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  • Logistics firm 21Express to tap Indonesia’s e-commerce boom for higher growth

    Logistics firm 21Express to tap Indonesia’s e-commerce boom for higher growth

    Founder and CEO 21Express Tjia Anastasia told reporters on Wednesday that the company’s plan to enter the retail courier business is driven by the high demand from retail sector for domestic and international shipments.

    “We have seen a fast growth in e-commerce since about 2010.This growth has really impacted the logistics business as companies have to send packages to Indonesia regularly,” Fany Wyadi, managing director of 21Express, said.

    As online shopping becomes increasingly popular in smaller cities, the Jakarta-based company expects to see shipments growth double or even treble in the next year from the current 130,000 packages each month, said Fany. 21Express’ clientele is dominated by corporates who account for 70 per cent of the business while it has already signed up three of the country’s top e-commerce players as clients, Fany said, declining to divulge further.

    According to independent research body IDC, e-commerce market in Indonesia grew by 42 per cent from 2012 to 2015.

    The high growth is encouraging e-commerce businesses to find reliable partners so that the delivery of goods and documents can be done in time. For example, one of the leading retail optical networks of the country Optik Melawai, has partnered with 21Express to send stock glasses and sales tools to hundreds of outlets in Indonesia. Tjia explains that its first partner is serving the retail customers of a communication equipment distributor firm to distribute its high value products.

    “We are the pioneer company behind the successful sales and distribution of mobile phones in Indonesia and one of the companies that is believed to transmit the tools and medical material to the corners of Indonesia,” Fany said.

    Backed by more than 200 units in its fleet, the company currently has 30 official outlets in Indonesia with an additional 50 partners that franchise the service. The company said, it was in the process of adding 200 new outlets by the end of the year.

  • Indonesia’s eFishery raises undisclosed pre-Series A funding

    Indonesia’s eFishery raises undisclosed pre-Series A funding

    INDONESIA’S eFishery, a smart fish feeder manufacturer, said it has secured pre-Series A funding from Dutch aquaculture investment fund Aqua-spark and Indonesian venture capital (VC) firm Ideosource.

    eFishery did not disclose the investment amount, but said the funds would be used to scale its distribution network nationwide, and also to ramp up manpower.

    “eFishery is a perfect example of a company that is solving real problems in a lucrative market,” said Andrias Ekoyuono, vice president of business development at Ideosource.

    According to the Food and Agriculture Organisation, more than 96% of fish farming activities worldwide is concentrated in Asia. In Indonesia alone, the overall market size for aquaculture is US$5.4 billion.

    As an Internet of Things (IoT) startup for fish and shrimp farming, the Indonesian firm said it is tackling one of the largest challenges in commercial aquaculture: Feeding operations.

    Fish feeding traditionally makes up between 50% and 80% of fish farming overhead costs, eFishery said in a statement.

    Overfeeding negatively impacts the environment in many ways, as a great deal of fish food ultimately goes to waste. It also harms the health of a farmer’s stock. Underfeeding means fish may not survive.

    The result of unmeasured and inexact fish feeding methods on a commercial scale inevitably means economic losses for farmers, the company said.

    eFishery offers a transformative, affordable, tech-based solution to solve the problem, in the form of an automatic smart feeder that uses sensors to measure fish appetite and appropriate feed amounts.

    Designed for both small and large-scale farmers, the system can sense appetites, automatically distribute feed, and give real-time reports of consumption on the farmer’s smartphone, the company claimed.

    “The problem we are solving is the inefficiency of feeding in the fish farming business,” said eFishery cofounder and chief executive officer Gibran Chuzaefah Amsi El Farizy.

    “I saw the problem when I was a fish farmer myself. Fish feeding is done inefficiently by labourers, and farmers don’t have any technology to control the feeding yet.

    “We built this product to make the fish and shrimp farming business more efficient, convenient, and accountable,” he added.

    eFishery said it makes makes money from selling smart feeders to farmers and distributors. It also charges a monthly subscription fee for the software used to monitor and analyse fish feeding activities in real-time via tablet or smartphone.

    On average, its smart feeding system reduces the amount of feed used by 21%, the company claimed.

    eFishery said it has sold hundreds of units in the past two years, and currently has over 17,000 fish and shrimp farms in its pipeline, which include orders from Thailand, Singapore, India, China, Brazil, and countries in Africa.

    “We are very excited to solve the global challenge of fish feeding with eFishery,” said Aqua-spark partner Amy Novogratz.

    “Indonesia has about 3.3 million fishponds and 2.7 million fish farms. When brought to scale, it could have a massive impact across a global industry plagued by this challenge.

