Retail News CRM

Author: Mei Ling Tan

  • Asics restructures global operations

    Asics restructures global operations

    Japanese sports brand Asics has announced an organisational restructure and the appointment of experienced international executives to accelerate business growth.

    Under what it calls ‘The Center of Excellence Initiative’ Asics is strengthening its global business, which includes the Onitsuka Tiger brand and retail network, through the appointment of “top talent to lead and manage its global categories from the most influential regional markets by category”.

    From September 16, a new Global Lifestyle Division will be established to lead global marketing for Lifestyle brands such as Onitsuka Tiger and Asics Tiger. Europe will be designated as the Center of Excellence for this category with the offices based in Amsterdam. This division will be headed by the newly appointed senior GM, Torsten Widarzik, who moves from his current position as CEO of German fashion label Campus. Widarzik was previously Levis Strauss Germany/Switzerland GM and business and brand director with Nike Sportswear at Nike CEMEA, where he built the sportswear business across Central and Eastern Europe.

    Asics says strengthening its footwear and apparel business is also a key part of the business growth strategy following the appointment of Asics as Gold Partner in Japan for Tokyo 2020 Olympic and Paralympic Games.

    “To further accelerate growth, the design functions will be added to the Global Footwear Product Marketing Division.

    “The seamless integration of the product design, development and manufacturing functions will boost the development of competitive products.The reformed Global Footwear Product Marketing Division will continue to be led by Gerard Klein, senior GM, who returned to Asics in August 2014 after seven years at Converse where he was in charge of the go-to-market strategy and merchandising in the EMEA market.”

    Earlier this year, Asics also strengthened its Global Brand Marketing Division by appointing a new leader, Paul Miles, senior GM, who joined Asics in May 2015 from Nissan Motor, where he was VP of marketing and communications. Miles previously worked for Fast Retailing in France and Japan, where he was responsible for the market launch and expansion of the Uniqlo brand.

    “The restructuring of our global operations and the appointment of top talent as our new leaders shows our commitment to accelerate growth as a global sporting goods company,” said Motoi Oyama, CEO of Asics Corporation.

    “I am confident that the Center of Excellence initiative will enhance organisation’s capacity and effectiveness, and lead us into the next stage of growth.”

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  • How to open a restaurant in China

    How to open a restaurant in China

    Many expats in China at one point or another have dreamed about opening up their own restaurant, café, or other sort of food and beverage operation.

    The largest food market in the world, China offers many exciting opportunities for foodies and savvy business people alike, but foreigners can be daunted by the often bureaucratic process of establishing a business in China. In this article, we provide a step-by-step guide to the process involved.

    Step 1: Finding the Right Location

    The first step of business is to find the location for the food and beverage operation. This can be particularly tricky, as the investor must lease the restaurant premises before starting the registration process for the food and beverage business. In order to avoid renting out a location that will be denied business registration, investors should take extra precautions to find a business location that can pass inspections. It is often possible to ask for consultations from the Environmental Protection Bureau, Hygiene Bureau, local department of the Ministry of Commerce and the Administration of Industry and Commerce (AIC) to verify certain requirements, like whether the location will be able to obtain a license for the disposal of waste water.

    It is often safer to find a location that is currently in use as a food and beverage operation. This will require the investor to pay a transfer fee to the current lessee. The fee will vary by location, but it is usually at least RMB 100,000. If investors instead choose a space that was not previously used as a food and beverage operation, they will need to remodel it to make sure it passes inspections. This option can be more risky, and costly too – redecoration companies tend to charge a service fee of around RMB 10,000 per sq. meter, on top of the costs of materials. Even if the investor acquires the necessary permits and certifications, if residents in the area find the food and beverage operation to be disruptive in the community, the business license can be revoked.

    Step 2: Licensing and Registration of the Food Business
    Company Name Registration

    Before applying for any licenses and permits, it is necessary to apply to register the business name at the local AIC. The AIC will issue a “Notice of Company Name Reservation” after they double check to make sure that the company name has not previously been used anywhere else in the province.

    Health and Food Hygiene Licenses

    After obtaining a company business license, investors then face the task of health and food safety inspections for their food and beverage operations. For businesses involved in the food and beverage industry in China, there are three main types of food and beverage licenses, and some businesses may require more than one license depending on the scope of their food and beverage business operation:

