell more than those which are perceived by consumers as stylish. However, the latter takes longer to change their collections.

    If even e-commerce companies must speed up to not be swept away by competition, what can be said of brick and mortar retailers?

    Another report by The Future Laboratory advised stores to become “hubs of activity, with ‘rewards’ such as exclusive products, immersive experiences or lifestyle services”. Indeed, no less than 75% of Generation Z consumers prefer stores that provide a “memorable and encouraging offer”.

    This dynamism imperative might explain why the biggest cities of the world are seeing a growing number of so-called “concept stores”. Although the term is sometimes used loosely to describe retail spaces that look different than usual, it usually refers to shops which, in addition to looking “artsy”, also offer an ever-changing curated selection of products from several categories.

    It’s a smart move: ever-changing, so that consumers always feel there’s something new to discover in store. Curated, because they often find it difficult to filter all the options they come across in a world saturated by information and products. Shoppers who are overwhelmed by choice tend to look for trustworthy sources to inspire their purchases, according to trend forecaster Pernille Kok-Jensen, director at Dutch research agency Mare.

    Think of the concept store as the retail equivalent of the social media influencer. Speaking of social media, that explains why so much attention is given to product display and décor: retailers aim to look “instagrammable”. After all, today’s consumers are avid social media users and Instagram is on a quest to become an e-commerce platform.

    But perhaps the most interesting thing to be noted about this type of shop is that fashion is placed alongside other product categories which used to be sold separately, such as books, homeware and food. Some even go as far as offering workshops, concerts and other cultural activities — just like a real museum or art gallery would. “Spending on clothing in developed markets is not growing at the same rate of other categories. In some markets, it is even in decline. That means retailers need to branch out in order to maintain profitable growth”, explained Marian. Fashion is now part of a more holistic view of style.

    Concept stores’ rise in popularity can, therefore, be related to the rise of “lifestyle”. As fashion brands expand into new product categories to have customers “fully immersed into their world”, as Gucci put it when releasing its homeware line, so do stores. After all, why restrict oneself to just one product category, when one can cater to more needs and be present at all moments of customers’ lives?

    “The books we read, the clothes we wear to the skincare we use are all indicative of the lifestyle we are aspiring to create”, explains Marian.

    No wonder established apparel giants, such as the H&M Group, are jumping in the concept store bandwagon as well. In addition to expanding H&M’s product offering to include homeware, the fast fashion giant has recently launched a new brand, Arket.

    Defined by H&M itself as a “modern day market”, the store features menswear, womenswear, childrenswear, homeware, beauty products and a café. Its website even includes a recipe section. At Arket, products are displayed in a minimalistic style reminiscent of Scandinavian museums — remember H&M’s motherland is Sweden.

  • Consumer goods, property most attractive sectors for acquisition in Vietnam

    Consumer goods, property most attractive sectors for acquisition in Vietnam

    The most promising sectors for mergers and acquisitions in Vietnam are consumer goods and real estate, says a global advisory firm.

    Food and beverage (F&B) tops the list followed by pharmaceuticals and real estate in joint second position and fast moving consumer goods, KPMG said in its latest outlook report for M&A released at the Vietnam M&A Forum (MAF) 2019 in HCMC last week.

    The firm came up with the report following a survey of more than 300 professionals working for private equity firms, securities companies and M&A advisory firms besides company owners.

    F&B takes the lead thanks to a booming young middle class, stable economic growth of 6.5 percent and increasing exposure to new concepts and cultures especially influenced by globalization.

    As for pharmaceuticals and life sciences, the survey found that while some foreign companies in this industry could see M&A as a faster means of obtaining the necessary licenses in Vietnam, several other arguments were also made in support of this trend: such as the government’s plan to simplify licensing policies and reforming regulatory frameworks, and the increasing demand for healthcare.

    Besides, the country’s rapid urbanization rate means the real estate sector will continue to remain a magnet for investment, especially the residential and hospitality segments.

    A report of the MAF 2019 stated that foreign investors in the consumer goods sector do not just have an eye for local brands but also their distribution networks.

