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Category: General

Retail News Asia is committed to providing both local and global retailers with the latest General Retail news throughout the Asian market. This on a daily base.

  • Indonesia Asks Ride-Hailing Apps Like Uber, Grab To Register Cars By May

    Indonesia Asks Ride-Hailing Apps Like Uber, Grab To Register Cars By May

    Indonesia asked ride-hailing apps such as Grab and Uber to partner with a transport business and register their cars by the end of May if they want to continue to operate in the country, Indonesia’s Transportation Minister Ignasius Jonan.

    “Uber, Grab are app companies. If they want (to operate), they have to partner with a transportation business entity, like a car rental company,” Jonan told reporters.

    Traffic in the capital Jakarta came to a complete halt Tuesday as taxi drivers caused traffic jams by blocking off several main roads to protest in response to the Indonesian government’s apparent refusal to regulate or outright ban ride-hailing services.

    Local news footage as well as videos posted on social media sites reportedly showed enraged taxi drivers pulling fellow drivers who were not part of the protest out of their vehicles and assaulting them on Tuesday.

    Similar protests have erupted against ride-hailing apps such as Uber in London, Paris, the U.S. and parts of Brazil among other places as the apps have ushered in cheap taxis and threatened the business model of traditional taxi drivers.

    “Even before the demonstration, we had started the process to help our drivers form a cooperative unit and meet the requirements,” Ridzki Kramadibrata, managing director of Grab Indonesia.

    Donny Sutadi, Uber Indonesia’s commissioner, reportedly said that they would partner with a car rental company.

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  • China’s Consumers Spend Up On Spas, Travel and Entertainment

    China’s Consumers Spend Up On Spas, Travel and Entertainment

    China’s consumers are ignoring the bears.

    Consultancy McKinsey & Co. is tipping that China’s shoppers will increase their spending by 10 percent per year through the end of the decade as incomes rise. Some 55 percent of consumers expect a significant wage increase over the next five years.

    It’s not just staple goods that will be filling the shopping trolleys. Consumers are spending more on luxury items like spa visits, travel and entertainment.

    The shift is just another sign of China’s economy changing away from one that is fueled by heavy industry and exports and towards one where consumers and services drive growth.

    The chart below shows how shoppers plan to spend more on leisure and travel.

    Here’s another sign of the burgeoning market: consumers are adopting new products, services and retail experiences at rates unseen in developed markets. Mobile payment in China went from zero in 2011 to 25 percent of the population in 2015.

    “Gone are the days of indiscriminate spending on products,” according to McKinsey. “The focus is shifting to purchasing more premium products, and living a more balanced, healthy, and family-centric life.”

    China’s leadership have prioritized economic growth of between 6.5 percent and 7 percent this year and have promised to ensure the economy, which grew by its slowest in 25 years in 2015, will avoid a hard landing.

    While China’s retail sales slowed in the first two months of the year, they remain in a double-digit growth range.  Annual sales of cinema tickets could overtake the U.S. as early as 2017 and outbound tourist trips is on course to reach 200 million by 2020, according to CLSA Ltd.

    Still, for foreign competitors hoping to capture greater market share, the outlook is mixed. While foreign brands dominate the premium segment, local companies are increasing their market share in the mass segment of the market.

    “While scale, speed, and simplicity proved advantageous during the past 15 to 20 years, the changing shape of Chinese consumption is set to topple some giants of the past, and elevate new champions,” McKinsey said.

    McKinsey surveyed 10,000 shoppers aged between 18 and 65 in 44 cities across China.

  • Chance to tap into ‘silver market’ in China

    Chance to tap into ‘silver market’ in China

    With its rapidly ageing population, China offers the world’s largest “silver market” – and trade shows are seen as the best way for foreign companies to start to tap into these consumers.

    About one third of the Chinese economy is now “silver”. There are more than 220 million people 60 years and older – more than the populations of France, Germany and the UK combined. This is set rise to 480 million by 2050 – about a quarter of the world’s elderly.