    • A Catering License (餐饮服务许可证)is required for catering service providers, both individuals and organizations, that are involved in the provision of group meals (food stalls and providers of semi-finished food products are not required to carry this license). If an entity provides catering services in different locations, it must apply for a license for each location
    • A Food Production License (食品生产许可证) is required in order to ensure that businesses comply with standards pertaining to manufacturing capabilities and environmental regulations. All staff involved in food service must undergo training approved by the China Food and Drug Administration (CFDA), and there should be a health management system in place in order to ensure the health and hygiene of personnel. The state-level General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) is responsible for the nationwide administration of the food production license.
    • A Food Distribution License (食品流通许可证)is required for businesses engaging in the sale of food items and is administrated by the AIC. Any entity, both individuals and organizations, that is involved in food distribution (including retail and the wholesale distribution of pre-packaged food and bulk food) is required to acquire a Food Distribution license. However, sometimes when an entity holding a food production license sells food products on the premises of production, it can get around the requirement to hold a food distribution license.
    Alcohol Permit Registration

    For food and beverage operations that will be serving alcohol, an alcohol permit is required. The permit will be issued after the business license, tax registration permit, and food licenses are acquired, but the intent to sell alcohol should be clearly stated within the application for the health and food hygiene license.

    Environmental Protections Approval

    Before any catering service can began operation, it must get approval from the local Environmental Protection Bureau. This will include an evaluation of the indoor and outdoor surroundings of the site in order to ensure that the location complies with standards listed in the Directory for the Management and Classification for Construction Items and Environmental Influence.

    Step 3: Establishing the WFOE or JV Entity

    The steps for establishing the business entity will ultimately depend on how the food business is being registered. In China, foreigners are not allowed to be the sole owners of the restaurant or food business, but they are able to open it as a limited-liability Wholly Foreign Owned Enterprise (WFOE) or through a Joint Venture (JV) with a Chinese citizen as a business partner. In addition, some foreign investors may choose to choose to let the Chinese partner(s) open the business to simplify the registration process, but investors should be aware that this will not allow them to have any legal rights.

    The business project will be approved by the Ministry of Commerce, which will issue an approval letter  and an approval certificate that can be taken to the AIC to register the company business license.

    Risks and Challenges

    Investors should also brace themselves to be ready to battle China’s often volatile real estate market in order to develop their business operation. While most restaurants in global cities like New York City and London operate on at least 10 year leases, leases for food and beverage operations in China are often five-year leases, some even just three years.

    In addition, restaurant owners in top tier cities like Shanghai pay a much larger percentage of their profits on business leasing than they would in other parts of the world. In a survey on restaurant leasing fees conducted by SmartShanghai, it was found that paying 15 per cent of restaurant earnings on rent is the norm, with most restaurant owners paying between 10 per cent and 20 per cent on leasing.

    In contrast, restaurant owners in some of the world’s most expensive cities, like New York City, pay around 10 per cent of their profits in rent. High rental costs can often be reasons why food and beverage businesses go out of business, especially in the beginning, when changes to business strategy sometimes have to be made.

    In addition, after signing the lease investors should be ready to spend at least two to three months in order to acquire all the required licenses and permits to open the food and beverage business. It is sometimes possible to negotiate with the landlord to have a rent-free period of one to two months after signing the lease, which will be helpful in case the investor encounters delays in obtaining all the appropriate licenses necessary to start operation.

  • Fake iPhone maker shut down

    Fake iPhone maker shut down

    A Chinese manufacturer of fake iPhones has been shut down after authorities learned it had produced a stunning 41,000 handsets.

    Nine people have been arrested including the husband and wife couple behind the venture,

    reportedly aged in their early 40s.

    The factory was raided after a tipoff from US officials which had seized some of the fake iPhones after they had been landed in America.

    So sophisticated was the operation that many of the workers at the plant genuinely believed they were making the real thing.

    The factory, located on the northern edge of Beijing, was actually discovered and raided back in May, but the event was only revealed by Chinese authorities over the weekend.

    According to the BBC, “hundreds” of staff were employed in the ruse, which included repackaging used smartphone parts in new iPhone cases.

    It took just four months for the company to make 41,000 phones, all of which were exported, with sales topping US$19 million. By our calculations, that values each fake iPhone at US$463.

    All of which rather makes Hong Kong Customs’ weekend seizure of 88 smartphones being smuggled across the border into the Mainland pale into insignificance. Photos suggest those phones were iPhones, although likely to be gray imports.

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  • To match Apple and Google, retailers ready mobile-pay system

    To match Apple and Google, retailers ready mobile-pay system

    After almost three years in development, the retail industry’s answer to Apple Pay is finally getting off the ground.

    A mobile payment app developed by Merchant Customer Exchange – a company founded in Aug. 2012 with funding from Wal-Mart Stores Inc., Target Corp. and Best Buy Co. – has been tested by employees of the retailers and will get a limited trial run next month in stores, according to three people familiar with the situation.

    That means shoppers will soon be able to use the technology, called CurrentC, to pay for items with their phones.

    The challenge for CurrentC now is playing catch-up against established apps from Apple Inc., Google Inc. and others, and explaining to customers why they should use it. When Apple Pay rolled out last year, CurrentC was derided by critics as a lower-tech alternative that retailers supported because it would give them tighter control over shoppers’ transactions.

