Retail News CRM

Author: Mei Ling Tan

  • China’s internet giants investing in offline retail for growth

    China’s internet giants investing in offline retail for growth

    Alibaba’s purchase of certain media properties has dominated recent headlines, but China’s acquisition-hungry internet giants have moved on plenty of other targets lately, including brick-and-mortar retailers as they expand their commercial ecosystems.

    The triumvirate of Baidu, Alibaba and Tencent has made US$75 billion of investments in strategic partners since 2013, according to HSBC data, and analysts say China’s internet behemoths have the cash to keep on going.

    “Mergers and acquisitions will remain a main feature of China’s internet industry in 2016. We expect Alibaba’s and Tencent’s M&A spend to remain high,” wrote Fitch analyst Kelvin Ho in a recent note.

    The internet firms aren’t just gobbling up other online players. Some US$47 billion has been spent on physical retailers and another US$797 million on logistic providers. Analysts say this reflects the broad adoption of an online-to-offline, or “O2O”, strategy.

    “O2O has become the new growth driver for internet companies, especially e-commerce companies, which have been making efforts to broaden their services and product offerings and to enhance shopping experiences for online shoppers,” HSBC analysts wrote in a report last month.

    Physical distribution capabilities have been on Alibaba’s shopping list. Its partnership with Haier Electronics Group two years ago strengthened its ability to fulfil white goods, and its August investment in Suning Commerce Group is expected do likewise for consumer electronics.

    Competitor JD.com already has delivery capabilities, so its focus is on investing to broaden its product portfolio, by partnering with local supermarkets, convenience stores and pharmaceutical chains. In August it boosted its fresh food business by taking a stake in supermarket chain Yonghui Superstores.

    The impetus for these moves comes from surging online retail sales, which grew at a 57 per cent compound annual growth rate from 2010 to 2014, easily outpacing the 13.7 per cent rate for all retail, as sales from physical outlets were cannibalised.

    “The cashed up internet companies are definitely doing a land grab, in terms of O2O and other assets,” said Chi Tsang, head of Asia internet equity research at HSBC.

    But despite the growth of online retail, it contributed just 11 per cent of all retail sales in 2014. And although it’s expected to grow at a CAGR of 27 per cent up to 2018, according to iResearch, HSBC figures show year-on-year growth is actually decelerating, from 49 per cent in 2014 to 39 per cent in the first half of this year.

    In this context, analysts say it’s critical for the online and offline sides of an O2O partnership to see mutual benefit.

    “By tying up with internet companies, offline retailers can benefit from getting access to their partners’ large online user base, and can better utilise their retail infrastructure (logistics supply chain and store network) by helping online retailers to provide an omni-channel shopping experience to their customers,” HSBC analysts wrote.

    “Conversely, internet companies can further enlarge their market shares by digitalising offline partner’s product offerings and providing just-in-time services to users by utilising offline partners’ retail infrastructure.”

    As an example, Alibaba’s deal with department store operator Intime Retail Group has spawned the Girlfriend Circle programme, which promotes social spending among more than 100,000 members, and the Miao Jie app, which has boosted conversion rates by channelling department store activity for over half a million users.

    “I think of O2O as tapping into the other 90 per cent of retail sales that is not served via online shopping. Nine hundred million people have computers – smartphones – in their pockets so they are already enabled. Just need to supply them with services and payment options,” Tsang said.

    Some O2O strategies don’t involve physical infrastructure or retail premises. Baidu is focused on mobile marketing and services transactions, having invested in online travel agency Ctrip and transport provider Uber. It also targets high-frequency consumer transactions like food takeout and movie ticketing.

    Other players, like consumer electronics giant Gome and grocery retailer Sun Art, are taking a solo approach to combining physical retail and e-commerce. Future partnerships with those firms are possible, although smaller operators like Golden Eagle Retail Group, Wumart Stores or Lianhua Supermarket Holdings could be easier for the big three to swallow.

    “The pure O2O land grab is nearly over, with Meituan.com, Didi and even 58 Home spoken for. But might there might be more retailers or hypermarkets interested in cooperating,” Tsang said.

  • Singapore’s Challenger loses flagship store

    Singapore-listed Challenger Technologies, the state’s largest IT products and services provider says it will boost its push towards a digital retail ecosystem and advanced software development initiatives for continued growth.

    Its statement followed news revealed yesterday on Inside Retail Singapore that CapitaLand Mall Trust plans to demolish Funan DigitaLife Mall to build a new integrated development which will open three years later. The mall is home to Challenger’s 53,000 sqft (4924 sqm) flagship megastore.

    “The group is well-positioned to continue bringing value and relevance to its half a million members and established base of corporate customers,” Challenger said in a statement intended to reassure shareholders the store’s closure will not measurably impact on its trading.

    CEO Loo Leong Thye said that Funan’s redevelopment was first mooted by CMTL more than seven years ago. Challenger’s planning had also began then.

    “We relocated our entire back office operations from Funan to our Ubi Link corporate building in 2009,” he said. This was followed by rapid retail expansion, with a total store count at 47 as of 12 December 2015 and three new leases confirmed for the first half of 2016.

    Apart from restarting its retail eCommerce engine in 2014 with a mobile-first revamp coming in early 2016, the group also announced its foray into a digital lifestyle ecosystem by establishing Challenge Ventures earlier this year to invest in digital businesses and services.

    One such service is the group’s existing end-to-end integrated marketing solutions provider, inCall System, which has been injected into CVPL. Another business is eCommerce marketplace Andios, which provides customers a platform to buy or sell their smartphones online.

    “To create the next wave of business growth, CVPL will continue to invest in relevant businesses from outside of the group,” said Challenger.

    To cater for the rapid growth from its digital businesses, the group has plans to establish a logistics hub in Singapore for eCommerce warehousing and fulfilment.

    The group believes the impact from the closure of its megastore is significantly reduced due to the extensive planning efforts over the last seven years.

    “When we first listed on SGX in 2004, our Funan store contributed to 60 per cent of our total group revenue. As of the third quarter of 2015, this number is only about 20 per cent of our total group revenue,” Loo noted.