    “It has the potential to set a new standard for aquaculture and make the industry more transparent, data-driven, and accountable – all factors that will make businesses in this sector more investment-friendly,” she added.

    eFishery said it will use the newly acquired capital for three purposes: To engage distributors, find local partners, and expand its market share aggressively in Indonesia.

    It is also developing a software-side platform, and will create a better dashboard for customers, as well as add more features and fish compatibility for its device.

  • MatahariMall Sets Its Sights High in Booming E-Commerce Scene

    MatahariMall Sets Its Sights High in Booming E-Commerce Scene

    Since its soft-launch earlier this year, MatahariMall has garnered nearly 200,000 customers with 200,000 different products in its inventory offered by some 1,200 vendors, according to Hadi.

    It has also set up a 10,000-square-meter warehouse located near Halim Perdanakusuma airport in East Jakarta.

    Backed by Lippo, one of the nation’s biggest retail groups, MatahariMall offers an online-to-offline service that would allow customers to order their goods online and collect them at a nearby Matahari department store or Hypermart supermarket.

    Both Matahari and Hypermart are affiliated with the Lippo Group, as is the Jakarta Globe.

    The service will later also be expanded across Lippo’s network, to outlets such as the Books & Beyond bookstore chain, Hadi said.

    “We are very proud of the team,” said the Lippo Group’s John Riady. “The growth numbers are very strong and the team is very focused. Lippo and our other investors are fully committed to doing anything we can to support MatahariMall as it pioneers e-commerce in Indonesia.”

    Undeterred by the current economic slowdown, Emirsyah Satar, the MatahariMall chairman, said the site aimed to capture a 20 percent share of Indonesia’s online retail market over the next five years, banking on the country’s expanding middle-class population.

    “We can see that Indonesia’s e-commerce still lags behind our neighbor countries,” he said. “In fact, we see the economic slowdown as a momentum to boost online retail, because most people are now looking for more affordable products.”

    Lippo’s much-publicized venture has lured in a series of seasoned executives from Indonesia’s tech industry, including Hadi from Zalora, another popular e-commerce site; Emirsyah from Garuda Indonesia; and ex-Google Indonesia head Rudy Ramawy as vice chairman.

    Adrian Suherman, previously the CEO of aCommerce, a Thai e-commerce logistics provider, also recently joined the MatahariMall team as a commissioner.

    The Lippo Group in April appointed Credit Suisse and Bank of America Merrill-Lynch to lead its $200 million first-round financing, with Britain’s Rothschild as financial advisers.

  • AirAsia’s Indonesian affiliate plans debt-to-equity conversion

    The Indonesian affiliate of Malaysian budget carrier AirAsia Bhd is planning to convert debt into shares to meet a new government rule on equity.

    The debt will be converted into preference shares which carry no voting rights, Sunu Widyatmoko, President Director of PT Indonesia AirAsia, told Reuters in a text message.

    He declined to disclose the amount to be converted as it is pending approval from the Indonesia investment coordinating board.

    Indonesia AirAsia is among several airlines that have until Sept. 30 to meet Indonesia’s “positive equity” rule after the country’s transport ministry extended the deadline from July 31.

    The ministry previously said 13 airlines had “negative equity” – meaning assets used to secure loans were worth less than the outstanding balance of the loans. It said those airlines risked suspension if they did not turn equity positive.

    AirAsia shares jumped as much as 5.4 percent in early trade, outperforming the benchmark index which was down 0.6 percent.- Reuters

  • Fonterra opens $37m blending and packing plant in Indonesia

    Fonterra opens $37m blending and packing plant in Indonesia

    New Zealand dairy giant Fonterra has opened a new $37m blending and packing plant in Indonesia.

    Said to be Fonterra’s first manufacturing facility in the country, the plant uses the company’s manufacturing design standards and technology.

    The plant is capable of packing close to 16,000mt of dairy ingredients annually and it will allow Fonterra to meet growing demand for nutrition in the country.

    The company says that the capacity is equivalent to nearly 87,000 packs of Anlene, Anmum, and Anchor Boneeto per day.

    When fully operational, the plant will employ 160 local people.

    The investment, which is Fonterra’s largest investment in ASEAN in the past 10 years, will boost the growth of Fonterra’s brands including Anmum, Anlene and Anchor Boneeto.

    Construction on the plant at Cikarang in West Java commenced in March 2014.

    Fonterra Asia, Middle-East, Africa managing director Johan Priem said: “The country’s large and increasingly affluent population is looking for highly nutritious foods for all ages.

    “This is fuelling dairy demand growth which is expected to increase by five per cent every year to 2020.

    “The site also utilises Cikarang’s dry port, allowing us to ensure all of our operations are located in one area. This will help us drive logistical efficiencies.”