    Customers also will need assurances that the technology is safe, given the high-profile data breaches at retailers over the past few years, said Julie Conroy, a payments security analyst at Aite Group.

    CurrentC itself was hacked last year during an early test.

    “Trust is going to be a huge issue for them,” Conroy said.

    Merchant Customer Exchange (MCX), expects to formally introduce CurrentC some time in the third quarter, a spokeswoman for Lowe’s, part of the consortium, said in an e-mail.

    But Lowe’s will not be part of the initial rollout.

    Scott Rankin, MCX’s chief operating officer, confirmed in an e-mail that CurrentC will begin public tests this year, without being more specific. He also said MCX was “making good progress” on bringing the app to the market.

    “We expect there to be more than one successful player in mobile payments, and we expect to be one of them,” said Rankin, a former executive at Staples Inc.

    At stake is a fight over money and customer data. Retailers have long loathed paying fees for credit card use in their stores. That has led to battles on multiple fronts, including multibillion-dollar lawsuits and a successful lobbying effort that cut fees in the 2010 Dodd-Frank financial reform.

  • Uniqlo eyes Philippines as garments production site

    Uniqlo eyes Philippines as garments production site

    GLOBAL clothing retailer Uniqlo is planning to tap Philippine garments manufacturers as it considers making the country one of its production sites that will cater to its global retail network.

    In a briefing on Thursday, Katsumi Kubota, chief operating officer of Fast Retailing Philippines Inc., said he had started studying a list of 40 local garments factories that was given to them by the Philippine government during President Aquino’s state visit to Japan recently.

    Kubota said this was also one of the topics discussed by the Uniqlo head and President Aquino when they met in Tokyo.

    “I think we have to study it carefully…We do not own any of our factories so what I’m checking now is, first of all, the quality (of the products produced by these factories). We cannot sacrifice quality. We’re also looking at their (capacities) because most the time, one factory produces one item for Uniqlo branches all over the world, so we have to work with large factories. These factories must also be operated by good owners,” Kubota said.

    Kubota, however, did not provide any timeline as to when the study on the prospective factories would be completed. If the company decides to pursue this plan, the local garments factories that will be selected will have to supply to all Uniqlo stores globally.

    For now, Kubota said Uniqlo was focusing on expanding its retail network aggressively over the next five years and in beefing up the local market’s awareness of the Uniqlo brand.

    He said Uniqlo would be opening two branches in Cebu by the fourth quarter of this year, marking the company’s first foray outside Luzon. Plans to put up stores in key areas in Mindanao such as Davao, Cagayan de Oro and GenSan are being studied.

    “Opening our stores in Cebu, after our third year in the Philippines, is another important phase of our business in the country. We have opened 23 stores in Metro Manila and Luzon, and entering the Visayas market is a milestone in our growth strategy,” he added.

    The two Uniqlo stores in Cebu will cover at least 1,000 square meters each and create 200 jobs per branch. Kubota did not say the amount the company was investing in these stores but said it was compliant with Philippine laws that required foreign retailers to invest a minimum of $800,000 a store.

    He said Uniqlo was targeting to have 29 stores in the country by the end of the year and 200 by 2020.

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  • Hong Kong retailers feel the pain as China economic slump hits travelling, shopping

    Hong Kong retailers feel the pain as China economic slump hits travelling, shopping

    For Hong Kong, it’s been one thing after another.

    A series of anti-China and pro-democracy protests last year prompted stores to close and mainland tour groups to cancel bookings. Meanwhile, a slowing Chinese economy and President Xi Jinping’s anti-corruption and austerity campaigns have also made the Chinese more wary of buying pricey cognac and Gucci bags in the city.

    While still the biggest outbound destination for Chinese tour groups, Hong Kong is in danger of losing its lead. Mainland Chinese travellers to Hong Kong last year grew by the slowest pace since 2009, Bloomberg Intelligence data show.

    Suncorp notes that the declining AUD has brought in more short term arrivals to Australia, and Australian Bureau of Statistics data shows that it is the Chinese who are coming in increasing numbers with more than 1 million arriving in the 12 months through May, a 17 per cent increase year on year.

    The Aussie has declined almost 35 per cent against the US dollar in the past four years, increasing the purchasing power of tourists and encouraging Australians to holiday at home.

    “According to Tourism Australia, they spent $5.7 billion in 2014, and this is forecast to more than double to $13 billion,” says Suncorp. “China has now surpassed the US as the biggest spender on tourism last year. But Tourism Australia considers we need to do more to take advantage of this boom in tourism and that our attractions are outdated. While we had a massive investment in mining, there was an underinvestment in the not so appealing tourism industry. It is likely that further investment and polishing up our industry will take time, but it is an important step to achieving economic growth in the long-term for Australia, as key commodity prices unwind.”