    “Over the last seven years, many of our members and even tourists have also begun shopping at our heartland mall stores because of proximity convenience. With our mobile-first revamp coming in early 2016, more Challenger customers will switch to shopping with us online. They will enjoy online-only member deals, always-on rebates credited to their eWallets and even same-day express delivery.”

    Loo says the concept of a destination specialist shopping mall is not as relevant as being able to provide a wider range of products for customers to browse on-the-go.

    “We can stock 10 times more products online than at our megastore, creating a mega mall effect for customers to browse and transact on their mobile devices. We need to go where the customers are,” he said.

    “Our physical retail stores will evolve to become more experiential, with our brand partners having better concepts to showcase their products’ capabilities. They will complement our online store, which will serve customers at their own time – not dictated by a mall’s operating hours.”

    The group will keep its physical store expansion options open.

    “Our retail strategy has always been and will continue to see us expanding at suitable locations with reasonable rentals,” Loo said. “We will continue to rationalise our retail store locations, including opening, closing and right-sizing our stores to improve operating performance.

    “I have a big sales target of $1 billion to be achieved in five years’ time,” Loo said. “This is entirely possible because we have scalable business plans to roll out progressively to regional markets.”

     

    Lees ook:

  • This Mickey Mouse-shaped streaming device will bring Disney to China

    This Mickey Mouse-shaped streaming device will bring Disney to China

    Call it a Trojan mouse if you like: this is the streaming device that will bring Disney content to China. The $125 Mickey Mouse-shaped gadget was unveiled this week as part of a multiyear licensing agreement between The Walt Disney Company and China’s retailing giant Alibaba, offering access to everything Disney, from films to e-books.

    The gadget is superficially similar to devices like Google’s Chromecast or Amazon’s Fire TV, plugging into customers’ TVs and streaming digital content from the internet. However, instead of offering TV shows and movies from a range of different publishers, it’s only connected to a single subscription service: DisneyLife. This on-demand digital library first launched in the UK in November, and offers access not only to Disney’s films, cartoons, games, e-books, and songs, but also lets customers buy Disney merchandise and plan trips to Disneyland theme parks.

    The devices will ship from December 28th, and the $125 retail price will include a year’s subscription to DisneyLife. Neither Alibaba nor Disney revealed how much subscriptions would cost after this initial period, but in the UK — where the service launched without a Mickey Mouse-shaped streaming box — the fee is $15 a month.

  • Rupiah strengthens to Rp13,774 against dollar

    Rupiah strengthens to Rp13,774 against dollar

    The Indonesian rupiah closed stronger at Rp13,774 per dollar in the Jakarta interbank market on Monday evening, up 143 points from the previous close of Rp13,917 per dollar.

    The rupiah strengthened against the US dollar as uncertainty about the money market eased following the Federal Reserves decision to raise its rate, Chief Researcher of NH Korindo Securities Indonesia, Reza Priyambada, said here on Monday.

    “The euphoria due to the US central banks decision has revived investors demand for assets of risky countries. The fact that Indonesia has regained its investment grade rating is one of the factors prompting investors to reinvest in the country and, accordingly, the rupiah is strengthening,” he said.

    Investors are also optimistic about Indonesias economic outlook in 2016 as a result of aggressive capital expenditure and monetary stimuli aimed at pushing economic growth, he said.

    Economist Leo Rinaldy of Mandiri Sekuritas, meanwhile, said the Federal Reserves plan to raise its rate gradually in 2016 has received positive responses from money market investors.

    He said the investors also believed that Indonesias macroeconomic fundamentals will be better next year.

    However, the domestic economic performance, which is far from expectation, and the Fed rate which may increase at a faster pace to more than 1.25 percent in 2016, may send out signals of a negative sentiment about the rupiahs exchange rate, he said.

    “The Fed rate hike will entail a risk if it does not meet market expectation,” he said.

    Lees ook:

  • Davao could be next retail hotspot

    Davao could be next retail hotspot

    With strong macroeconomic fundamentals driven by a burgeoning consumer market and supporting social infrastructure, Davao City is expected to be the Philippines’ next retail hotspot outside Metro Manila. A recent report by global real estate services group Cushman and Wakefield said such progressive environment has supported the recent expansion of retail space in the city and the influx of international brands.

    Cushman and Wakefield said Davao City exhibits the trends and qualities that make for a robust retail market.

    Some of these qualities are Davao’s increasing population, the city’s high income, massive regional consumer market, and strong tourism market.

    Cushman and Wakefield noted that the rapid influx of people into the city has turned it into the largest urbanized area in terms of population and land area outside Metro Manila. The city is estimated to have a population to date of about 1.63 million.

    It also said the uptrend in the city’s population is driven by the migration of people from other regions, mainly because of the incentives that Davao has to offer, such as good social
    infrastructure like easy access to quality schools, hospitals, and an international airport.

    The advent of the Information Technology-Business Process Outsourcing (IT-BPO) sector in the city has also served as a magnet for people to settle in Davao.

    “The outlook now is that we will be seeing retail integrated into workplaces and mixed-use township communities,” the report said.

    Citing the implementation of a stringent traffic management system, Cushman and Wakefield observed in Davao the absence of traffic and infrastructure woes that bug people in Metro Manila.

    “Further, complementing the population trend, we have seen housing subdivisions and residential options increase in urban Davao, encouraging people to choose to conveniently live in the city,” it added.

    Davao is also recognized as one of the top-five high-income cities in the country, according to data from the Bureau of Local Government Finance.

    The report said the economic gains of Davao City could also be gauged from the city’s transforming economic landscape, with buildings rising in every corner.

    “We see the emergence of infrastructure like high-rise residential buildings and mixed-use developments,” the report noted.

    Among the significant upcoming developments, it cited, are the mixed-township Davao Park District, Dusit’s luxury accommodations Dusit Thani Residences and DusitD2 Hotel, and the Lubi Plantation Resort.

    “Clearly, Davao City has proven and continues to prove to be an economically healthy emerging high-income city that offers the right incentives for business and investment,” Cushman and Wakefield said.