    This growing consumer segment has greater spending power, more leisure time and improved lifestyles, according to Intex Shanghai, which is the lead organiser for the annual ChinaAid exhibition, which will have its 17th edition at Shanghai New International Expo Centre (SNIEC) from June 8 to 10.

    Managed by the Shanghai Ageing Development Center, the show is supported by the Ministry of Civil Affairs of the People’s Republic of China and such organisations as the China National Committee on Ageing. Other organisers include the Shanghai Municipal Committee on Ageing, China Silver Industry Association and the Shanghai Health Industry Development Association.

    Offering promotional and networking opportunities for businesses seeking a foothold in China, the show has had 66 per cent growth over the past three years.

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  • Manchester’s LSE Retail Group drives global growth with China office launch

    Manchester’s LSE Retail Group drives global growth with China office launch

    Manchester online lighting distributor, LSE Retail Group , has launched an office in China as it pushes ahead with ambitious growth plans and expands its global supplier network.

    The company behind brands Value Lights, Iconic Lights and MiniSun has opened the office in Shekou, in the Shenzhen province close to Hong Kong, and has recruited three people from the local area, with plans to hire a fourth staff member by the end of 2016.

    It comes as LSE was named the fastest-growing medium-sized business by the 2016 Ward Hadaway Greater Manchester Fastest 50 Companies list and was ranked number one on the Investec Mid-Market 100 league table in 2015.

    David Gutfreund, managing director of LSE, said: “With the vast majority of LSE’s products sourced in China, the role of the new team will be to maintain our high quality standards, oversee logistics and source new suppliers to extend our ever-increasing range of lighting.

    “The business is going from strength to strength and we’re seeing a 50% year-on-year growth rate, with each financial year performing at a record level. We’re constantly recruiting at our head office in Eccles, Greater Manchester, in order to keep up with increasing demand for products across all three of our brands.”

    All staff members at the China office were recruited locally and LSE sourced the candidates directly, using contacts made through its existing supplier chain. The team will also be responsible for product development and will work closely with members of the Manchester team.

    “With the new direct flight routes between Manchester and China and the Airport City industrial park under construction, links between the north west and the Far East, have arguably never been stronger.

    “We’re extremely excited to be part of this powerful relationship at a time when the region’s economy is flourishing and setting a strong example to the rest of the UK and Europe,” David said.

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  • Indonesia Sees Tourist Visit Increase in Early 2016

    Indonesia Sees Tourist Visit Increase in Early 2016

    Three big events namely, the Lunar New Year, cross-border promotion of Wonderful Indonesia Festival and total solar eclipse have boost the number of inbound tourists, particularly from China.

    I Gde Pitana, Deputy of Marketing Development of Foreign Tourism (Deputy BP3M) of Tourism Ministry, said that the majority of foreign tourists from China spent the Lunar New Year holiday in early February by visiting Bali as favorite destination, most of them came from Beijing and Heilongjiang Province using chartered planes.

    “People from those regions, which temperature were under 15 degrees celcius at that time, preferred to celebrate the Lunar New Year at warm places such as Bali,” he said.

    During the Lunar New Year, 23,000 tourists from 11 cities in China came to Bali using 65 units of chartered AB330 aircraft.

    Foreign tourist visits through Immigration Checkpoint of Bandar Bintan Telani (BBT) in Lagoi stood at 8,700 people, whereas 580 Chinese tourists visited Sulawesi to spent their winter holiday.

    The number of foreign visitors in January 2016 were 814,303, rose by 3.6% compared to the same period in 2015 of 785,937 foreign visitors. Besides China, Singapore and Europe are among the top countries on the list of countries of origin of foreign tourists.

    Pitana also hoped that total solar eclipse on March 9 could boost this year’s number of foreign tourist visits to Indonesia which is targeted to reach 12 million people.

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  • Lippo Partners With GrabTaxi to Expand E-Commerce in Indonesia

    Lippo Partners With GrabTaxi to Expand E-Commerce in Indonesia

    Lippo Group, the Indonesian conglomerate founded by billionaire tycoon Mochtar Riady, will partner with GrabTaxi Holdings Pte for e-commerce deliveries in Southeast Asia’s largest economy.