    Back in Hong Kong, with fewer mainland Chinese staying overnight, average daily rates at Hong Kong’s hotels fell for a ninth straight month through June. The Pearl of the Orient also faces rising competition from regional rivals such as Thailand and South Korea, and mainland alternatives including Shenzhen and Shanghai.

    In addition, China slashed tariffs on products such as face creams and imported sneakers from June 1, reducing Hong Kong’s draw as a cheaper shopping destination.

    The effect on Hong Kong’s retailers has been immediate and painful. Retail sales fell in four of the five months through May, with jewellery, watches and other high-end gifts the worst hit.

    Burberry Group, whose stores in Hong Kong’s Causeway Bay and Tsim Sha Tsui shopping districts sell $HK18,500 ($US2400) handbags and $HK24,000 dresses, has said it may try and lower its rent bill to offset a worsening slump in Hong Kong, while Emperor Watch & Jewellery, which sells Cartier and Montblanc watches, said it may shut one or two of its Hong Kong stores when their leases end this year.

    And the news out of China doesn’t inspire much confidence. French distiller Remy Cointreau reported first-quarter sales that missed analyst estimates as Chinese wholesalers continued to hold back on cognac orders. Prada also reported first-quarter profit that trailed analyst estimates on slumping sales in China, while foreign carmakers including Audi have stepped up discounts to woo buyers.

    So there’s no relief in sight for Hong Kong. The tourism board forecasts overall visitor arrival growth to slow to 6.4 per cent in 2015 from 12 per cent last year, with mainland Chinese tourist arrivals expected to drop by half to 8 per cent. Hong Kong’s economy expanded 2.1 per cent in the first quarter from a year earlier, weaker than a revised 2.4 per cent expansion in October through December.

    “We’re just too exposed to China,” said Silvia Liu, a Hong-Kong based economist at UBS. “Structurally, until the tourism sector consolidates and Hong Kong finds new growth engines, I don’t see the way out yet.”

  • Snow Leopard Vodka makes Indian TR debut

    Snow Leopard Vodka makes Indian TR debut

    Snow Leopard Vodka has made its debut in Indian travel retail in May 2015, after hitting the shelves at Hyderabad Airport. Edrington Asia Travel Retail, which distributes the brand, believes this is evidence of a growing momentum in Asian travel retail.

    Ryan Hill, Managing Director of Edrington Asia Travel Retail said: “Snow Leopard Vodka continues to gain strong traction in Asia and we’re now excited to introduce it in India, where we see great potential for it.

    “With vodka sales in India up 14% in 2014, this is clearly a growth market and given Snow Leopard Vodka’s unique story and close ties to this region through conservation projects, we are confident that we have a strong opportunity here.”

    Snow Leopard Vodka’s launch in Indian travel retail will contribute to the work of The Snow Leopard Trust, particularly active in the region, as well as its local partner Nature Conservation Foundation (NCF).

    It has recently accelerated its awareness-raising and educational activities in India through NCF’s eco-camp programme, which help increase knowledge and understanding of local ecology and foster positive attitudes toward local wildlife.

    “2014 was an extremely positive year for the Snow Leopard Trust in India with over 350 children attending 11 camps throughout the year,” commented Siri Okamoto of the Snow Leopard Trust. “These eco-camps inspire and educate future generations, with many participants subsequently aspiring to become wildlife biologists. We look forward to growing this programme in 2015 and continuing our successful partnership with the team behind Snow Leopard Vodka.”

    Snow Leopard Vodka was created to help save the critically endangered snow leopards from extinction, says Edrington, which adds that 15% of all profits from Snow Leopard Vodka are donated to snow leopard conservation projects through the Snow Leopard Trust. Edrington’s goal is to raise US$1m for snow leopard conservation projects each year that will safeguard the snow leopard’s future.

  • Alibaba drive perks up China sperm donations

    Alibaba drive perks up China sperm donations

    Alibaba has used the internet to revolutionise China’s retail, banking and transport markets, and now the ecommerce juggernaut has turned its attention to the country’s sperm shortage.

    Amid spiralling infertility rates, sperm banks across China have been running dry. Worsening environmental conditions and hectic work schedules have taken their toll on male fertility in China, experts say.

    According to a 2012 study by the China Population Association, a state agency, 12.5 per cent of Chinese couples are infertile.

    Enter Alibaba, whose Groupon-like website Juhuasuan markets everything from underwear to insurance. The ecommerce group’s move into boosting sperm donation features a banner advertisement with a phallic cartoon candle exploding into a white cloud, bearing the Chinese character for “semen” in bold lettering.