    The report cited that the city experienced a 16-percent increase in total capital from 2011 to 2014 alone.

    The report also said Davao City serves as the regional center of the entire Davao Region, which is known to be the fastest growing region in the country, exhibiting exceptional gross regional domestic product (GDRP) growth rate in 2014 at 9.4 percent from the 6.7 percent in 2013.

    The report said one of the main drivers of this growth is the region’s locational advantage as a financial and business hub in Southern Philippines, and with the emergence of IT-BPO parks in the region.

    “This motivated business expansion into the region, resulting in the increased demand for property in the form of offices and residential and retail spaces,” the report said.

    The report also pointed out Davao Region’s emerging signs of a maturing consumer market, even surpassing Metro Manila’s and the whole Philippines’ growth in terms of per capita spending.

    “Indicators show that purchasing power is increasing in the region and this presents ample opportunity for growth in retail,” the report said.

    It said the optimism toward Davao retail and developers’ consequent response of adding more retail spaces had ushered in an influx of retailers, including foreign brands.

    “We can now observe a very international mix of tenants, especially in the newer malls of Ayala and SM,” Cushman and Wakefield said. “This is a drastic departure from six years ago, when tenants were predominantly local brands.”

    The group noted that Davao’s biggest malls now have more international tenants, especially the established brands for general retail, 90 percent of which are fast fashion.

    Cushman and Wakefield said this is especially true for Ayala Abreeza and SM Lanang Premier, which post international tenant shares of 72 percent and 63 percent, respectively.

    Cushman and Wakefield said this is anticipated, as both Ayala Abreeza and SM Lanang Premier have always marketed themselves as the premier and upscale malls in Davao.

    The group said while there is no visible major shopping mall project in the city’s pipeline yet, future retail development is looking to take place in many of Davao’s mixed-use developments.

    “Major malls tend to evolve over time, more often not expanding retail space in the process,” Cushman and Wakefield stressed. “Many of the major mall developers in Davao, like SM and Ayala, have sizable land banks that allow for any form of expansion.”

    The group further noted that the rapid take-up of retail space in major malls is sure to keep occupancy rates at a high, with optimistic projections looking at close to 100-percent occupancy by 2016.

    A popular Philippine tourist spot, Davao breached the one-million tourist arrival benchmark in 2012, and has since been growing, even if 90 percent of the tourists were locals.

    “Domestic travelers have proven to be a strong market for retail tourism, as Filipino travelers tend to include shopping in malls in travel plans,” Cushman and Wakefield said.
    The firm said the past five years has been the most vibrant for Davao City in terms of retail, as retail developers see the opportunities for retail growth in the area.

    Some of the biggest shopping malls in Davao so far are: the Ayala Abreeza Mall by Ayala Land Inc.; Gaisano Mall of Davao by DSG Sons Group Inc; and SM City Davao and SM Premier Lanang both by SM Prime Holdings.

    “While Davao retail is already more dynamic, it will become even more vibrant, as new developers and retailers enter the market,” Cushman and Wakefield concluded. “With the right demographic fundamentals, the social infrastructure to support the demographic, and an energetic and fresh retail sector, Davao City is poised for further retail development and is surely a retail destination to look out for outside the capital.”

  • Scandal-hit Toshiba cuts 6800 jobs, sells Indonesia plant, sees annual loss of $4.5 billion

    Scandal-hit Toshiba cuts 6800 jobs, sells Indonesia plant, sees annual loss of $4.5 billion

    Scandal-plagued Japanese manufacturer Toshiba Corp. is cutting 6,800 jobs after projecting a net loss of 550 billion yen ($4.5 billion) for the fiscal year through March 2016.Toshiba said Monday it will slash the jobs in its personal computer, video product and consumer electronic businesses.

    The job cuts equal about 3 per cent of Toshiba’s overall employees. It is also selling its TV plant in Indonesia.Toshiba, which also makes nuclear power plants, has repeatedly apologized after acknowledging it had systematically doctored its books over several years to inflate profits by 152 billion yen ($1.3 billion).Officials have said that mangers set unrealistic earnings targets, under the banner of creating a big “challenge,” and subordinates faked results.

    The scandal at one of the nation’s top brands highlights how Japan is still struggling to improve corporate governance, despite efforts to beef up independent oversight of companies.Toshiba said the job cuts in Japan will be by early retirement, but a significant number of overseas jobs will also be involved and steps will vary by each nation. It did not immediately have a detailed regional breakdown.Earlier this year, Toshiba said it is selling facilities for making computer chips related to image sensors to Sony Corp.Toshiba is also in trouble because it operates and is decommissioning, with Hitachi and other companies, the Fukushima Dai-ichi nuclear power plant, which went into meltdowns after the March 2011 tsunami.

    Toshiba said it had not yet fully calculated the impact of the nuclear disaster on its books.The latest earnings projection means Toshiba is sinking into its second straight year of red ink, after racking up a nearly 38 billion yen ($312 million) loss for the fiscal year that ended in March.Japanese media reports said the loss forecast for this fiscal year would be a record for Toshiba, surpassing the massive losses during the Lehman financial crisis.

  • Malaysia is Poised for E-commerce Growth through Better Mobility

    Malaysia is Poised for E-commerce Growth through Better Mobility

    Today, there are a total of 252.4 million Internet users around Southeast Asia, with Malaysia emerging as the third country that recorded the highest percentage of Internet users (67%) after Singapore and Brunei.

    The promising Internet penetration result indicates Malaysia’s enormous potential for e-commerce market growth. Leveraging on the rise of Internet usage, indeed 2015 have been a fruitful year for all online businesses and e-commerce as Malaysia recorded one of the highest online transactions per capita in Southeast Asia.

    Nevertheless, this only represents the tip of an iceberg – Malaysia’s e-commerce market owns approximately 2% of the total retail market and countless opportunities still remain untouched if we look at what has been accomplished by other advanced e-commerce markets such as Korea, which accounts for approximately 15% of the total retail market.