    New Zealand Minister of Local Government, Social Housing and State Services Paula Bennett said that the new facility reflects the strength of the relationship between New Zealand and Indonesia.

    “Our governments have set a target to grow two-way trade to NZD4 billion by 2024 and dairy continues to be a critical part of this relationship,” added Bennett.

  • 11street Grows Local E-Commerce Landscape through Major Participation in MDeC’s #MYCYBERSALE

    11street Grows Local E-Commerce Landscape through Major Participation in MDeC’s #MYCYBERSALE

    11street, one of the largest online marketplaces in Malaysia, today announces its participation in the nation’s biggest cyber sale event, #MYCYBERSALE 2015 (www.mycybersale.my), as part of its commitments to enhance Malaysia’s e-commerce eco-system.

    Organized by Multimedia Development Corporation (MDeC), #MYCYBERSALE 2015 will see thousands of online stores gather from 28 September to 2 October with a common goal to stimulate the domestic e-commerce market. #MYCYBERSALE 2015 mobile app has also been developed to attract more local and foreign consumers to shop online. Extending the shopping period from 3 days to 5 days, this event is expected to surpass last year’s success[1] and to continue boosting the online shopping culture in Malaysia.

    11street’s Vice President of Merchandising Division, Bruce Lim says, “A national online event like this is not to be missed as it would definitely spur online shopping demands in the country. As a leading global e-commerce player, 11street is dedicated to empower our sellers with intensive industry knowledge to meet market demands. We urge local SME sellers to grab the opportunity and join us to be part of this annual cyber sale. As a result, sellers will be able to broaden their market reach and increase by leveraging on our resources and promotions strategically at this event.”

    Expect Shockingly Good Deals and Discount Coupon Giveaways from 11street at #MYCYBERSALE 2015

    To enthuse Malaysian shoppers to buy online, 11street will be lining up a series of discounted products, deals and attractive giveaways for #MYCYBERSALE 2015. Consumers can look forward to irresistible discounts during the event period, of which one of them continues to be the significant lowest price guaranteed ‘Shocking Deal’ to surprise local consumers with great offer.

    Before #MYCYBERSALE 2015 begins, 11street will also be initiating an exclusive promotion for Malaysian consumers to download free shopping credits in Malaysian Ringgit from 14 September to 27 September on a daily basis. This is to offer them a fun shopping experience online, and for those that logon 11street online and mobile platforms for a minimum of 3 consecutive days will be rewarded with up to 50% bonus coupons.

    According to statistics released by MDeC, #MYCyberSALE 2014 saw a total of 4.7 million Malaysian visitors (16% of populations) made 77,000 online orders during the 3-day sales period, of which 57% of them accessed the site via mobile devices.

  • Japan’s Kakaku.com launches Priceprice.com in India

    Japan’s Kakaku.com launches Priceprice.com in India

    Japan’s Kakaku.com has launched the Indian version of Priceprice.com, a price comparison site for mobile phones, tablets, computers and household appliances.

    Priceprice.com shows online shoppers a list of products from various sites, sorting the results from lowest to highest price, to easily show the best available price for that product.

    Kakaku.com is the largest price comparison site in Japan with approximately 50 million monthly users. Eighteen years after its founding, Kakaku.com has strengthened its management expertise and in recent years, the company has expanded its service globally. Following the launch in the Philippines, Thailand and Indonesia, Priceprice.com has established its position as the largest price comparison site in Southeast Asia with approximately 5.3 million unique users in all three countries.

    “We have now launched a new site in one of the fast-growing eCommerce market, India, where we dedicate ourselves continuously to offer pleasurable shopping experience for consumers,” the company said in a statement.

    The site not only compares prices. Users can access forums for each product allowing a place for people to ask questions about a product or for users to exchange opinions with other users. Shoppers can also see the ratings and reviews written by users who have actually used the products.

    “As we continue to improve product search and comparison functions, we also hope to include price information from offline retailers to further expand our services,” the company said.

  • One of China’s top 10 e-retailers grows Q2 revenue 30%

    One of China’s top 10 e-retailers grows Q2 revenue 30%

    September 4, 2015, 10:56 AM

    The Beijing-based web-only retailer’s total net revenues in the second quarter of 2015 were 2,312.3 million yuan ($373.0 million), a 29.8% increase from 1781.65 ($280 million) in the corresponding period in 2014. Net loss for the quarter was 21.2 million yuan ($3.4 million), compared to net income of 28.8 million yuan in the second quarter of 2014, or 1.6% of total net revenue in that quarter.

    “During the second quarter of 2015, we expanded our leading position in China’s books and media market, gained additional share in the baby, children and maternity destination category and continued to enjoy some of the highest conversion rates in the industry,” executive chairwoman of Dangdang Peggy Yu Yu said in a statement accompanying the earnings report.