    “Avid concentration” the ad reads, with a pun on the character jing which in Chinese means both mind and sperm. During the donation drive, Alibaba offered payments of up to $800 for successful sperm donations.

    Posted between July 15-17, the campaign garnered 22,000 new registrants for the seven participating provincial sperm banks — equivalent to nearly a year’s worth of traffic for some of the centres.

    “This exceeded all expectations,” said Wang Zhiqiang, director of the state sperm bank for Guanxi province. “On average, we get about 300 donors a year, but during the three days of the Juhuasuan event, more than 1,000 people signed up. Assuming 20 per cent of them will donate, that is 200 new donors.”

    The mismatch in supply and demand for sperm has prompted donation centres to overcome many taboos in tradition-bound China. In April, the shortage had become so dire in Hubei province that the regional sperm bank turned to Weibo, China’s equivalent of Twitter, to broadcast: “Stop wasting all that tissue paper!”

    “Under-achievers! This is your opportunity! Hubei Sperm Bank is badly in need of sperm,” it said.

    The shortage of sperm donations is partly caused by stringent requirements for donors — roughly one in five is acceptable — but mainly because men in China have “shyness about such topics”, according to Mr Wang. “We mainly try to get recruits by passing out flyers and holding awareness seminars, but we do not get enough qualified men.”

    But Alibaba has made a speciality out of taking dysfunctional markets and overcoming everything from supply bottlenecks to onerous government regulations to low demand — it has done so in areas such as finance and taxis.

    Matching sellers with the masses of online traffic is the company’s speciality, usually combining with a bit of fun, marketing savvy, big data and, most importantly in the case of sperm donation, anonymity.

    “People feel shy and embarrassed when we meet them face-to-face,” said Mr Wang. But he said that marketing via the internet added a layer of privacy that makes previously forbidden topics acceptable.

    “Online, when they don’t have to face a human being, they are more comfortable, and this is a major reason why this project is a success,” he said, adding: “We don’t know whether they will actually come in or not.”

  • Rents down, vacancy rate up for retail space in Q2

    Rents down, vacancy rate up for retail space in Q2

    Prices and rentals of retail space both dipped by 0.5 per cent in the second quarter of this year, according to data from the Urban Redevelopment Authority on Friday.

    It was the second straight quarter of rental decline and comparable to the level seen early last year. Prices had stayed stable in the first quarter.

    Vacancy rate of retail space rose 0.4 percentage points to 7.2 per cent for the second quarter, the highest in over four years.


    SOURCE: URA

    Office rents also weakened by 2.6 per cent in the second quarter, after rising 0.6 per cent in the first quarter.


    SOURCE: URA

    Office prices rose 0.3 per cent in the quarter, after falling 0.1 per cent in the first quarter.

    Vacancy rate of office space dipped by 0.4 percentage points to 9.8 per cent for the second quarter.

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  • Apple’s India test: how to gain volume and meet aspiration

    Apple’s India test: how to gain volume and meet aspiration

    With only a tiny share of the world’s fastest-growing major smartphone market, Apple Inc is stepping up its push into India, with a first targeted TV advertising campaign, expanded retail network and promotional financing schemes.

    For years, India has been a low priority for Apple as spending power is weaker than in China, where the company’s iPhones swiftly became must-have devices after their 2007 launch.

    But Apple is now looking to build on a 93 percent increase in its iPhone sales in India in April-June, which for the first time outpaced growth in China, of 87 percent – albeit from a low base. Apple has just a 2 percent share of India’s smartphone market, while South Korean rival Samsung Electronics accounts for around one third of volume sales with its range of Android phones.

    The India push coincides with Apple missing elevated expectations when it reported earnings earlier this week, prompting some investors to question how long double-digit growth can continue.

    “Apple is consciously expanding its distribution in India and pushing its products aggressively. The marketing spend too is a part of that,” said Jaideep Mehta, managing director for India and South Asia at tech research firm IDC.

    Executives at several electronics retail chains and Apple distributors said the Cupertino-based firm was chasing shelf space to make its gadgets more visible, and has more than doubled the number of distributors to five.

    Apple has also brought in a new senior executive to take charge solely of the Indian market, industry sources said, and has placed advertisements for a policy adviser to help it work with New Delhi’s bureaucracy.

    The company declined to comment on its India strategy.

    “Apple’s single-minded focus for India is on volume,” said a senior executive at an electronics chain store, who declined to be named. “They have increased distributors and want to reach out to smaller cities.”

    BALANCING VOLUME, ASPIRATION

    Analysts say much of the high growth in iPhone sales in India has come from earlier models such as the 4S, 5S and 5C, which are sold more cheaply.

    “Apple is an aspirational brand. They will (have to) balance their volume push with that to get growth,” said IDC’s Mehta.