    Over the past five years (2010-2014), Malaysia’s e-commerce market size has seen 31% increase in CAGR. Viewing from a logical standpoint, we anticipate it will follow a similar growth rate and achieve USD 3.1 billion by 2018. As for 2016, we foresee mobility, better Internet and logistics, and security will be the three key drivers to push for the local e-commerce development.

    1) The ‘mobility’ trend will continue to grow

    The mobile penetration in Malaysia has reached 136% this year, and the growth of connected devices have paved the way for a positive increase in the e-commerce sector with 47% of Malaysians using their smartphones to shop online.

    Furthermore, Malaysia ranks third in the rate of growth of mobile shopping in Asia (over 20%; from 25.4% in 2012 to 45.6% in 2014) according to a Mobile Shopping Survey and with these results, it is not surprising to know that more than 50% of traffic to 11street is generated on mobile devices.

    What shoppers can expect next year

    This promising result has encouraged us to make a bigger commitment for mobile users. We believe the ‘mobility’ trend will continue to grow and next year, 11street will put a stronger focus to serve mobile shoppers through a two-pronged approach.

    Mobile shoppers can expect more curated content from 11street’s app, with an improved user interface and user experience designs (UI/UX). Additionally, we will lift it with additional personalized features, and introduce more mobile exclusive deals for an exciting mobile shopping experience.

    2) Internet penetration and improved logistics will further enhance local e-commerce activities

    While the government has allocated RM1.2 billion for Malaysian Communications and Multimedia Commission (MCMC) to offer High-Speed Broadband to rural areas starting next year, we are also pleased with the government’s initiative to improve the logistics – a crucial element to boost the e-commerce development in Malaysia.

    Driven by the progressive e-commerce landscape, the logistic industry, especially the courier segment has seen exponential growth over the past one year. For instance, courier service contributed 60% of POS Malaysia’s total earnings in FY15, as compared to 41% in FY14.

    In preparation to serve shoppers better in 2016, we believe these supportive initiatives suggested by the government will aid sellers to meet future demands, by providing shoppers a seamless online buying experience with more timely delivery service.

    What shoppers can expect next year

    Online marketplaces like 11street place high importance on offering pleasant shopping experiences from the moment a consumer start shopping online, all the way through to the delivery of purchased items. Several measures that the company has been implementing since its establishment include (i) Thoroughly brief and train sellers on product delivery management (ii) Provide shoppers with a tracking system to keep them informed on location, time of arrival, and delivery status of their purchased products.

    With a solid Internet and logistics infrastructure, 11street trusts that Malaysians will enjoy online shopping even more in the coming years.

    3) User confidence, especially safe and secure online shopping is a priority for shoppers

    Security issues discourage shoppers from heading online. Malaysia Computer Emergency Response Team (MyCERT), a department within CyberSecurity Malaysia, reported that the number of online scams in the country is on the rise. A total of 743 fraud cases were received in Q1 2015, of which is the second most reported incidents (25.54%) in total reports.

    Shoppers are always urged to make transactions with only trusted platform that offers product return policies, customer reviews on products, seller’s rate or scoreboard, as well as a trustworthy payment system. Online sellers and marketplaces have to bear this in mind and update their security measures from time to time in order to establish shoppers’ confidence.

    What shoppers can expect next year

    11street implemented the ESCROW system, which is a financial instrument of placing a buyer’s money on hold and releasing it to the seller only when the delivery of the purchased item is fulfilled, thus protecting buyers from frauds. The ESCROW system has helped to prevent many fraud cases and it will continue to be invested by 11street in the future.

    Our website is also strengthened with abilities to monitor all products, transactions from buyers and sellers to detect suspicious activities such as counterfeit product listing. Moreover, a number of other efforts include a stringent application process and regular product quality inspections will be enhanced to provide shoppers a safe & secure shopping experience.

    A budget-conscious year ahead

    2016 will be another budget-conscious year for Malaysians in view of the rising cost of living caused by GST implementation and the ringgit devaluation. To assist consumers to ‘shop smart’, we are gearing up to double our variety of product listings for ‘Shocking Deals’ with the lowest price guarantee by early 2016.

    It is also worth noting that cross-border trading (CBT) trends can be observed from the increasing searches for popular international products on the Internet in Malaysia. However, with the higher exchange rates and international shipping fees, today local shoppers might find it challenging to get their favorite overseas brands or items. In view of this, 11street is committed to bring in more popular overseas product, including cosmetic, fashion, and food items, especially from Korea in 2016. These products will be imported and affordably priced at the online marketplace in order to satisfy Malaysian shoppers’ needs.

    Undeniably, the overall e-commerce market in Malaysia is poised to flourish positively. The next step would be to sustain the market potential and all industry players need to work together to ensure this. As a market expert, 11street is delighted to work with close partners such as Multimedia Development Corporation (MDeC) and Google. We look forward to collaborating with even more industry leaders in the coming year. In closing, we would like to urge sellers to stay alert on the evolving mobile & purchasing trends in the market to give shoppers a satisfactory experience, as this will build upon Malaysia’s vibrancy as a profitable market for e-commerce.

  • Prada shares hit all-time low as China’s slowdown hits sales

    Prada shares hit all-time low as China’s slowdown hits sales

    Prada shares have fallen sharply in Hong Kong, after analysts reacted negatively to the fashion company’s latest financial results which came in well below expectations.

    The Italian fashion house, which specialises in leather fashion and fashion accessories, shoes, luggage, perfumes, and watches, reported third -quarter sales of €747.7 million, down 6% from €792.3 million a year earlier, as sales in China deteriorated further and US sales were hit by the strength of the dollar which crimped tourist spending.

    The sales were well below analysts’ expectations of about €816 million, while earnings before interest, tax, depreciation and amortisation of €155 million came in below expectations of €170 million. Prada’s efforts to improve the efficiency of its supply chain boosted gross margin, but this was then more than offset by higher operating costs associated with its retail expansion.