    The founder’s grandson, John Riady, is spearheading Lippo Group’s foray into e-commerce with a $500 million investment in MatahariMall, an online version of its Matahari department store chain. Grab, a regional ride-hailing company, will help transport and deliver goods to bolster MahatariMall’s services, the companies said in a statement Monday.

    The partnership shows how local companies, familiar with consumer preferences, regulations and infrastructure challenges, are trying to tailor services to stay ahead of foreign rivals as competition heats up. Japanese e-commerce company Rakuten Inc. closed down its Indonesian unit as of March 1, while China’s JD.com Inc. has recently set up shop in Indonesia.

    “Speed is really important in this business,” said Ridzki Kramadibrata, managing director of Grab Indonesia. “You need to be able to do multiple things at the same time because if you can’t do that, the market will outgrow you and you will lose your opportunity.”

    Rising Incomes

    MatahariMall’s site allows customers to buy on the Web and pick up items from Lippo’s stores. Its rival Tokopedia, which is backed by Japan’s SoftBank Group Corp. and Sequoia Capital, has already formed a similar alliance with Go-Jek, a motorcycle taxi booking company, to deliver purchased items to customers.

    “Our combined knowledge of the Indonesian market will help us build the most effective online-to-offline experience — to ensure that online shoppers anywhere in Indonesia can receive or collect their purchases easily,” John Riady, a Lippo Group director, said in the statement.

    Grab’s alliance with Lippo also underscores its aggressive market-share acquisition strategy in Indonesia, where it competes with Uber Technologies Inc. and Go-Jek. Grab’s private car-hailing service grew 30 percent in Indonesia in February, according to the statement. It has more than 50 percent of the country’s motorcycle taxi market in March, it said.

    Technology startups are trying to capitalize on rising incomes and growing mobile-phone use in Southeast Asia, where 250 million consumers are now connected via smartphone and 100 million engage in online transactions, according to a report by Bain & Co. and Google Inc. released last week. The report predicts online sales across Southeast Asia to surge to $70 billion by 2020 from $6 billion now.

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  • Some 2,000 foreign companies pay no taxes

    Some 2,000 foreign companies pay no taxes

    Some 2,000 foreign companies in Indonesia did not pay taxes in the past 10 years on the pretext of having suffered losses, Finance Minister Bambang Brodjonegoro reported to President Joko Widodo (Jokowi).

    “They always claimed that they suffered losses,” the minister said at the Presidential Office here on Monday.

    Several of the foreign companies should have paid an average of Rp25 billion in taxes per year, he said.
    As a result, the state lost Rp500 trillion in taxes during the past 10 years, he said.
    He said the government will make every effort to minimize tax evasion.
    The minister also reported to the president that many residents who have more than one income source do not comply with tax obligation.

    “Only 900 thousand of 5 million taxpayers really pay taxes. In total, they pay almost Rp9 trillion in taxes,” he said.

    He said the Finance Ministry, through the Directorate General of Taxation, will coordinate with the Center for Financial Transaction Report and Analysis (PPATK) to trace the transaction data of taxpayers.
    PPATK Chief Muhammad Yusuf said the center is committed to helping the Directorate General of Taxation.

    “Everyday, PATK receives reports of 150 thousand financial transactions. We are trying to develop this information, analyze it and cooperate with the tax authorities so that we can take certain steps,” he said.

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  • IKEA donates Rs 92 crore for safe water projects in India, Indonesia

    IKEA donates Rs 92 crore for safe water projects in India, Indonesia

    Swedish furniture retailing giant IKEA will contribute 12.4 million euro (Rs 92.84 crore) to provide safe water and sanitation to one million people in India and Indonesia through Water.org. IKEA Foundation has announced a new grant of 12.4 million euro to Water.org on the occasion of the World Water Day, it said in a statement.