    “Thai and South Korean investors have expressed interest in Vietnam’s consumer goods sector since M&A deals will help them access established channels to distribute Thai and Korean goods in the Vietnamese market,” said the report.

    As for the real estate sector, it noted foreign investors are interested in M&A because it often takes long to complete procedures for new real estate projects in Vietnam, and acquiring local firms would be a shortcut.

    Besides, the availability of land for new projects is limited, with local firms already buying up most of them, making it difficult for foreign investors to strike out on their own.

    MAF 2019 data showed that the total M&A value in Vietnam last year was $10.2 billion, the highest ever and 175 percent up from 2016.

    In the first six months of this year the figure was $3.55 billion, up 55 percent.

    Consumer goods and real estate accounted for the biggest slices of the M&A pie last year, with 57 percent and 27 percent, respectively.

    In H1 this year real estate surged to the top, accounting for 66.75 percent, followed by finance-banking with 19.06 percent.

    Experts at the forum said this year the M&A value could be lower at $6.5-6.9 billion.

    Last year it had been boosted by the biggest ever divestment deal in the country when Thai Beverage paid nearly $5 billion for a 54 percent stake in Vietnam’s top brewer Sabeco.

    KPMG’s survey found that Japan, South Korea and China would continue to be the top sources of M&A deals in the next three years.

    Warrick Cleine, chairman and CEO of KPMG in Vietnam and Cambodia, said the wave of investments from Asia into Vietnam would be huge and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that Vietnam signed in March with 10 other Asia-Pacific countries would make Vietnam’s market even more attractive to investors from Japan and South Korea.

    Deputy Prime Minister Vuong Dinh Hue told the forum the government is amending and finalizing policies related to management of state-owned equity.

    The government will continue to push with its equitization of state-owned firms and tighten up rules to ensure those that have already launched IPOs list on the stock market, he said.

    The government is seeking to make things easier for investors. “The target is to cut 30-50 percent of business procedures within this year. Now 15 percent of such procedures has been axed. We will do the same with specialized inspection procedures to improve the investment environment in Vietnam to make it easier for the establishment of new firms as well as M&A activities,” the deputy PM added.

    Pham Van Thinh, CEO of advisory firm Deloitte Vietnam, said as the government continues to facilitate foreign investment and make the economy more open, Vietnam would remain an attractive market for the next five to 10 years.

    However, as most companies in Vietnam are small or medium-sized, which means many of them do not have strategic policies for long-term development, there is not much scope for strong growth in M&A in future, he said.

    Dominic Scriven, executive chairman of Dragon Capital, one of the top investment funds in Vietnam, said he is optimistic about the M&A prospects in Vietnam.

    But he noticed three factors that should be sorted out to bolster the M&A landscape: the government’s policy to attract foreign investment, a change in attitude of local firms many of whom still want to handle everything themselves and do not look at M&A as a solution to become stronger and how effectively Vietnam can handle possible disputes between partners in M&A deals.

  • In Ratio Shanghai, robot can create the perfect drink

    In Ratio Shanghai, robot can create the perfect drink

    A retail concept harnessing the power of technology to deliver personalised coffee and cocktails has opened in China.

    Ratio uses robots to craft personalised espresso coffee during the day and cocktails at night.

    Launched with a pop-up store at Shanghai’s K11 Art Mall, the concept is about to find a permanent home at Raffles City, People’s Square. Dozens more stores are in the pipeline at hotels and co-working spaces in Asia.

    “With Ratio, bespoke drinks and service, previously available only at high-end hotels and lounges are now accessible to everyone,” says co-founder and chairman of Chinese luxury retailer Mei.com,Thibault Villet, who is a cornerstone investor in Ratio.

    “The Ratio experience is a journey towards self-exploration and it and empowers individuals to live brilliantly.”

    At ratio, drinks are made to order, in the exact ratio customers prefer. For example, a 1.2 shot of espresso in a cappuccino, or an extra strong 120ml bourbon in an Old Fashioned cocktail.

    Ratio uses science to come up with the perfect blends.

    “An individual’s sensory capacity for bitter, sweet, and umami is determined by genetics,” explains founder Gavin Pathross. “The distribution of taste buds is also genetically programmed. That’s why no two taste palates are identical.”