    Dangdang.com was founded by Chinese book publisher Li Guoqing and his wife Peggy Yu Yu, who says she was inspired by Amazon.com when she studied in the United States.  In terms of sales, Dangdang.com is one of the largest book and media e-retailers in China and the company has gradually expanded into other categories, such as electronics and apparel.

    Dangdang also has invested heavily in serving mobile shoppers. “Mobile orders remained close to record levels at 40% of total orders, and we improved monetization of our mobile platform with a sharp increase in mobile advertising revenue,” Yu said. “Our digital business is gaining momentum, driven by our growing catalog of e-books, including original content.”

    Dangdang’s size is still small compare to leading e-retailers, however its executives contend it can challenge the Chinese e-commerce leaders, Alibaba Group and JD.com.

    “I don’t think the position of those leaders is secure. As we all know, the size of the business is not equal to competitive advantage and competitive threshold.  The market will be settled only if the marketing leaders have some unique edges and generate difficult barriers to entry,” Dangdang cofounder and CEO Li Guoqing said last month in a speech at the One Thousand E-commerce Professionals Seminar in China.  “Alibaba’s sales only account for about 5% of retail sales of China and that is not enough barrier to entry. At same time, JD.com’s electronics sales only represent 2% to 5% sales of electronics products in China. If some companies get a new business model, there are still plenty of chances to beat those leaders.”

    Also, Li said few people knew Vipshop, No. 4 in the Internet Retailer China 500, and Yihaodian, No. 7, three years ago, but now they have become e-commerce leaders in their categories in China. Wal-Mart Stores took full control of Yihaodian in July. Vipshop is a discount fashion retailer.

    • Dangdang.com is No. 10 in the Internet Retailer 2015 China 500. JD.com is No. 1. Alibaba is not ranked in the China 500 because it does not own merchandise but rather provides a platform for more than 8 million merchants to sell. However, the gross merchandise value of goods sold on Alibaba’s online marketplaces totaled $109 billion in the first quarter, while JD.com reported $18.5 billion in GMV. By contrast, Dangdang’s GMV in the second quarter was 1,890.6 million yuan ($304.9 million), a 32.1% increase from the same period in 2014.

    For the second quarter ended June 30, Dangdang reported:

    • The combination of product revenue from its own sales and GMV from marketplace sellers reached 4,130.3 million yuan ($666.2 million) and grew 31.8% year-over-year.
    • Active customers were 9.7 million, an increase of 15% from 8.4 million 2014.
    • Total orders for the second quarter of 2015 were approximately 19.5 million, a 19% increase from 16.4 million in 2014.

    For the first six months of 2015, Dangdang reported:

    • Net revenues were 4093.99 million yuan ($644.30 million), up 18.5% from 3454.25 million yuan ($543.58 million) in the same period of 2014.
    • Net income of 7.62 million yuan ($1.2 million), compared with a $35.1 million yuan ($5.52 million) net loss in same period of 2014.
  • H&M positive to the uniform minimum wage set in Myanmar

    H&M positive to the uniform minimum wage set in Myanmar

    At H&M, It is positive to the uniform minimum wage that has been set by the Government. A uniform minimum wage across all industries is essential for the sustainable economic development not only for the textile industry but also for the country as a whole.

    H&M also believes that the minimum wage should be reconsidered through an annual review mechanism, which is inclusive of key stakeholders. It aims at laying the foundation for a vibrant tripartite industrial relation and wage level negotiations process based on transparency, inclusiveness and peaceful negotiation.

    The above has been addressed in two joint letters to the Government of Myanmar. H&M has also met with the Ministry of Labor and expressed the expectations about setting minimum wage levels and annual review mechanisms to ensure that workers receive a fair wage.

    H&M’s role is to contribute to a working environment in the factories where a skilled workforce has their wages annually reviewed and negotiated. It is believed that meaningful collective bargaining is very important and are looking at ways to strengthen it. Workers’ ability to organise and negotiate about their rights is key to improve working conditions. That is why   industrial relations has set as one of our main sustainability focus and will launch a project to strengthen industrial relations in Myanmar in 2015.

     

  • Odel to build Mega Mall in 3 years

    Odel to build Mega Mall in 3 years

    Sri Lanka’s Odel PLC (Odel) is aiming at upgrading its Ward Place Odel flagship store to improve quality of offerings to customers and plans to build a Mega Mall of 300,000 sq. feet adjoining the Odel flagship store along with car park amenities. Addressing shareholders at the release of the 2014 Annual Report, Chairman of Odel PLC (Odel), Ashok Pathirage said the Mall is projected to be completed within three years.