    “IKEA Foundation is committing 12.4 million euro to Water.org to expand its WaterCredit model, helping families have access to small, affordable loans so they can get safe water and sanitation,” it added. IKEA Foundation is the philanthropic arm of INGKA Foundation, the owner of the IKEA Group of companies.

    Commenting on the development, Matt Damon, co-founder of Water.org said: “Our work at Water.org has never been more important, and thanks to this grant and to IKEA Foundation, we are going to help hundreds of thousands of kids gain access to safe water and sanitation and impact their lives forever.”

    IKEA Foundation CEO Per Heggenes said: “We believe that every child deserves a healthy start in life and this is why we are supporting Water.org’s innovative programmes to help families in India and Indonesia access safe water and better sanitation facilities, giving them improved health and a life of dignity.”

    The World Bank estimates that 21 per cent of communicable diseases in India are linked to unsafe water and the lack of hygiene practices, and 50 per cent of India’s population continues to practice open defecation, the statement said. In Indonesia, more than 33 million people lack access to safe water and 100 million lack access to improved sanitation facilities.

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  • China retail sales growth slows further

    China retail sales growth slows further

    Official retail sales data from the mainland shows a continuation of slowing growth this year.

    According to the National Bureau of Statistics (NBS) China retail sales of consumer goods rose 10.2 per cent in January and February combined.

    That follows growth of 11.7 per cent in December and 10.7 per cent for the entire 2015 calendar year.

    According to the NBS, Chinese consumers bought 5.29 trillion yuan (US$815.2 billion) worth of consumer goods in the first two months of 2016.

    Urban areas accounted for nearly 86 per cent of China retail sales, rural areas 14 per cent. Sales in rural areas rose by 10.9 per cent – faster than the 10.1 per cent in the cities.

    Online sales also continue to rise sharply, soaring 27.2 per cent year-on-year for the first two months of this year, to 636.1 billion yuan. Online now accounts for about 12 per cent of China’s total retail market.

  • Philippine retail sales surge

    Philippine retail sales surge

    Philippine retail sales soared 6.3 per cent in the last quarter of 2015 – more than three times faster than the same period a year earlier.

    According to data from the Philippine Statistics Authority, the retail trade growth was more than three times the rate of the same period of 2014, when sales rose 1.9 per cent.

    Thus, the retail sector has significantly contributed to the growth of overall trade in the country.

    Wholesale trade also accelerated to 9.0 per cent compared with the 8.9 per cent growth a year ago.

    The industry group that includes wholesale and retail trade accelerated to 7.0 per cent growth in the fourth quarter of 2015 from the 3.4 per cent posted in 2014.

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  • Thai BJC shareholders approve $6.2 billion Big C buy

    Thai BJC shareholders approve $6.2 billion Big C buy

    Thailand’s Berli Jucker shareholders have voted in favor of a $6.2 billion acquisition of hypermarket operator Big C Supercenter Pcl (BIGC.BK) from France’s Casino Group.

    Some 99.99 percent of voters approved the plan at Monday’s meeting, two financial sources who attended it said.

    Berli, the core retail business of Thai tycoon Charoan Sirivadhanabhakdi’s TCC group, won a hotly contested auction for Casino’s 58.6 percent stake in Big C.

    Earlier, Casino said it was on track to reduce debt as promised after Standard & Poor’s cut the French retailer’s credit rating to junk, citing falling profits, weakness in Brazil and competition at home.

    The Thai group secured $6.2 billion short-term financing deal with 15 banks to fund the Big C acquisition on Wednesday.

    Berli is expected to pay Casino by the end of March and the company will buy the remaining shares from minority shareholders in a tender offer, to be completed by May, one source said.

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  • Women now running the stores at Lotte Mart

    Women now running the stores at Lotte Mart

    Lotte Group believes that women know what women want. As a result, it’s moving more women into executive positions.In fact, its retail arm, Lotte Mart, has the largest number – six – which is 30 percent of the 19 women executives in the group: Julia Han, head of the home furnishing division; Kate Song, head of the babies and kids division; Kim Yoon-kyung, head of the marketing division; Seo Hyun-sun of the space merchandising innovation division; Jeong Seon-mee, head of the human resources development division; and Kim Hee-kyoung, head the Gyeonggi Nambu sales division.There’s more “women power” at Lotte Mart than at any other company in the industry, the company said Sunday.