    Using robotic technology and software, Ratio has developed a system that can put together ingredients according to the exact ratio that will satisfy individual tastes.

    Harnessing the accuracy and consistency of a cobot – that’s short for “collaborative robot” – each drink is prepared precisely to order and speed; a latte takes less than one minute.

    Using AI, Ratio stores customers’ orders, learns their preferences and even makes recommendations during future visits.

    Pathross promises humans will not be replaced, however. “Cobots are just better than humans in performing repetitive work. They’re great at executing orders, freeing up our team of Ratiologists, assembled from Asia’s best baristas and mixologists, so that they can do what they do best – provide personalised service and have great conversation with our guests.”

    The team of Ratiologists Pathross has assembled have a combined 50 years of food and beverage industry experience.

    “We’re literally raising the bar on beverage service,” says chief Ratiologist Steve Teo.

    “Our team will help guests discover their individual preferences and customise their own Ratio. We want you to be particular about your G&T and select precisely 20 ml of lime and 60 ml of gin, for example. Bartenders elsewhere will be too busy to have that kind of conversation. That’s why Ratio is unique.”

  • How luxury car brands in China show that bigger is better

    How luxury car brands in China show that bigger is better

    China specialises in big numbers and the car market is no different, from 6.7 million passenger vehicle sales in 2008 to 24.7 million in 2017.

    While many articles about business in China tend to wring their hands over the ‘whys’, this topic does not need much social pondering of why Chinese people like cars – people in all countries opt for car ownership when financially able, and you just may have read that the Chinese economy has grown somewhat in the last decade.

    The more intriguing poser is how do car brands ignite passion for their marque in China’s competitive environment?

    The experience of the drive – and the brand

    In something of a pole position in China, Porsche has captured the spirit of Chinese drivers. Popularity rocketed with the launch of the Cayenne and the Panamera. In terms of cars, bigger is always better in China, and flashiness reigns supreme.

    The recent World Premiere of the new Porsche Macan was held in none other than Shanghai, as the CEO, Jens Puttfarken, explained that Porsche was committed to creating not only a vehicle but a lifestyle brand for Chinese customers. The customer in China is, in general, an entire generation younger than in other countries – and China is Porsche’s biggest single market for the third year in a row.

    Porsche have one of the most interactive WeChat mini-programs of car brands. With a campaign of ‘follow your voice’, their mini-program allows the user to choose a car colour, seat their friends on selected seats and then record a voice message which is sent to their chosen friends in WeChat.

    Porsche doesn’t only aim to create a vehicle brand, but a lifestyle brand. The Porsche Experience Center Shanghai is the sixth worldwide and first in Asia, newly completed besides the International F1 Circuit in Jiading district. Potential customers can book test drives via WeChat, and on site there are interactive elements such as racing simulators, kids zones, a café and restaurant, as well as versatile test tracks and even an off-road course for pushing the Cayenne to its limits. As well as ‘experiential’, it’s all ultra-ripe WeChat-posting fruit for each visitor.

    The keyword: ‘Me’

    Mercedes Me is a ‘lifestyle venue’ in a swanky location within Shanghai’s new Bund Financial Center. After the first Mercedes Me was built in Beijing in 2016, the concept clearly works, hence this 2018 addition.

    Quoting directly from the Mercedes press release, the venue delivers “an integrated and personalised customer journey, encompassing three distinct products and services: Food & Beverage, Test-drive and Retail. The overall experience is designed to engage both new and existing customers, and connect them to the lifestyle attributes of the Mercedes-Benz brand.”

    There’s a restaurant, bar and WeChat-photo-friendly designs such as a large, flashy (and flashing) logo outside. Using special on-site tech, visitors can also digitally dream up their personalised car, down to the finest interior details.

    For the car itself, Mercedes have also adapted well to Chinese tastes; WeChat is integrated directly within the infotainment system – no matter how alarming ‘texting + driving’ may sound – and the voice system has regional dialects such as Cantonese and Sichuanese alongside the usual Mandarin option.