    Retail sales were down 4% overall, with wholesale sales down 26%. Retail sales fell 17% in China, which the company blamed on the volatility in the Chinese stock market in August and September, and were down 4% in the Americas, offsetting rises of 2% in Europe and 8% in Japan. Middle East sales were down 3%.

    Those sales were flattered by the weakness of the euro, and were even worse at constant exchange rates. Chinese sales were down 26%, Americas sales down 13%, and Middle East down 4%. Japanese sales were only up 4%.

    Prada’s growth in Europe was also a marked slowdown from the 10% and 12% growth reported in the first and second quarters of the year, respectively.

    “Prada also commented that the recent attacks in Paris have deterred tourist traffic from Europe. Some improvements in mainland China were noted, but trends are difficult to extrapolate at this point, while the US sees continued weakness, with a promotional market into the seasonal period a further headwind,” writes Nomura Analyst Christopher Walker.

    He notes that Prada has pledged to better harmonise its global prices, with a target of reducing the price gap between China and Europe to about 10% to 15%. Prices of some new products in Europe have already been raised, but Walker thinks Prada “may need to take more immediate action on Asia pricing”.

    Nomura is retaining a Reduce rating on the stock, and has lowered its target price for the stock to 26 Hong Kong dollars.

    Prada’s shares fell 6.6% to HKD24.85 a share in Hong Kong on Wednesday, marking a new all-time low for the stock and meaning they’re down 42.9% so far in 2015.

    J.P. Morgan Cazenove has cut its earnings estimates for the year as a whole by a further 6% on the back of Prada’s third quarter report, and has reduced its target price for the stock to HKD33. The broker has a Neutral rating on the stock.

    Its analysts think Prada is compounding a tough environment for the luxury sector with brand-specific issues and high operating expenditure that it’s only just getting under control.

    They also think that Prada’s warning of a further deterioration in European sales since the terrorist attacks in Paris bodes ill for the luxury sector as a whole, although Prada looks like being among the worst hit. Most of the sales luxury goods companies make in European cities like Paris and London come from tourists.

    “The further deterioration in the trend is not a surprise: tourists are critical to the luxury goods sector and the Paris tragic events dent tourist flows (note that Japan Airlines announced that it was stopping its Paris-Tokyo Narita routes today until March after a 60% slump in bookings),” they write. “Peers though seem to have noticed mainly an impact in Paris and Brussels and not in other European capital cities.”

    The analysts think the fourth quarter of 2015 will be weak for the whole luxury sector, as the Paris attacks weigh on European sales. They think sales will remain strong in Japan; improve in South Korea; be slightly improved in Asia Pacific due to weak comparative figures from a year earlier; and remain weak in the US.

    Nomura and J.P. Morgan Cazenove weren’t the only analysts to cut target prices for Prada’s stock on Wednesday. Bryan Garnier slashed its target price to HKD41, from HKD52, and Bernstein cut its price to HKD25 from HKD26.50. Bocom International Securities reduced its rating to Sell, from Neutral.

    Lees ook:

    Lees ook:

  • Photo fails… It’s more fun in the Philippines

    Photo fails… It’s more fun in the Philippines

    The more awkward, the better. The Department of Tourism (DOT) is now calling on netizens to submit entries for its new contest, which aims to award cringe-worthy photos of tourists in the country’s top tourist destinations.

    “From the almost picture perfect photos of white, sandy beaches mangled by poor cropping or a giant thumb on the lens, everyone is invited to upload his own version of photo fails on Instagram, Twitter, or Facebook with the official hashtag #Visitphilippinesagain2016,” DOT said.

    The contest aims to attract visitors, who already went to the Philippines once, by implying in a humorous way that there is always something they could do much better on their next visit in the country.

    The winner will be determined based on the following criteria: fun; beauty of the Philippines captured in the shot; and creativity.

    Interested participants may visit DOT’s official online accounts at itsmorefuninthephilippines.com, facebook.com/itsmorefuninthephilippines, and @TourismPHL for Twitter and Instagram accounts to get additional details about the promo.

    The deadline for the submission of entries is on Jan. 15, 2016.

    The contest will serve as the online launch of DOT’s Visit the Philippines Again (VPA) 2016 promotion campaign, which aims to repeat the success of the Visit the Philippines Year (VPY) 2015 campaign.

    Photo fails (Photo courtesy of 'It's More Fun in the Philippines' website)

    Photo fails (Screenshot from ‘It’s More Fun in the Philippines’ website)

    DOT officials earlier directly attributed the surge in the number of tourist arrivals this year to the VPY.

    “2016 will be a year of again. Our VPA campaign will again highlight the Philippines as a multi-level experience destination with our warm Filipino people, exciting activities, and endless new discoveries in our award-winning destinations that are worth a repeat visit,” Tourism Secretary Ramon Jimenez, Jr. said.

    Jimenez disclosed they are also coordinating with the tourism establishments in of the possibility of providing packages and rewards to tourists, who will visit the country multiple times.

    “Visit the Philippines Again 2016 is going to be the most massive retail-focused effort the Philippines has ever made. We are negotiating with tour operators and travel agents to give incentives to returning visitors to the Philippines,” Jimenez said.

    Among the major events lined up for the VAP is the ASEAN Tourism Forum 2016, Routes Asia 2016, Madrid Fusion Manila 2016, 2016 Ironman 70.3 Asia Pacific Championship, MTV Music Evolution 2016, and the Travel Blog EXchange (TBEX).

    Lees ook:

    Lees ook:

  • DIBPL wins ‘Best Islamic Retail Bank in Asia’ award

    DIBPL wins ‘Best Islamic Retail Bank in Asia’ award

    Dubai Islamic Bank Pakistan Limited (DIBPL) one of the fastest growing Islamic banks in Pakistan has been awarded “Best Islamic Retail Bank in Asia” by the CPI Financial in Dubai, UAE. DIBPL was given the Best Islamic Retail Bank in Asia award for the bank’s achievements in product innovation, comprehensive suite of Halal financial solution and sustainable business growth. The DIBPL Chairman, Mohamed Saeed Ahmed Abdulla Al Sharif and CEO of DIBPL Junaid Ahmed, were presented the award in Dubai, at the CPI Financial Award ceremony for Islamic Business & Finance.