    Decision makers from the beginning of the whole retail process to the end – product selection, marketing, consumer management and on-site sales – are women.

    The idea is that of 53-year-old Lotte Mart CEO Kim Jong-in, who was looking for a unique way to grow sales and profits. While most hypermarkets compete by opening more stores or slashing prices, Kim felt he could bring the level of competition to a new level and ultimately outperform E-Mart and Homeplus.

    “It’s true that we weren’t concerned enough about the major customers of our stores, which are women in their 30s and 40s,” Kim said. “By having women in charge at our company, we will transform from a place people go to for cheaper food products to a place where all sorts of things related to a more enjoyable life await shoppers.”

    The women executives hold a brainstorming session twice a month, dubbed Women’s Pick Cafe, a speedy discussion that deal with more than 10 topics at a time. Conclusions reached at the meeting are implemented in all stores.

    Here are the kind of ideas they come up with:

    Han (Home furnishing) – “When we publish product information on flyers, we should focus on showing actual ‘scenes’ rather than the product itself, so that customers can associate the advertisement with their own homes. Let’s show them a dinner table with food than showing them the food itself.”

    Kim (Marketing) – “When we visited neighbors 10 years ago, we used to bring canned tuna or ham products, but now we bring aromatic candles, wine or flowers. We have to bring that change in custom into our mart as well.”

    Seo (Merchandising innovation) – “What people want these days is not a luxury lifestyle but rather, a cool one. That means the supermarket has to carry a more diversified set of products.”

    Song (Babies and kids) – “For busy working moms, we opened an online version of Toys ‘R’ Us, and in the future, there will be more multibrand shops for men, because these days, men are very lonely.”

    Kim (Sales) – “When I was a store manager, I created separate rest areas for men, and they were really popular. Let’s listen to what employees are having difficulty with and figure out solutions.”

    Jeong (Human resources) – “A leader that works with the passion of a mother can change corporate culture. If more suggestions are conveyed from the bottom up, customer service can only get better.”

    The change to a more women-centered management at Lotte Mart is only three months old, but the impact is already visible. The biggest change is how products are arranged in the store. The layout is transforming as specialized brands are clustered together. Room by Home (home interior shop), Yorihada (home meal solution), Toys ‘R’ Us and Pet Garden (pet shop) are examples of such clusters.

    Even in the fresh food areas, which are pretty much the same at all hypermarkets, Lotte Mart is using lighting to differentiate product displays.

    The flow of people is also being improved in stores. Displays are raised to a height of 30 to 60 centimeters (1 to 2 feet) so customers don’t have to bend over.

    Following suggestions that too much information disturbs customers’ shopping, various advertisements that once filled the walls have been cleared out.

    The Yangdeok branch of Lotte Mart in South Gyeongsang, which opened last December and implemented all the listed changes described above, actually saw 40 percent more revenue in home furnishing and 47 percent in fashion accessories through February compared to the Guro branch in Seoul, which is of a similar size.

    Stores in Gunsan, Pangyo and Yeongjong Island have all jumped in sales by 10 to 20 percent year on year after remodeling.

    Lotte Mart plans to renew an additional 30 branches this year. It is also planning to train more than 100 female store managers and actively solicit female customers’ suggestions.

     

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  • The 11th Edition of Eco Expo Asia set for October in Hong Kong

    The 11th Edition of Eco Expo Asia set for October in Hong Kong

    Celebrating its 11th edition this year, Eco Expo Asia, the preeminent trading platform for green businesses in Asia, will gather industry experts and leading-edge products and solutions at AsiaWorld-Expo in Hong Kong from 26 to 29 October 2016. The annual show is organised by the Hong Kong Trade Development Council (HKTDC) and Messe Frankfurt (HK) Ltd, and co-organised with the Environment Bureau of the Hong Kong Special Administrative Region (HKSAR) Government.