    That could be tough in a market where you can buy around eight basic-level smartphones for the upwards-of-50,000 rupee (US$785) price of a new iPhone.

    Taking to Indian TV screens for the first time, Apple plays up the aspirational appeal of its phones, showing a glamorous Indian bride using Facetime, Apple’s video calling feature, to send coy flashes to her groom of a henna-ed hand or skirt hem before their wedding.

    In addition, Apple offers financing schemes where buyers of its latest iPhone 6 can pay in monthly instalments, and has launched Apple Music, a cloud-based music streaming service, for just 120 rupees (US$1.88) a month in India – a fifth of the price in the United States.

    The company has offered easy financing schemes in India before, but retailers say the focus on operations and marketing show Apple is now more seriously targeting the market.

    And there’s plenty of market for it to aim at.

    “The premium smartphone market will be close to 8 million units in 2015,” said Neil Shah, analyst at Counterpoint. “Apple has a lot of room to grow and capture a significant share of that,” he added, noting Apple sold just over a million iPhones in India in the year to April.

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  • Bridgewater Clarifies China View After Client Document Leaks

    Bridgewater Clarifies China View After Client Document Leaks

    “While the report to Bridgewater clients is a private communication which they want to continue to try to keep private, Ray Dalio and Bridgewater believe that too much has been made of the shift in their thinking and want to clarify their thinking,” the statement said. The Wall Street Journal first published an article based on a July 21 client memo that outlined their thoughts on China. ValueWalk later reported on the client memo based on a copy it had received, noting the retail focus and the fact that concern was expressed after a stock market crash.

    As the largest hedge fund in the world whose respected economic and political viewpoint has become increasingly important in public economic policy discussions, Dalio and his global analysis is in consistent demand from sophisticated institutional and high net-worth retail investors. Over the past year ValueWalk has published nearly two dozen articles chronicling the organization’s thoughts on significant economic matters.

    In regards to statements about China’s faltering economy and the odd focus on the retail investor, Bridgewater says they were simply and accurately noting a market fact that had repercussions. It was an observation not to be given an extraordinary amount of significance.

    “The observations that were made simply noted that falling stock prices have a negative wealth and negative psychological effect. When a classic stock market bubble (supported by unsophisticated investors buying stocks on a lot of margin) bursts there are negative growth effects,” the statement said, downplaying the significance of the retail aspect of the analysis in making forward looking projections.

    In the original Bridgewater analysis the firm was clear to point out that it was economic statistics that would determine their outlook going forward. “When combined with the debt and economic restructurings underway, that will most likely result in slower growth, and more simulative government policies to offset these downward pressures,” the report said.

    Rather than sound an entirely negative note, the world’s largest hedge fund looked on the positive side as well as considering the negative. “Bridgewater’s view that China faces debt and economic restructuring challenges, and that it has the resources and the capable leaders to manage these challenges, remains the same.”

    Two distinct approaches going forward: “Hunting time” and cautiously monitoring economic statistics

    For investors there appear to be two approaches.

    Goldman Sachs Group Inc said “its hunting time” in China, potentially being the first and most aggressive to call the low in the region. This comes at a time when certain algorithmic signals are also pointing to stock market normalization and the market experiencing a normal mean reversion retracement off a dramatic market move over the past year. Past performance is never indicative of future analysis, and algorithmic systems based on past performance statistics, like all investment analysis, is never perfect. In fact, when considering algorithmic investment signals degrees of probability are used to evaluate different future paths.

    Bridgewater appears to be rather pointing out issues with China that investors should consider and taking a wait and see attitude on economic numbers and the economic fallout before making such a bold claim. Its a fundamental, discretionary analysis that is watching for further impact.

    Who will be correct, Goldman and their early call on China or Bridgewater’s wait and see approach? Its hard to tell at this point, but the next several months could be an interesting time to watch as China, the potential withdrawal of quantitative easing and yes, even Greece, may all come into market focus this fall.

    The full Bridgewater Associates statement is below:

    While the report to Bridgewater clients is a private communication which they want to continue to try to keep private, Ray Dalio and Bridgewater believe that too much has been made of the shift in their thinking and want to clarify their thinking.

    The observations that were made simply noted that falling stock prices have a negative wealth and negative psychological effect. When a classic stock market bubble (supported by unsophisticated investors buying stocks on a lot of margin) bursts there are negative growth effects. When combined with the debt and economic restructurings underway, that will most likely result in slower growth, and more simulative government policies to offset these downward pressures.

    Bridgewater’s view that China faces debt and economic restructuring challenges, and that it has the resources and the capable leaders to manage these challenges, remains the same.

  • MasterCard expands in Myanmar

    MasterCard expands in Myanmar

    MasterCard has just launched yet another prepaid card in Myanmar, this time with Myanma Apex Bank Limited (MAB Bank).