    While many car brands have purely functional WeChat mini-programs that let you book a test drive and see the car models (note that in China, people don’t go to their browser and find a website or enter a URL, WeChat is your website in China), Mercedes’ WeChat stands out with richness of information and detailed payment plan details.

    Tesla were first in electric, but will they remain so?

    The Tesla brand immediately switched on interest in China. Chinese consumers like tech, gadgets and a brand that takes them into the desired category of ‘internationalised pioneer’ – someone who is on the edge of the new and not afraid to be first to try. Owning a Tesla is just that, and Tesla focused its energies on the digital gizmos now commonplace in the country:

    Tesla in China took full advantage of WeChat mini-program capability – they show the driver a real-time map of the electric charging stations and with details such as their own acceleration, speeds and energy consumption. If you don’t own a Tesla, you can still use the mini-program to book a test drive. They also promote regular exhibitions and events on the mini-program, and showcase content such as short videos on sustainable living and CO2 reduction.

    Tesla stole a charge on EVs in China, yet they will soon have competition from all brands. The advantage of having an electric car in somewhere like Shanghai is that you pay a drastically reduced price for the registration plate – which currently commands almost RMB 100,000 for a standard petrol car. There was recent announcement that China will remove foreign ownership caps for companies that make fully electric and plug-in hybrid vehicles in 2018, for commercial vehicles in 2020, and the wider car market by 2022. This will likely see a strong influx of not only existing brands offering fully electric cars, but a slew of entirely new brands.

    When a gizmo becomes a gimmick

    Last year, Alibaba rolled out a ‘car vending machine’ which grabbed a few easy headlines, yet was in fact a pure marketing gimmick and not a functional sales platform. Firstly, car buyers in China need to go through plenty of red tape to simply buy and register a car: several trips to various administrative buildings in inconvenient locations. But more importantly, the car-buying aspect is a key momento of affluent life for the Chinese consumer. The sales service, the showroom experience and the like are still all-important, particularly for luxury vehicle purchase. The takeaway? Don’t always believe the headline-grabbing tech news.

    Who wants to share?

    Luxury car ‘sharing’ puts brands on thin ice. While ride-sharing and easy car-hire apps have been very popular, the affluent demographics are not so keen. BMWs were tried in a ‘shared’ concept, only to find that owners who had also chosen a blue BMW were miffed that their own car now looked ‘cheapened’, as it was similar to a general car-for-hire. No other luxury car brand has since attempted a sharing scheme.

    Bigger really is better

    As mentioned, bigger is better. The CEO of Aston Martin, Andy Palmer, was as open as could be with his recent quote: “The DBX SUV exists because of the booming China market,” Palmer told Wards Auto. “Would Aston Martin have done an SUV if not for the China market? Probably not.”

    Aston Martin also revealed a strong trend towards female buyers, as the DB11 Volante was launched in Melbourne a few months ago, with Vice President Simon Sproule telling media:

    “What we can say with fact, is we are now seeing more women as the outright owners and main drivers of the car. In certain markets we’re seeing quite an extraordinary swing towards female buyers. On the V12 coupe in China last year, full year, 50 percent of sales were women. We’ve never seen that for our brand in any market.”

    This also tallies well with Porsche stating that China leads the way for gender balance, with 47% female buyers, after which Russia and the U.S. are second and third with 33% and 22% respectively.

    The takeaways for any brand

    The car market in China reveals modern-day truisms on the expectations of affluent Chinese consumers – you have to be personal, digital and allow your customer to ‘brand’ themselves in the same high-end way that you are strategising for your brand itself.

    Online and offline are both must-haves for any strong luxury brand. Interactive content and booking, locating, testing functionality on a WeChat mini-program as well as branded venues are more than abstract ‘engagement’; they implant the lifestyle values of exclusivity and fun that make Chinese consumers tick.

    Women are the drivers and decision-makers for many luxury sectors, including for the luxury auto industry. As shown above, female buyers make up half of the ownership – and anyone who has lived in China for a while would be able to safely surmise that a good portion of male owners/buyers choices were actually led by their partners.

    The oncoming boom of the EV car market is a society-shaping happening. While the instigation of the global move towards electric cars is related to many factors, the opportunity in marketing communications will have a strong ripple effect to many other luxury categories – related to eco-friendliness, hi-tech connectivity and ‘clean’ living.