    A networking luncheon for the show was held on 17 March at the Hong Kong Convention and Exhibition Centre, which welcomed representatives from the international government and business sectors. These guests shared insights into the emerging green market in different countries.

    Four key focuses for Hong Kong environmental protection policies

    Wong Kam-sing, Secretary for the Environment of the HKSAR Government, delivered the keynote luncheon speech. Mr Wong praised Eco Expo Asia as an exceptional platform for promoting environment protection in Hong Kong as well as for representatives from different countries to exchange their views and set common objectives.

    Mr Wong highlighted the achievements Hong Kong had made in environmental protection in recent years. For example, in July 2015, the government introduced a new regulation which requires all ocean-going vessels to switch to low-sulphur marine fuel for berthing in the port of Hong Kong. Hong Kong is the first Asian city to implement such a measure, and it has improved the air quality around the Kwai Tsing Container Terminals and surrounding berths significantly.

    He added that the government will also set up an inter-departmental committee on climate change to formulate more progressive policies towards meeting emission reduction targets.

    Mr Wong elaborated: “Hong Kong has identified four key focuses for its environmental protection policies, including cleaner air supply, building energy efficiency, green transportation and waste-to-energy conversion. Related measures will be taken to address the major pollution issues of Hong Kong and to transform the city into a low-carbon, low-waste and energy-efficient one.”

    Green solutions to seize market opportunities

    Benjamin Chau, Deputy Executive Director of the HKTDC, noted that the theme of this year’s Eco Expo Asia, “Green Solutions for a Changing Climate”, echoed the mission of the government’s environmental protection policies.

    He not only pinpointed that business viability and environmental awareness are equally significant in promoting green technology in Asia, but also stressed the importance of having the local community’s support. He said: “The community’s involvement is an essential part of promoting sustainable development and environmental protection measures. As with previous years, we will extend the invitation to participate from trade professionals (on the first three days of the fair) to the general public on the last day, free of charge.”

    Ir Prof Daniel M Cheng, Chairman of the Federation of Hong Kong Industries and President of the Hong Kong Environmental Industry Association, pointed out that, since the inaugural Eco Expo Asia, which featured 128 exhibitors and drew close to 5,000 buyers, the fair has grown considerably and attracted 320 exhibitors and more than 12,000 buyers in 2015.

    Prof Cheng further explained that many major environmental protection projects have been launched in Hong Kong over the past 10 years, including the establishment of sludge treatment facilities, the EcoPark WEEE Recycling Centre and integrated waste management facilities. Apart from these large-scale projects, the Environmental Industries Council also encouraged small- and medium-sized enterprises to bring innovative ideas into the environmental protection space, and to capitalise on market opportunities. He said: “Climate change is not necessarily a challenge that is impossible to handle. We need to understand its impact and be flexible in our strategies in order to seize various market opportunities.”

    World-class expo promoting international cooperation

    Wilfred Mohr, Consul General of the Consulate General of the Kingdom of the Netherlands, also complimented Eco Expo Asia for being an excellent platform for green businesses. For the past two years, the Netherlands Consulate General has organised a national booth at the expo. It not only facilitated exchange between companies from the Netherlands and Hong Kong, but it also promoted cooperation with the Chinese mainland. From this came the establishment of sewage treatment plants by the Government of the Netherlands, in Guangdong Province. In view of this, the Netherlands Consulate General has arranged for several more Dutch enterprises from different sectors of the green industry to exhibit at the 2016 Eco Expo Asia.

    Also speaking at the luncheon, Jason Cao, Senior General Manager of Messe Frankfurt (HK) Ltd, thanked all the guests for their support for Eco Expo Asia. He encouraged the cooperation of more organisations from around the world that are interested in promoting geen development in Hong Kong and throughout Asia to capture valuable opportunities available in the Asian markets.

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  • HK’s Li & Fung 2015 profit down, but beats forecast

    HK’s Li & Fung 2015 profit down, but beats forecast

    Global exporter Li & Fung Ltd’s full-year profit fell 4.6 percent but beat analysts’ estimates, as growth in its logistics and vendor support services business helped overcome headwinds from global retail disruption and macro environment.