    The ceremony was also attended by the Presidents and CEOs of other Islamic banks as well. Junaid Ahmed said that Dubai Islamic Bank being the pioneer and leading Islamic banking institution globally is committed to the long-term prosperity of Pakistan and Islamic Finance as a whole.

    Junaid Ahmed said that DIBPL is a wholly owned subsidiary of Dubai Islamic Bank UAE, the world’s first Islamic bank. Alhamdulillah, DIBPL is a Minimum Capital Requirement (MCR) compliant bank that enjoys a short-term credit rating of ‘A-1’ and long-term credit rating of ‘A+’, with a “positive” outlook from JCR-VIS. He further stated that DIB UAE Group is one of the largest Islamic bank in the world total asset base of approximately over Rs 4.5 trillion (US Dollars 41 billion) at September 30, 2015.

    He further said that DIBPL intends to keep this momentum going for 2016 as well, aiming to take the overall branch footprint of over 250 locations nation-wide. This will enable more customer convenience and highlight the Bank’s endeavour for bring world class Islamic Banking at the customer’s doorstep.

  • What if…HSBC sold Hang Seng for BoCom deal?

    What if…HSBC sold Hang Seng for BoCom deal?

    Companies of China are increasingly focused on international expansion, at the exhortation of Beijing. Its desire to expand has helped support the international ambitions of local insurers such as Anbang and Fosun International, or securities firms such as Citic and Haitong. But one vital part of this sector has yet to demonstrate such assertiveness: China’s banks.
    Chinese individuals are remarking upon their meekness. The South China Morning Post reported that Li Ruogo, former chairman of the Export-Import Bank of China and now an executive vice-president at the International Financial Forum, claimed the international capabilities of China’s banks is not suitable for the needs of the nation’s outbound investments and acquisitions.

    Similarly, the newspaper reported that Ma She, deputy director of European affairs at the Ministry of Commerce, as criticising the banks for “underdeveloped” overseas branch networks and poor data sharing management.

    To date China’s banks have embarked on tentative acquisitions offshore, in South Africa and South America. But these have been small, and piecemeal.

    It looks unlikely the banks would ever unveil grandiose plans to buy a Deutsche Bank, or a Standard Chartered. Instead, for a truly transformational purchase they would be most likely to seek targets close to home.

    Hong Kong would be the most obvious immediate candidate, boasting geographic, financial and cultural ties. However, the city has relatively few decent-sized candidates that are obvious acquisition prospects.

    Bank of East Asia might be the most obvious potential target. However, the bank recently issued an exchangeable bond in its shares to Sumitomo-Mitsui Financial Group, effectively raising its stake to around 17.5%. That, combined with the Li family’s 11%, might make a takeover bid highly challenging, particularly given the likely reluctance of the Li family to sell out.

    But there is another possibility: Hang Seng Bank.

    Appealing acquisition

    Hang Seng’s biggest shareholder is HSBC. It bought a 51% stake in Hang Seng in 1965, after the latter was tottering following a bank run, and has subsequently raised this stake to 62.14%.

    As a result HSBC, which is by far Hong Kong’s largest retail bank, was responsible for 52% of Hong Kong loans (HSBC 40% and Hang Seng 12%) and 55% of deposits in 2014 (HSBC 44% and Hang Seng 11%), according to a report by Dagong Securities, published in May.

    The UK-headquartered bank holds Hang Seng at arm’s length, no doubt in order to avoid accusations of monopolistic practices. But it would be very reluctant to sell it. Understandably so; Hang Seng reported a profit of HK$20.05 billion ($2.59 billion) for the first half of 2015, had total assets of HK$1.3 trillion, while it was trading at 1.93 times price to book value on Wednesday, according to Bloomberg. It enjoys strong retail banking and insurance businesses and is growing in wealth management too.

    Acquiring Hang Seng would make a potentially appealing addition to a Chinese state-owned bank. It would offer the lender immediate scale in Hong Kong, North Asia’s leading financial centre. More importantly, Hang Seng would provide expertise in international banking practices and customer services.

    For Hang Seng, the backing of mainland lender with international aspirations would offer it the opportunity to flourish into commercial and retail banking outside of Hong Kong.

    Getting a sale done

    Hang Seng’s strength and financial stability means HSBC would be very reluctant to part with it. Yet it might be persuaded to do so for a large enough incentive.

    As it happens, Beijing could give HSBC what it may want most of all:  ownership of a local nationwide bank.

    The most likely is Bank of Communications. HSBC has owned around 19% of BoCom for years, and hoped to eventually get majority control, but these plans are currently impossible due to China’s 20% foreign ownership limit in its banks.

    Beijing could offer HSBC an exemption to its foreign ownership limits (potentially utilising the idea that HSBC’s local Hong Kong bank unit, The Hong Kong & Shanghai Banking Corporation, is applicable to buy larger stakes in China banks). Then it could sell HSBC enough shares to give it a controlling interest at a competitive rate (following, no doubt, a very thorough audit).

    In return, HSBC would agree to relinquish Hang Seng to a local bank for a similarly competitive valuation.

    The biggest challenge would be building enough political support for such a deal.

    It would likely require sanctioning by the State Council, plus the Ministry of Finance, State-owned Assets Supervision and Administration Commission and the China Banking Regulatory Commission. Additionally, the Chinese bank would need to agree to the purchase of Hang Seng Bank.

    However, if the political will could be found, it should be relatively straightforward to sell shares in BoCom to HSBC. The Chinese government owns 46.3% of BoCom, with the National Council for Social Security Fund owning another 4.78% and Sasac holding a further 4.66%, according to 4-traders.com.

    Securities fast track

    HSBC might ask for another favour in return for giving up BoCom: rapid approval of its new securities joint venture.

    The bank HSBC agreed to establish a joint-venture securities company with Shenzhen Qianhai Financial Holdings, of which it would own 51%, on November 2. However, the deal is subject to regulatory review and approval, which can take a long time – some JV players have been waiting years to get final approval on certain licences.