    “We intend to bring our Softlogic Brands portfolio to Odel. During the year, ‘Mothercare’ has already been promoted inside Odel stores. We continue to develop customer care to enhance and facilitate standards and to bring our retail store floor space to international standards. We will be also launching Bodyshop branded products at Odel in the Q3 of FY2015/2016,” Pathirage said.

    He noted that whilst the company serves customers through 20 stores, their new Business Model aims at smaller outlets and one Big Mall.

    “Thus, we have closed down some of our bigger outlets including Maharagama and Jaela, with other outlets currently under evaluation,” Pathirage said.

    Softlogic Holdings Plc initially acquired nearly a 45% stake in Odel for over Rs.2.7 billion and since then has gradually increased its stake to 93% of issued share capital of the company by acquiring a further 47.46% stake for over Rs.2.8 billion from Parkson Retail Asia Ltd (PRA), the Singapore-listed department store subsidiary of Parkson Holdings Bhd. The total investment in acquisition that was concluded in mid-September 2014 amounted to over Rs.5.5 billion.

    Odel acquired 99.99% of Softlogic Brands Private Ltd on 20th March 2015 for a total consideration of over Rs. 599.99 million from Softlogic Retail Pvt Ltd and Dai Nishi Securities, which are subsidiaries of Softlogic Holdings PLC.

    Analysts have outlined that the retail sales worldwide will reach US $22.492 trillion this year, and that the global retail market will see steady growth over the next few years. In 2018, worldwide retail sales are projected to increase by 5.5% to reach US $ 28.3 trillion.

    “We will continue to invest in the businesses that give us profitable returns and opportunities for capital appreciation over the next 3 – 5 years. Softlogic’s Retail operations have plans to increase island-wide expansion of retail space and our brand acquisitions are backed by careful assessments. Softlogic Retail has ambitious plans to target a total retail space of 335,000sq.ft. in three years,” Chairman Pathirage said.

  • Singapore’s Impressive Food Security

    Singapore’s Impressive Food Security

    In many parts of the world, food security is emerging as a serious threat. Increasing population, land and water constraints, changes in dietary habits with increasing affluence, the impact on global food production of floods and droughts in major food producing areas, falling food exports, and a rising number of importing countries – all are contributing to these uncertainties. The problem is likely to be compounded in the future by climate change.

    In the years to come, food security in most countries will become more complex than ever. For Singapore, among the world’s most open economies and one that is highly dependent on international trade, the situation is likely to be even more complex. The city-state’s volume of external trade is about 3.5 times its annual gross domestic product. A decline in the economies of its major trading partners is therefore likely to have an impact on Singapore’s own economy, including its food security.

    Economist Intelligence Unit recently ranked Singapore as the second-most food secure country in the world, behind only the United States. The Unit’s Global Food Security Index is based on three factors, affordability, availability, and quality and safety. Singapore ranks 1st, 11th and 13th on these three criteria, respectively. That puts it ahead of major food-producing countries like Malaysia (34), Brazil (36) and Australia (9). This achievement is largely attributable to the Agri-Food and Veterinary Authority (AVA), and comes despite a heavy dependency on food imports. At present, Singapore imports almost 90 percent of its food, and less than 1 percent of its land area is used for agriculture.

    Through its Food Security Roadmap, AVA has diversified sources of food and optimization of local production. These policies, especially those that seek to diversify the source of food imports, are important as they help to spread the risks associated with Singapore’s high levels of food imports.

    The Sino-Singapore food zone established in Jilin Province, China, in 2010, is just one example of food diversification efforts. The Jilin food zone has been designed as a foot-and-mouth disease-free-zone so that it can be an important source of pork. Not without its challenges, it is meant to enhance the city-state’s food security. This will provide further resilience against food supply disruptions.

    AVA has also ensured increased local food production over time through the provision of the Food Fund. Investments in new farming techniques such as hydroponics have contributed to a 30 percent increase in local vegetable production over the past 10 years. By the end of 2014, some 40 percent of local farms had benefited from this Fund.

    Singapore’s net imports for food, beverages and alcohol (clustered in one group) are quite high, at approximately S$15.57 billion ($10.9 billion) in 2014. Some of Singapore’s most important trade partners, like the United States and Australia, place great importance on the city-state’s retail food market. The U.S. sees Singapore as diverse, dynamic, highly developed, extremely competitive, and very strict with its sanitary requirements. Customers in Singapore are considered to be open to a wide range of foreign concept foods, conscious of food safety and health, and aware of sustainable products. However, they are not necessarily willing to pay more for them.