    The changes in import tariffs mean that looking only at 2018 H1 sales statistics would be very mis-leading. The word from car companies is that they expect a strong 2H to make up for any deficit, and more importantly, all are still investing into China with full belief of the long-term benefits. Simply put, those with a ‘go big or go home’ China strategy, such as Porsche and other brands mentioned, are the ones that end up winning.

  • China retail sales slump in July

    China retail sales slump in July

    Mainland China retail sales fell in July according to a survey of 50 major retail chains.

    According to the China National Commercial Information Centre (CNCIC), a government-backed consultancy authorised by the National Statistics Bureau, sales fell 3.9 per cent year on year, with home appliance retailers the worst hit, with a decline of 9.9 per cent.

    Sales of ‘daily necessities’ dropped 5.7 per cent and of clothing by 3.8 per cent. The only category showing strong growth was cosmetics, up 6.5 per cent.

    “In general, the performance of China’s retail sector was rather sluggish in July,” said CNCIC.

  • No cheers from World Cup for Vietnam’s top local brewers

    No cheers from World Cup for Vietnam’s top local brewers

    Sabeco and Habeco, Vietnam’s two largest brewers, reported dismal results in H1 despite some highly favorable factors.

    Generally, for fast-moving consumer goods, the first half of the year is usually good because demand skyrockets during Tet, the Lunar Year national holiday.

    This year the beer industry would have hoped to make a killing since the World Cup football tournament began on June 14.

    Yet the two brewers saw profits actually decline.

    Sabeco, as Saigon Beer Alcohol Beverage Corp. is called, saw pre-tax profit fall 4 percent year-on-year to VND3 trillion ($127 million) on sales of over VND17 trillion ($722 million), up over 8 percent. This was the first time its profits had declined since 2013.

    Its gross margin ratio, which compares gross profit to sales, fell to 23.8 percent from 27.4 percent in the same period last year.

    In July Sabeco’s new chairman, Koh Poh Tiong, told shareholders at its annual general meeting that net profits might fall by 19 percent this year due to increased costs, tax hikes and higher branding expenses.

    Habeco, or Hanoi Beer Alcohol and Beverage Joint Stock Corp., reported revenues of VND4.3 trillion ($183 million) and VND413 billion ($17.5 million) in pre-tax profit, almost unchanged from a year earlier and only 40 percent of its full-year target.

    But, unlike Sabeco, its marketing and advertising spending increased by 15.5 percent in the second quarter to VND167 billion ($7.1 million).

    The slowdown for the biggest brewer in the northern market started three years ago. Even as its rivals were growing steadily, Habeco saw annual sales stagnate at around VND10 trillion ($425 million).

    Its market share is showing signs of shrinking amid expansion by foreign rivals in the high-end segment, according to securities analysts.

    The stocks of both brewers are suffering due to their modest showing.

    On Friday 19 morning, Sabeco traded at VND208,000 ($8.8), 40 percent down from its peak late last year. Habeco has fallen by half to below than 83,000 dong ($3.5 each).

    According to a study on the Asia-Pacific beer market by Euromonitor, Vietnamese consumption is forecast to rise in the coming years despite the stagnation and even decline in China and some European countries.

    Last year Vietnam consumed over 4 billion liters, or 45 liters per capita, the local Beer, Alcohol and Beverage Association estimated.

    The country targets production of 4.1 billion liters in 2020 and 5.5 billion liters in 2035.

  • Vietnam eyes power imports from China, Laos

    Vietnam eyes power imports from China, Laos

    Vietnam might have to import power from China and Laos after 2020, says a senior official.

    “There is a real risk of power shortages in 2021-2023, and the risk will get higher if consumption surpasses forecasts in the coming years,” Hoang Quoc Vuong, Deputy Minister of Industry and Trade, told the Vietnam Energy Forum in Hanoi on Thursday.

    Although the sole power distributor Vietnam Electricity (EVN) is currently able to meet the country’s demand, there is a strong likelihood that the increasing needs of a 95-million population outstrip the capacity.