    Its launch comes exactly three years on from the lifting of sanctions in Myanmar and affirms MasterCard’s commitment to  provide safer and easier ways for Myanmar residents to pay for their travels.

    The new prepaid card is also timely given the latest MasterCard survey on consumer purchasing priorities in travel indicates that three out of five Myanmar consumers surveyed intend to travel within the next 12 months (either as much, or more than they did in the past 12 months).

    The MAB Travel Prepaid MasterCard provides a secure way for consumers to make payment when travelling overseas for leisure, business or education, and also when shopping on e-commerce sites.
    “We know that leisure travel and shopping are on the rise among Myanmar citizens and we hope this product will help to meet their needs,” said Win Min Khine, managing director, Myanmar Apex Bank.

    MasterCard country manager, Thailand & Myanmar, Antonio Corro said: “Myanmar’s gradual opening up presents many opportunities for entrepreneurship and commerce to flourish, and their progressive participation in the global payments system that MasterCard enables not only aids the development of the local payments landscape, but also facilitates global connections.”

    Since 2012, MasterCard has launched prepaid cards together with Co-operative Bank, Kanbawza Bank, Ayeyarwady Bank and Myanmar Citizen Bank with 2C2P, the last of which was also Myanmar’s first smartphone-enabled Prepaid Card.

    At present, more than 2,000 restaurants, retail outlets and hotels in Myanmar accept payment cards.

  • Retailers remain pessimistic about industry prospects

    Retailers remain pessimistic about industry prospects

    Hong Kong’s retailers remain pessimistic about their industry prospects, with a survey from the Hong Kong Productivity Council suggesting that the sector’s business confidence is at three-year low.

    The Standard Chartered Hong Kong SME Leading Business Index showed the retail industry sub-index sliding to 43.1 for the third quarter from 49.9 in the preceding three months, marking the weakest level in three years.

    Meanwhile, the overall gauge of the SME Business Index stood at 49.6, up 0.6 point from the previous months but remaining below the 50 mark that separates positive and negative outlooks, the Hong Kong Economic Journal reported.

    The sub-index that reflects interest in hiring dropped below 50 to reach 48.5 for the first time, according to the survey which was conducted by the Hong Kong Productivity Council in association with Standard Chartered Bank Hong Kong.

    Kelvin Lau, senior economist for Asia at Standard Chartered, said slower growth in the number of mainland tourists and structural change in their consumption behavior have brought prolonged adverse impact on the city’s retail environment.

    He noted a 1.3 percent fall in mainland visitors as of the end of May this year, the largest decline since August 2009.

    However, DBS Bank Hong Kong economist Lily Lo said the actual impact is not so bad because 70 percent of retail sales in the city come from local consumers.

    Lo expects Hong Kong’s economy to expand at 2.5 percent rate this year, with retail sales likely to recover.

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  • Singapore Press Holdings Limited Makes Big Splash In e-Commerce

    Singapore Press Holdings Limited Makes Big Splash In e-Commerce

    For those of you who are shopping online regularly, Qoo10.sg might be a familiar name. According to Alexa, a website ranking company, Qoo10.sg is the second most popular e-commerce site in Singapore, behind only U.S. online retail giant Amazon.com.

    Qoo10 is a joint venture between South Korean e-commerce outfit Giosis Group and American online marketplace creator eBay Inc. Qoo10’s still a private company, but investors who believe in the potential of e-commerce and think that Qoo10 will be a strong beneficiary of this important trend will be happy to know that they can now get exposure to the firm.

    Earlier today, it was revealed that Qoo10 had just raised US$82.1 million from a group of investors who are led by newspaper publisher and property developer Singapore Press Holdings Ltd. Singapore Press Holdings has long been trying to diversify away from its traditional print business which might be facing structural challenges with more and more people obtaining their information online. This affects the circulation of the firm’s traditional print newspaper and would thus directly affect the firm’s advertising revenue.

    The negative impacts to Singapore Press Holdings’ business are already apparent with the firm’s total ad revenue from its newspapers falling in each year since its fiscal year ended 31 August 2011 (FY2011).

    As a result, Singapore Press Holdings has been actively investing into other types of businesses over the past few years. In particular, the company has been putting capital to work aggressively in the internet space. Currently, Singapore Press Holdings is owner of some of the most popular sites in Singapore such as hardwarezone.com, shareinvestor.com, and even stomp.com.sg.

    With an investment into Qoo10, Singapore Press Holdings has gained access to an e-commerce marketplace in six different territories (Singapore, Japan, Indonesia, Malaysia, Hong Kong and China).

    Qoo10 currently has about 17.6 million registered users and had achieved a gross merchandise value (GMV) of US$408 million in 2014. Interestingly, Singapore is currently Qoo10’s best performing market, with more than US$182 Million in GMV in 2014 with just 1.8 million registered users. However, there is no detail on whether Qoo10 is profitable or not at the moment.