    In 2013, the U.S. exported retail food products to Singapore worth approximately $575 million, making tiny Singapore its 13th largest market. Exports were led by dairy, prepared foods, fresh fruits, and pork products. For Australia, Singapore was its 9th largest market for food, beverage and agribusiness products in 2014, with exports of A$1.1 billion ($760 million) the same year, principally animal fats, dairy products, red meats, sugars and sugar confectionery and pork.

    Direct imports are not the only reason for Singapore’s international relevance. Its location and trading hub status makes it a vital market for exporters. For example, the percentage of imported food that is re-exported to other countries is approximately 20-25 percent.

    Resilience

    From a policy perspective, Singapore has managed to accomplish the difficult task of becoming a food secure country by boosting the resilience of its food supply. Policy alternatives such as diversification of sources, the Food Fund, and facilitating food imports are all important components of a well planned and coordinated strategy. Nonetheless, the next 50 years are likely to be more complex as alternative possibilities depend on external forces and are subject to global change over which the city-state will have no control.

    Globally, increasing resilience has been acknowledged as an effective strategy against fluctuations in supplies. This encompasses partnerships, financing, trade, technology, and research and development, all of which are already part of Singapore’s strategy.

    What else can the city-state do? One alternative is to reduce food waste. Another would be to continue investing in innovative food science and emerging technologies. High-tech, visitor-friendly urban agriculture on the East Coast, or even in very fashionable 50-plus story buildings designed by the nation’s most innovative architects could be very significant options.

    Highly sophisticated greenhouses that control their environments (temperature, carbon dioxide levels, air flow and nutrients) and situated on ships adapted for this purpose could be another alternative. Projects as visionary as the Marina Reservoir (with a catchment that is about one-sixth the size of Singapore’s total land area) or as innovative as Pulau Semakau (the world’s first offshore landfill) for highly intensive agriculture could represent additional possibilities.

    Agricultural investment or contract farming abroad – something that other countries, financial services, life insurance, and pension schemes have done – is a distinct possibility. Stable nations such as Australia, the United States, or Brazil may provide attractive business possibilities.

    Singapore continues to develop its food security strategies, seeking opportunities and addressing risks in an increasingly complex environment. One relevant lesson that other Asian countries could learn from the city-state is the understanding that food security does not mean food self-sufficiency, since no country can be self-sufficient in all food products. National food security depends on both domestic production and imports, and requires effective distribution, in addition to diversification, partnerships, and good long-term planning. These are the reasons why Singapore, which imports most of its food, has become the second-most food secure country in the world.

     

  • Traditional retailers transforming to stay afloat

    Traditional retailers transforming to stay afloat

    The impact of e-commerce on the retail industry in China has meant traditional retailers have been transforming themselves by investing in new sectors, shifting to asset-light business models or exploring the online-to-offline business mode, Shanghai’s China Business News reports.

    It has been forecast that nearly 80% of retail sales growth in Shanghai between 2014 and 2016 will come from the city’s second-tier commercial areas, according to a research report on commercial real estate and shopping centers.

    Beijing, which accounts for 16.66% of the country’s total number of high-net-worth individuals, is considered by retailers to be a market with great growth potential.

    A major factor affecting brands’ considerations in making inroads into a shopping mall is its geographic location. A mall in an area with a low vacancy rate is usually more attractive than that with a high vacancy rate, said Fan Hongjuan, head of retail services at DTZ East China.

    For instance, the vacancy rate in shopping centers in Hangzhou is as low as under 2%, while the rates in Shenyang, Chengdu and Chongqing are more than 10%, Fan added.

    High vacancy rates usually stem from shopping center operators’ incompetence in attracting brands. Brand operators are largely unwilling to set up in shopping centers in remote areas because low business turnover might not offset high rental costs. Even in downtown areas, some shopping centers located in remote parts of the country have been experiencing sluggish business, according to some industry experts.

    Under the circumstances, traditional retail business operators are seeking to transform their operating models. Property conglomerate Dalian Wanda Group has devised plans to undergo restructuring of its unprofitable businesses. It has closed a number of its department stores and plans to convert 29 of its 89 karaoke parlors into other types of entertainment outlets, in response to the slump in businesses affected by the country’s slowing economy.

    The business conglomerate has also been engaged in transforming toward an “asset-light” business model in recent years.

    Meanwhile, Beijing Wangfujing Department Store (Group) has been exploring an online-to-offline business mode to cater to consumers born in the 1980s and 1990s, who are expected to be the main force of consumption in the near future, according to the report.

  • Investors switch to Hong Kong office property market amid troubled outlook for retail sector

    Investors switch to Hong Kong office property market amid troubled outlook for retail sector

    Institutional investors are diverting their capital to Hong Kong’s office property market in the wake of a troubled outlook for the retail sector, where yields have been compressed by soaring asset prices.