    The Hong Kong-based company, which grew to prominence by making clothing and toys in Asia for Western retailers, said on Thursday its net profit for the year ended Dec. 31 fell to $421 million from $441 million a year earlier.

    That compared with an average forecast of $413.2 million by 10 analysts polled by Reuters. Li & Fung, which supplies to companies like Kohl’s Corp and Wal-Mart Stores Inc, said core operating
    profit fell 15.2 percent to $512 million.

    Revenue fell to $18.8 billion from $19.3 billion a year ago, which was the biggest company by revenue for 2014 in Asia pacific in “Textiles & Apparel” industry.

    Textile companies in China are expected to post a 12-month forward revenue growth of 23 percent, the highest expected increase in the Asia-Pacific region in the “Textile & Apparel”
    sector, according to Thomson Reuters StarMine SmartEstimates, which emphasizes on recent forecasts by top-rated analysts.

    Li & Fung has refocused on its core asset-light supply-chain business following the sale of its loss-making brand-licensing and distribution business in 2014, helping it boost free cash flow and better control operating costs.

    The company, with a market value of about $5.3 billion, posted a 34 percent rise in January-June profit last year at $149 million.

    Analysts were concerned about inventory build-up at retailer level as inventories grew faster than sales growth in recent quarters. They worried that Li & Fung’s turnover would be affected as U.S. retailers focus on resolving high inventory levels.

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  • Hengdeli Achieves Sustainable Growth for 2015

    Hengdeli Achieves Sustainable Growth for 2015

    Hengdeli Holdings Limited, a world-leading retailer of internationally renowned brand watches, announced its annual results for the year ended 31 December 2015 (the “year under review”).

    In 2015, the overall operating environment was very challenging and negatively impacted on the business development of the Group, resulting in weak sales of internationally renowned brand watches. Despite this, the Group’s industrial sector achieved relatively good results due to a series of reforms and innovations. During the year under review, the Group recorded revenues of RMB13,302,724,000, representing a year-on-year decrease of 9.9%. Retail sales amounted to RMB9,373,354,000, a year-on-year decrease of 11.6%. Revenue from industrial sector and others amounted to RMB539,991,000, a year-on-year increase of 25.9%. The Group recorded net profit of RMB190,164,000, a year-on-year decrease of 67.4%. Profit attributable to equity shareholders amounted to RMB144,868,000, a year-on-year decrease of 71.3%. This decrease in profits was mainly due to one-off revenue from the disposal of properties, which was included in the profit for the year of 2014, as well as a drop in sales and gross profit and impairment of goodwill and available-for-sale securities.

    Mr. Zhang Yuping, Chairman and the Executive Director of Hengdeli, said, “In 2015, the overall business environment remained unstable. The increasingly diversified shopping locations and consumption patterns of Mainland Chinese consumers aggravated the harsh environment for product sales as a whole in the Greater China region, especially in Hong Kong. Businesses are faced with a loss of customers and a rise in labor costs. Despite these highly challenging business circumstances, the Group held fast to its operating principle of “healthy and sustainability” to ensure business stability and to better safeguard the interest of shareholders.”

    During the year under review, the Group continued to be guided by the principle of “healthy and sustainability” along with “aiming for optimizing inventory and guaranteeing profits.” The Group also insisted on keeping in place a policy of mutual complementary and interactive operations across the Greater China region, including Mainland and Hong Kong, with mid-end brands serving as the mainstay in its brand mix in order to meet the affordability demands of the general public, and second, third and fourth tier cities as the main sales regions. The Group also continued to adjust the layout of retail network, constantly improving store quality and optimizing the inventory mix. The Group carefully steered business forward through strengthened scientific management and prudent operations. Despite the Group’s various efforts, it was unable to stem the decline in sales as affected by adverse macro condition and subdued consumer demand. Retail sales from Mainland China decreased 7.4% as compared with that of the previous year. Under dismal overall conditions, sales of Elegant Hong Kong decreased 26.8% year-on-year along in line with the overall market trends. As at 31st December 2015, after adjustments and optimization, the Group operated a total of 482 retail outlets across Mainland China, Hong Kong, Macau and Taiwan.