    This can happen as early as 2020 if the generators don’t operate well or there is not enough coal and liquefied natural gas (LNG) to produce power, EVN Deputy Director Ngo Son Hai said at the forum.

    While more coal power projects are being built in the south, shortages can happen if these constructions run behind schedule, he noted.

    Power shortage will increase by 7.2-7.5 billion kilowatts hours a year in the southern region for each delayed project, Hai said, adding that there were seven underway at present.

    Southern provinces need more coal power projects be built to provide over 18,000 megawatts needed in the next five years, but none of them have opened yet, he said.

    Power production plans in southern Vietnam in megawattsby 2022Projects under constructionProjects yet to be builtEVN

    Deputy Minister Vuong proposed that Vietnam starts importing electricity from Laos and China, to meet rising demand in the country.

    Vietnam should also create favorable conditions for renewable power projects, like solar and wind power, be developed near high consumption areas, he said.

    Vuong noted encouraging the installation of rooftop solar power systems could be one solution to address the looming power shortage.

    To meet the high demand for power, Vietnam needs to produce 278 billion kilowatt hours in 2020, and this number needs to double by 2030, according to EVN.

    The country’s installed power capacity is estimated to reach 47,800 megawatts by the end of 2018, 5.4 times that of 2003, making the country second in ASEAN and 25th in the world, EVN said.

  • Hip-Hop’s influence on the booming Chinese streetwear market

    Hip-Hop’s influence on the booming Chinese streetwear market

    In less than 6 months, hip-hop and associated visual representations exploded into mainstream Chinese consciousness.

    Launched in the summer of 2017, “The Rap of China,” adapted from a similar Korean show saw its first season episodes viewed more than 3 billion times on the iQiyi streaming platform.

    Featuring superstar Wu Yifan, it sparked not only widespread interest in rap music, but also fueled a hip-hop-influenced, high-end streetwear obsession among Chinese youth, led by distinctive brands such as Supreme, Off-White and Vetements.

    Chinese millennials number more than 400 million and they are increasingly demanding more niche, high-end brands that simultaneously offer the comfort of logos, however discreet, while also giving young people space to differentiate themselves from previous generations.

    “I think after consuming high-end fashion brands for a long time, [traditional luxury brands] weren’t making an offering that people like, so I think brands that knew how to capture that internet generation, the millennials, are doing very well. At the core of that consuming is just wanting to feel that they belong to something,” explains Kevin Poon, who co-founded Hong Kong-based streetwear brand Clot alongside friend, actor and rapper Edison Chen in 2003.

    According to figures from Tmall, China’s largest B2C e-commerce platform, streetwear growth last year was 60 percent higher than average apparel category growth, with popular brands on the site including Aape, the youth-centered, price-conscious offshoot of Japanese brand A Bathing Ape, and British brand Superdry. Tmall’s most popular streetwear sub-categories are sneakers and hoodies.

    A report released in March from OFashion and Nielsen showed growth of streetwear consumption in China from 2015 to 2017 at 3.7 times higher than non-streetwear apparel, reaching 62 percent last year, compared with 2016.

    This intersection between hip-hop culture, street fashion, tough guy attitudes and adjacent markers of a rebel attitude, such as tattoos, is familiar over the world.

    While hip-hop from the US has been bootlegged and passed around a small underground fan base in China since the 1990s, the mainstream movement and fashion associations now connected with the genre comes from Korea.

    Following increased attention from censors, a more sanitized mainstream version of rap music, without swearing, political messaging, drug references and misogyny is now prevalent in advertising and social media and the rise of streetwear in China looks set to continue.

    SEE ALSO: FASHION ASIA HONG KONG, wrap-up and interview : Sustainable fashion: high end vs. high street.

    For brands looking to tap into these trends by partnering with associated influencers, Michael Norris, research manager at Resonance China’s consumer insights, naming and brand strategy team, Smart, says the safest bet will be to look behind the scenes, rather than affiliating with performers necessarily.

    “If they are a producer [or] a clothing designer, I would have very little hesitation in partnering with these creatives who are on the front lines of these subcultures [because] they can be a great ally to brands,” he says.