    Property consultants expect more big-ticket transactions to emerge in the office investment market over the next 12 to 18 months, with investors targeting en-bloc sales.

    John Davies, an executive director of the Hong Kong institutional investment properties team at property consultant CBRE, said interest in office properties was increasing, given that the retail sector was heading for a correction and the mass residential market was under pressure.

    The office sector had become sought after by both investors and end-users because it had offered “stable but steady growth in rental income” since 2010, he said.

    The solid fundamentals of the office sector, including a low vacancy rate and a lack of major new supply from now until 2020, made investors more confident, Davies said.

    “It is quite interesting to see [office demand from] the financial sector in Central has not grown, but the insurance sector, global sourcing firms and engineering consultants doing a lot of regional infrastructure projects have been expanding in decentralised locations in the past decade,” he said.

    For instance, Kowloon Bay was becoming a favourite address among multinational corporations setting up headquarters in Hong Kong.

    There has been chatter in the market that an investor is in talks with Swire Properties to acquire an office project in Kowloon Bay for an estimated US$1 billion. If the deal eventuates, it would be the biggest office transaction in Hong Kong.

    In a stock exchange filing on August 30, Swire revealed it was considering selling its entire interest in a wholly owned subsidiary that holds an office development project in Kowloon Bay.

    Swire won the 46,235 sq ft site in November 2013 in a government tender for HK$2.6 billion, or HK$4,753 per square foot. The project is scheduled for completion in 2017.

    Jonathan Lai, an associate director at Ricacorp Properties, said there was a limited number of quality en-bloc office projects available for sale on the market.

    “Investors are willing to pay a premium for it,” he said.

    Lai said the Kowloon Bay project could prove attractive to real estate funds looking for stable income for three to five years.

    Davies expects more large deals in the next 12 to 18 months.

  • Li Ka-shing’s Moves in China Reveal Good Timing

    Li Ka-shing’s Moves in China Reveal Good Timing

    As investors around the world fret over China’s economic tremors, Hong Kong tycoon Li Ka-shing has less reason to press the panic button: he has been quietly accelerating moves to cut his reliance on the world’s second-largest economy.

    Mr. Li, nicknamed Superman in Hong Kong for the business acumen that made him one of Asia’s richest men, has been trimming his property portfolio in China since 2011. He has also sold off parts of his ports and retail holdings in Hong Kong, which is a conduit for China’s international trade and finance.

    Instead, the 87-year-old tycoon has pivoted his two main conglomerates—Hutchison Whampoa Ltd. and Cheung Kong Holdings Ltd.—toward the old world of Europe. He has spent more than $20 billion in the past 18 months on deals that include buying the U.K.’s second-largest mobile-phone operator, a Dutch drugstore chain and a U.K. train-car maker, as well merging his Italian telecommunications company with a larger rival. Those deals were valued at more than his combined European acquisitions in the previous decade.

    Even before the spree, Europe had overtaken Greater China as the biggest contributor to Hutchison’s operating profit, by a small margin, in 2012. Last year the region accounted for 42% of the total, as Greater China shrunk to 30%.

    In a sign that easy returns from the boom years of China may be over, three people close to Mr. Li’s business say the moves were spurred in part by his belief that he can make more money in Europe—long seen as a collection of plodding economies—than in China, hitherto a magnet for investors because of its rapid growth rates. Company officials have said that the size and scale of investment opportunities in Europe exceed those of Hong Kong, where there is little left for Mr. Li to plow funds into.

    Now, as global markets stumble on concerns over China’s slowing economy, falling stock prices and a sudden devaluation in the Chinese currency, Mr. Li’s moves appear prescient, cementing his status among investors as an oracle. Company insiders and academics who study Mr. Li, however, say that the tycoon was also motivated by a weak euro that made European assets offering steady returns cheaper relative to China.

    “What Mr. Li really excels at is the timing of his selling,” said Woody Wu, an accounting professor at the Chinese University of Hong Kong. “He sells as long as the price is right. He’s a genius when it comes to finance.”

    Mr. Li, who is valued at $24.8 billion by Forbes as of Sept. 5, presides over an empire that is divided roughly into quarters: property, telecommunications, ports and infrastructure as well as retail and energy. Earlier this year, Mr. Li folded his two flagship firms together into CK Hutchison Holdings Ltd. and spun off their property businesses into a separate company, Cheung Kong Property Holdings Ltd. The companies’ combined market value is about $77 billion.

    Both companies outperformed Hong Kong’s benchmark Hang Seng Index, which has fallen nearly 24% since June 12. Shares of CK Hutchison are off 10% over the same period, while the property arm took a 21% hit, showing Mr. Li isn’t immune to any slowdown in China.