    More synergy?

    With the new investment, there might be some synergies to exploit given Singapore Press Holdings’ distribution-reach on both its offline and online media properties.

    If Singapore Press Holdings is able to successfully promote Qoo10 within its audiences on its various media platforms, it might help boost growth for Qoo10 in the coming years.

    Foolish Summary

    The internet looks to be the way forward in the future. But, investors have to know that businesses that ply their trade on the web are engaged in extremely fierce competition.

    With low barriers to entry and having access to a global market at your fingertips, internet businesses need to dominate or else they might disintegrate. Clearly, Singapore Press Holdings has decided it wants a part of all these and its investment into Qoo10 is just another step in its longer term ambition to transform its business. Let’s hope it can compete successfully in this unforgiving landscape.

    For those of you who are shopping online regularly, Qoo10.sg might be a familiar name. According to Alexa, a website ranking company, Qoo10.sg is the second most popular e-commerce site in Singapore, behind only U.S. online retail giant Amazon.com.

    Qoo10 is a joint venture between South Korean e-commerce outfit Giosis Group and American online marketplace creator eBay Inc. Qoo10’s still a private company, but investors who believe in the potential of e-commerce and think that Qoo10 will be a strong beneficiary of this important trend will be happy to know that they can now get exposure to the firm.

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  • Singapore Savings Bonds: Good intent, bad timing, say analysts

    Singapore Savings Bonds: Good intent, bad timing, say analysts

    Singapore’s plan to launch a savings bond to encourage long-term retail savings is unsettling domestic banks and economists who fear this bond will push interest rates up and suck cash out from an already anaemic economy.

    The new bond, which will begin selling in October, will have a term of 10 years. It will offer the same yields as government bonds or ten times the returns on bank deposits, and can be redeemed without penalty at any point.

    Such a juicy proposition could cause a flight of cash from bank deposits into these bonds and force interest rates higher as banks compete to attract savers.

    The government says it will issue a maximum of S$4 billion worth of bonds this year, which is still more than a fifth of deposit growth in 2014.

    The timing of these bonds, which are aimed at meeting a long-felt need for long-term investment options in the low-yielding economy, couldn’t be worse, say analysts.

    The economy contracted sharply in the second quarter as manufacturing slumped and is at risk of tipping into technical recession. Price pressures are subdued and expectations are building for the central bank to ease policy once again at a twice-yearly review in October.

    “Launching a retail savings bond now is almost like reverse QE,” said Chua Hak Bin, an economist with BofA Merrill Lynch in Singapore, referring to the unorthodox quantitative easing (QE) policies the United States and other major economies have pursued in the years since the 2007 financial crisis.

    Chua points to the already slowing deposit growth in the Singapore banking system, with just S$3.8 billion ($2.8 billion) of deposits being added in the first five months of 2015, just 20 percent of the total growth last year.

    He suspects the government would invest the savings bond flows overseas. That would further pressure loan growth, by tightening available cash and triggering a rise in deposit rates, he said.

    “So the timing is not ideal. The economy has stagnated in the first half and this will worsen the situation,” Chua said.

    Citibank analysts expect that of a total S$559 billion of deposits in the banking system, 36 percent are savings deposits held by households. If on average the MAS issued about S$6 billion worth of bonds each year, S$30 billion would flow from the deposit base into bonds over five years, they estimate.

    RISK-FREE AND REWARDING

    Singapore’s central bank, the Monetary Authority of Singapore (MAS), has set a cap of S$100,000 on individual investments in the bond.

    MAS Managing Director Ravi Menon played down fears the bond will cannibalise bank deposits.

    “The savings bonds issuance numbers pale in significance compared to the total size of the banking deposits,” he said at a news conference this week.

    Yet there is little doubt the bonds will draw savers from banks. Government bonds yield about 0.95 percent for one-year and 2.6 percent for 10 years. Bank deposits fetch around 0.25 percent for a year and just double that for 24 months.

    “The Singapore Savings Bond is bending the risk-reward paradigm in investors’ favor,” said Zal Devitre, head of investments at Citibank in Singapore.

    Devitre believes retail investors and consumers will be keen to buy the bonds, and yet thinks it is premature to be projecting the impact that will have on rates and banking system liquidity.

    Local banks such as DBS, Oversea-Chinese Banking Corporation and UOB are expected to be impacted if there is a heavy migration of deposits.

    But analysts also expect there will be more pressure on global banks such as Citibank, Standard Chartered, HSBC and Malayan Banking Bhd, which have been deemed systemically important by Singapore and therefore need to maintain higher capital than stipulated under the Basel 3 guidelines.

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