    Therefore HSBC would likely want fast-tracked approvals that gave its JV full underwriting, trading and wealth management access to China’s local capital markets.

    In addition to offering HSBC incentives, Beijing could also – if it so chose – place pressure on it to divest Hang Seng via the compliant politicians who run Hong Kong’s government.

    For all the operating separation of HSBC and Hang Seng, the fact remains the two comprise a dominant percentage of Hong Kong’s retail banking sector. In most countries this would cause antitrust concerns.

    Coincidentally, Hong Kong’s government introduced a new Competition Ordinance on December 14. International law firm Linklaters noted “the impact of the new law will grow over time, but it will ultimately lead to a more mature marketplace in which consumers will benefit through enhanced competition.”

    Costly acquisition

    Aside from political will, the biggest sticking point of any deal over bank acquisitions would be cost.

    Neither purchase would be cheap. BoCom had a market capitalisation of Rmb416 billion, or $64.13 billion, as of Thursday, giving it a price-to-book valuation of 0.94 times. Assuming BoCom’s balance sheet didn’t raise any major concerns, HSBC might spend $21.8 billion to raise its stake from 19% to 51%, assuming it paid on a par price-to-book valuation.

    Hang Seng is a bit cheaper. Its market capitalisation was HK$281.4 billion ($36.3 billion) on Thursday, giving it a price to book valuation of 1.98 times. At that valuation, a Chinese bank would need to pay $18.5 billion to gain a simple 51% majority stake from HSBC.

    To put those price tags into perspective, the largest banking M&A on record in Asia-Pacific, Westpac Banking Corporation’s $17.9 billion purchase of St. George’s Bank in 2008. Malaysia’s CIMB, RHB and Malaysia Building Society did discuss a three-way merger worth $22.3 billion in 2014, but the plan was scrapped early this year.

    Beijing would need to have a truly unshakeable desire to get one of its banks to expand internationally to sanction such an expensive M&A. And it would be hard for the Chinese government to cajole HSBC into such a sale without giving it in return the sort of local bank control it has thus far been unwilling to allow.

    But China appears keen to get its banks to support the expansion of its companies and the usage of its currency overseas. And HSBC really wants more mainland access.

    Lees ook:

  • Singapore shares food, culture and friendship for 50th anniversary

    Singapore shares food, culture and friendship for 50th anniversary

    Singapore celebrates 50 years of independence by sharing with Filipinos the best of what Singapore has to offer. Singapore Ambassador Ms. Kok Li Peng and Secretary of Foreign Affairs Albert del Rosario opens SG50, a cultural fair to celebrate Singapore’s 50 years of independence. All photos by Ana Vasquez/Rappler

    The year 2015 marks Singapore’s Golden Jubilee year. Although Singapore’s independence day was celebrated last August 9, 2015, the festivities in the Philippines were extended to highlight the city-state’s historical milestone.

    To cap the series of activities, the Singapore Embassy showcased the country’s offerings through SG50 in Manila at Bonifacio High Street on December 20, 2015.

    The power of three

    The one-day event featured three Singapore powerhouses: food, retail, and tourism.

    It was definitely a feast fit for the gods, as evidenced by the guests indulging in all types of savory Singaporean cuisine.

    Singaporean classics such as laksa and chicken rice were the crowd pleasers, in sync with the Filipino palate. One of the booths even offered the Singaporean version of fishballs and squidballs. “Our version is bigger and has more flavor. Also, no preservatives added,” said one of the Singaporean vendors.

    The famous shopping district of Orchard Road was brought to the Philippines through the display of Singaporean fashion brands, Heat Wave and G-Star Raw. Also, guests were given access to Singapore’s Changi Airport through the Singapore Airlines (SIA) booth, which highlighted travel destinations in Singapore such as Marina Bay Sands and the Singapore Zoo.

    Guests were also given a glimpse of what it feels to grow up in Singapore through Five Stones, a traditional Singaporean game, which is similar to jackstones. There were also coloring and face-painting activities for the kids.

    FIVE STONES. Kids play Five Stones, a Kampung game. The goal is to catch all 5 stones, a triangular cloth filled with rice—much like the English Jack Stones. Kampung means community in Malay.

    Trip down memory lane

    Did you know Singapore started as a fishing village? With the guidance of its founding father, the late Lee Kuan Yew, Singapore evolved into the modern and globalized country we know today.

    Singapore became a sovereign nation when it declared its independence from Malaysia in 1965. Throughout the 50 years of independence, the people of Singapore embody the “never say die” spirit as they continue to expand their nation’s horizon.

    In 1969, bilateral relations between the Philippines and Singapore were established. Today, this relationship continues to deepen as both nations constantly exchange cultural backgrounds.

    FOOD FESTIVAL. Singaporean food at its delicious best.

    Neighbors

    A couple, who declined to be name for this report, shared a few cultural observations between the two neighboring countries. The husband, a Singaporean, admitted that it was hard to adjust at first due to the culture shock. “Masyado kasi silang formal,” explained the wife, who is a Filipina. However, she was happy to say that her husband has finally adapted to the hospitable nature of Filipinos. The two travel back and forth to the Philippines regularly.

    Moving forward

    SG50 in Manila was an invitation to the Filipinos to celebrate and commemorate Singapore’s 50th year of independence.

    Mr. Scott Loh, Deputy Chief of Mission and Councilor of the Singapore Embassy, attested that the relationship of the Philippines with Singapore is growing stronger than ever. He was happy to report that Jollibee is the best performing operating overseas outlet in Singapore.

    The relationship of Singapore and Philippines is an example of how cultural interaction and communication can enrich one’s nation and more importantly, its people. It should not always be what we can show to them, but also, what we can learn from them. In fact, you might be surprised to know that Singaporean children, as young as 8 years old, take the bus to school all by themselves. “The level of security and discipline in Singapore, iba talaga,” said a Filipino living in Singapore.