    Most of Mr. Li’s property portfolio is in China and nothing thrills Mr. Li like a development deal, according to two people who have worked closely with him. When entertaining clients over bowls of pili nuts at his office on the 70th floor in Hong Kong’s central business district, Mr. Li once pointed to the city’s skyline and boasted that one in eight buildings were made by him, according to a person who has visited him.

    He was among the first foreign developers to enter China after its leader Deng Xiaoping, with whom Mr. Li had close ties, began opening up the nation’s economy. He retained good relationships with subsequent presidents Jiang Zemin and Hu Jintao, although he is seen by China watchers as less close to the current president, Xi Jinping.

    In 2008, Mr. Li surprised observers when he sold a 40-story office tower in the heart of Shanghai’s blossoming financial district to a private investor for 4.9 billion yuan (US$769 million). Three years later, the building fetched a half billion yuan less when it was resold as the market dipped, people familiar with the matter said at the time.

    Mr. Li hasn’t made any significant land acquisitions in China since at least 2012 and has sold off malls and housing developments.

    “It shows [Mr. Li’s companies] are bearish on the market going forward,” said Samuel Hui, a conglomerates analyst at broker CLSA.

    One person close to Mr. Li said he had lost the advantage in know-how for construction that he held in the 1990s in the face of competition from rising Chinese property moguls such as Dalian Wanda Group’s Wang Jianlin, who has replaced Mr. Li as Asia’s richest man.

    Other potential motives attributed by company insiders and academics for Mr. Li’s step back range from the possible souring of his relations with the nation’s power brokers, to the tycoon preparing to hand over the business reins to his eldest son, Victor Li.

    “The more important reason why he’s moving away from China is that his influence there is dissipating,” said Joseph Fan, a finance professor at the Chinese University of Hong Kong who has studied Mr. Li’s career.

    In Hong Kong, where Mr. Li started his empire manufacturing plastic flowers in the 1950s, he has shifted the domicile of his businesses to the Cayman Islands. Last year, he sold a quarter of his Hong Kong retail chain to Singapore sovereign-wealth fund Temasek Holdings Pte. Ltd. Most recently, Qatar’s sovereign-wealth fund bought 16.5% of his electricity assets in the city.

    People close to Mr. Li say he remains in empire-building mode.

    “You still see that energy and strong interest into making deals—megadeals,” said a person familiar with Mr. Li. “I don’t see that he’s tired of doing this.”

  • Qantas adds more flight to Sydney from Hong Kong

    Qantas adds more flight to Sydney from Hong Kong

    Qantas will add more flights between Hong Kong and Sydney, Australia as a result of increasing demand from travellers.

    From 26 October 2015*, Qantas will operate an additional four Hong Kong-Sydney services each week, on top of the current daily services available to Sydney, Melbourne and Brisbane.

    Qantas International CEO Gareth Evans said the airline was pleased to offer customers more choice from Hong Kong, on a route that is experiencing strong demand from customers.

    “Customers travelling from Hong Kong will have the choice of double daily flights to Sydney on peak days of the week for business travel and we’ll look at expanding beyond that if the opportunity is available,” said Mr Evans.

    The four new Hong Kong-Sydney services will be operated by Qantas’ refurbished A330 aircraft with lie-flat seats in Business and new Economy seats, the first time customers travelling on this route will experience the airline’s latest international product.^

    The new services have been made possible by Qantas’ continued focus on more efficient use of aircraft across its fleet. It coincides with the airline also today announcing an increase in services from Manila to Sydney from four to five per week between early December 2015 and late March 2016 and follows an additional 140 international services recently announced to operate to Australia from Singapore, Jakarta and New Zealand over the upcoming summer holiday season.

    “We’re pleased to add to the seasonal services we’re set to operate from Asia later this year, with the new services again representing the dynamic nature of our network, which has the flexibility to offer our customers more flights during peak seasons,” said Mr Evans.

    With the new services, Qantas will operate 25 services per week from Hong Kong to Australia, in addition to daily services which operate from Shanghai to Australia. From 21 January to 16 February, Qantas will upgrade its B747 services to daily A380 services between Sydney and Hong Kong. 

    Schedule*

    Flight

    Dep

    Arr

    Days of week

    Aircraft

    QF118 HKG-SYD

    2135

    1000+1

    Monday, Tuesday, Wednesday, Thursday

    A330

    QF117 SYD-HKG

    1315

    1940

    Monday, Wednesday, Thursday

    A330

    1340

    2005

    Tuesday

    A330

     

    * Flights subject to regulatory approval.

    ^ All aircraft subject to change for operational requirements.