    The industrial sector which is engaged in the manufacture of watch accessories made substantial progress during the year under review. Based on a previously launched marketing strategy and after more than one year of re-alignment and integration, the industrial sector has established a new business model comprising upstream and downstream operations of the watch industrial chain, spanning watchcase manufacturing, packaging products and commercial space design, to production and decoration as well as self-development of brands. A number of companies in the sector have earned goodwill in their respective markets, while a wide customer base covering China, Switzerland, the U.S. and other nations in the Asia-Pacific region was established. Co-operation with brand suppliers has been increasing and a close collaborative relationship with mutual trust and interest sharing was formed. Benefiting from quality management and bold innovations, overall performance of the industrial sector improved remarkably with sales increasing by approximately 35% year-on-year, reflecting a healthy uptrend and promising growth potential. The industrial sector is seen as becoming a strong driving force for the Group’s overall development and turning into an important business arm of the Group in the foreseeable future.

    Following highly focused preparations and various enhancements , “censh.com” (www.censh.com), a new consumption model that merges the “Internet + Hengdeli”, was officially launched online during the year under review. “censh.com” is a media-based e-commerce cross-platform within the Group that operates its major flagship – “censh.com” (www.censh.com), drawing together a number of popular mobile internet software platforms, including WeChat, Weibo and other mobile communication applications. It provides a one-stop solution for six major functions, namely: e-commerce, ERP, product data management, customer resources management, call center and messaging. It offers a comprehensive online to offline service experience to watch lovers. The Group believes that with the successful online operation of “censh.com”, the online and offline resources will become highly synergistic, and will contribute significantly to the overall development of the Group.

    The Group’s customer service network and maintenance business, renowned as a top-notch, retail group leader for internationally renowned watch brands, has been fully integrated and comprehensively covers the Greater China region. During the year under review, the Group added the CK brand into its comprehensive customer services arrangements with brand suppliers, including: Tissot, Mido, and Certina from the SWATCH Group, as well as others. The Group also entered into exclusive watch maintenance agent agreements with: Movado, Milus, Blita, LOCMAN, Million Horn and others. To date, the Group has become the maintenance agent for 74 international brands such as those from the SWATCH Group and LVMH Group and also serves as the exclusive maintenance agent for 45 of those brands.

    In the brand distribution business, the Group has always maintained a sound co-operative relationship with numerous brand suppliers and brand retailers, and has received active general support from them. The Group has about 400 wholesale customers in over one hundred cities across China, distributing and exclusively distributing world-famous watch brands. For the coming year, the Group will continue to maintain and deepen its relationships with suppliers and retailers, while exploring new measures under the “new normal” economic climate to achieve harmonious growth and win-win situation.

    In the coming year, the Group will hold on to a stable and healthy growth policy, while at the same time harboring a pragmatic view and fostering an innovative spirit in the search for a new development model to benefit the Group. We will also continue to make structural adjustments while ensuring healthy growth and seeking business sustainability. The Group will maintain a healthy and stable level of sale and inventory on the one hand while investing more resources in our industrial sector to help bolster faster development. The overall aim is to open up a road of continuous development for the Group amid today’s “new normal” economic climate and generate higher value for shareholders and the community at large.

    Mr. Zhang concluded, “In 2016, as the road to full global economic recovery is still long and winding, China’s economy will also be faced with significant downward pressures. For this reason, the Group believes that under the new normal economic climate, the growth in sales for watches in the Greater China region will continue to lose steam. However, the long-term economic trend in China remains fundamentally favorable, which will offer unprecedented opportunities and challenges. By leveraging our core competitiveness, the Group will identify and take advantage of any and all new opportunities to achieve business breakthroughs and expand business despite the current headwinds and challenges. Ultimately we remain cautiously optimistic about the future prospects of the Group.”

     

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