    Lees ook:

  • SM Investments Corporation receives Platinum Award

    SM Investments Corporation receives Platinum Award

    SM was also awarded as the Best Investor Relations Team, a new category this year. SM is the sole Philippine company awarded this category among only seven companies in the Asian region. SM’s Investor Relations department is headed by Senior Vice President Corazon P. Guidote. She is supported by a team of IR and communications professionals whose main goal is to address the requirements of both its major and minority shareholders through direct communications, mainstream and social media communications, domestic and international IR roadshows, conferences and forums. They reach out to as many investors as possible both equity and fixed income who have interest in the Philippines given that SM is widely considered by the investment community as an ideal proxy for investing in the country.

    Attesting further to SM’s adherence to global standards across the group, its major listed subsidiaries SM Prime Holdings Inc. and BDO Unibank, Inc. likewise received the Platinum Award. BDO and SM Prime have also been excellence awardees of The Asset for the past six years.

    The Asset’s Corporate Awards, which focuses on Excellence in Governance, CSR and Investor Relations, uses a rigorous research process for benchmarking the region’s listed companies. The criteria used to assess the companies include a range of metrics on financial performance, which are also a proxy for gauging management acumen. The purpose of the awards is to recognize the importance of sustainable growth where companies are also evaluated according to the quality of their corporate governance, social responsibility, environmental responsibility and investor relations. A total of 56 companies were awarded on December 15 at the Four Seasons Hotel in Hong Kong.

    Lees ook:

    Lees ook:

  • Brown Forman rolls out Jack Daniels and Sinatra promotions

    Brown Forman rolls out Jack Daniels and Sinatra promotions

    Brown-Forman Travel Retail has rolled out a series of promotions worldwide touting the relationship between Frank Sinatra and Jack Daniel’s and commemorating what would have been the singer’s 100th birthday.

    Activities include high-profile Sinatra and Jack Daniels promotions in 26 airports worldwide along with social media support including Facebook and Twitter feeds (#ToastSinatra).

    Brown-Forman Travel Retail began its Sinatra/Jack Daniel’s partnership with the launch of Jack Daniel’s Sinatra Select at the TFWA show in Cannes in 2012.  Since then, the Kentucky-based spirits producer has executed promotions and displays in airports and other channels around the globe.  On December 12, a day before what would have been Sinatra’s 100th birthday, Delta Air Lines served tastings of Jack Daniel’s Sinatra Century on first class flights between New York John F Kennedy and Los Angeles International airport. Throughout December, the signature cocktail on all Delta Flights will be “Frank’s Way” featuring Jack Daniel’s Old No. 7, ice and a splash of water.

    Jack Daniel’s Sinatra Century was developed in collaboration with the Sinatra family to celebrate the day Frank would have turned 100 years old.   The high-end product is drawn from a rare selection of only 100 barrels hand-picked by Brown-Forman’s Master Distiller.  This rare 100 proof whiskey gains its rich oak character and smooth delicate finish from specially crafted, grooved “Sinatra barrels”.

    Along with the whiskey, is a never before released concert from Sinatra at the Sands in 1966 and a commemorative book wrapped up in a luxury gift-pack.  Only a limited number of bottles of Sinatra Century are available in travel- retail. While prices vary from market-to-market, the suggested retail price is $450.

    Finally, there is the Jack Daniel’s Sinatra Family Reserve. Only 15 bottles of this high-end product were created with a portion going to the family.  The product comes with a special signed letter from Frank Sinatra’s children and each bottle is individually numbered and comes with a commemorative plaque.

    At $1,500 per bottle, this is the most exclusive Jack Daniel’s whiskey ever sold and is only available for sale in travel retail at Hong Kong, Sydney, Munich, Atlanta, Heathrow, Singapore Changi, Los Angeels International and Amsterdam Schiphol.

    Lees ook:

  • China’s growing upper middle class to drive consumption by 2020

    China’s growing upper middle class to drive consumption by 2020

    The dramatic rise of China’s upper middle class and affluent families is expected to become a major driver for domestic consumption, which will grow fast despite the nation’s sluggish economy.

    A report released by consulting firm BCG and AliResearch, the research arm of China’s largest e-commerce company Alibaba Group, said the combined number of upper-middle class households, whose annual disposable income ranges from US$24,000 to US$46,000, and affluent households, with disposable income over US$46,000, would double to 100 million by 2020.

    By then, they will account for 30 per cent of urban households, up from 17 per cent today and only 7 per cent five years ago.

    “During the past few decades, China’s consumer economy has been powered by the ascent of hundreds of millions of people from poverty to an emerging middle class,” said Kuo Youchi, a principal with BCG Greater China who helped draft the report.

    “But China is entering a new era. The real driver for the future will be upper-middle class and affluent shoppers.”

    The report projects that affluent and upper-middle class consumers will account for 55 per cent of China’s urban consumption and 81 per cent of its incremental growth by 2020.

    Compared to tier-one cities like Beijing, Shanghai and Guangzhou, smaller mainland cities would see faster growth in the number of well-off shoppers. Half of the upper middle class and affluent households to emerge during the coming five years were likely to be in fourth-tier or even smaller cities, it said.

    China’s economy has been undergoing a structural transformation while its gross domestic product growth has cooled in recent years. The government hopes domestic consumption willoffset the sluggish export and investment sectors.

    The report is bullish about China’s consumption market, predicting it to grow 9 per cent annually to US$6.5 trillion by 2020, outpacing GDP growth which is expected to remain at around 6.5 per cent over the next five years.

    In addition to an increase in wealthier consumers, another force to boost consumption is from the younger generation of shoppers who were born in 1980s and 1990s.

    A separate BCG survey found that 42 per cent of Chinese aged 18 to 25 disagreed with the statement, “I feel I have enough things and feel less need to buy new ones”. That compared to 36 per cent in the US and European Union and 32 per cent in Japan.

    Meanwhile, e-commerce, as a more important retail channel in China, will also help stimulate demand and is expected to account for 42 per cent of growth in private consumption.

    Alibaba recently announced plans to buy the South China Morning Post and all other media assets owned by the SCMP Group.

    Lees ook:

    Lees ook:

    Lees ook: