Shilla Duty Free opens at Gimpo International Airport’s international terminal on Wednesday. The duty-free store run by Hotel Shilla was approved by the government in June last year in a bid against Lotte Duty Free. The duty-free store is renting the place for five years.
Vietnam retail sales grew at 13 per cent last year, with food and beverage, apparel and household appliances leading the way, according to Savills Vietnam. The country’s Ministry of Industry and Trade has estimated total revenue generated from retail sales and consumer services reached US$191 billion last year. Vietnam retail sales accounted for $143.3 billion of that figure, or more than 75 per cent.
The highest growth was recorded in precious stones and metals, wood and building materials, food, household appliances, and garments.
Sales from accommodation and catering services grew by 9.1 per cent to $23.3 billion, accounting for 12.3 per cent of the total retail sales.
Retail space supply
The supply of retail space in Vietnam increased by more than 28,000sqm last year with two new shopping centres opening and several others changing format or closing. Total stock was approximately 1.3 million sqm, up 9 per cent year on year and the average gross rent rose 2 per cent quarter on quarter.
This year, Savills predicts, new supply in CBD locations will be only 31,700sqm with another 215,000sqm becoming available in non-CBD districts.
Outlook
Meanwhile, the ministry predicts total revenue from retailing and consumer services will increase at an average of 13 per cent this year, reaching $255.5 billion.
Between 2021 and 2025, the predicted growth rate is 14 per cent with total revenue reaching $484.58 billion by 2025.
LG Household & Health Care announced Wednesday it is buying Avon’s Chinese factory in an effort to expand production facilities. According to LG Household, subsidiary The Face Shop will purchase the London-based cosmetics firm’s factory in Guangzhou, China, for around 79.3 billion won ($70.8 million). Avon’s 49,500-square-meter (12.25-acre) factory in Guangzhou, China is capable of producing 13,000 tons of cosmetics and hair care and body products every year. Its facilities meet cGMP (current Good Manufacturing Practice) regulations, which are enforced by the U.S. Food and Drug Administration.
LG Household will use the Guangzhou factory to manufacture LG products like The Face Shop branded goods for its Chinese and other Asian businesses while continuing to produce Avon products as well. Avon employees will remain at the factory.
The buyout deal is expected to be finalized in February after Chinese authorities approve the transaction.
The move comes less than a year after LG Household purchased Avon’s Japanese operation for around $96 million last April. Avon said it hopes the Guangzhou factory sale will help increase its operational flexibility.
“This transaction is a significant step forward in our effort to ‘Open Up Avon’ by operating more efficiently, with a leaner, more agile global infrastructure,” said Jan Zijderveld, CEO of Avon. “We know [LG Household] well and believe that they will continue to be a strong partner for Avon.”
“We are pleased to … add a state-of-the-art facility with powerful capabilities to deliver quality products for the fast-growing local market,” added Suk Cha, CEO of LG Household.
South Korean Cafe chain Tom n Toms has started to launch outlets in Myanmar. Tom n Toms Myanmar has opened two locations in Yangon so far, at the international airport and the Kantharyar Centre, with a third planned for Yankin Township. Information from Myanmar International Business Alliance Company operation director Aung Sithu Khant revealed a fourth planned outlet at the Secretariat Building in Yangon.
“Myanmar people and coffee brands have been friendly for a long time,” said Khant.
“We opened these outlets hoping that Myanmar people can taste a high-quality coffee with reasonable price. Next month, strawberries from south Korea will be selling in Myanmar. We will introduce a menu connecting with strawberries.”
Khant said the third outlet will be opened soon. Future Tom n Toms cafes are expected to open in Mandalay, Taunggyi, and the capital city, Nay Pyi Taw next year.
“The main thing is the customer is always first. Therefore, we will pay special attention to coffee and other foodstuffs”.
Rimowa Japan has opened its first standalone store in Tokyo. The luxury luggage brand’s new 900sqm outlet in Ginza features a minimalist decor focused on a spiral staircase backed by a backdrop of basketweave, recalling a traditional Japanese craft design aesthetic. Rimowa Japan says the store is equipped to perform simple repairs, with staff speaking both English and Chinese, to cater for the tourist market.
A heritage brand founded in Cologne, Germany, more than a century ago, the brand is primarily known for its aluminium and polycarbonate suitcase lines. LVMH owns a controlling 80 per cent stake in the brand.
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Malaysia’s real gross domestic product (GDP) growth is expected to recede to 4.7% in 2019 after averaging at around the 5% mark between 2015 and 2018 on the back of external headwinds, according to Moody’s Investors Service. For 2020, the economy is projected to moderate further to 4.5%. The rating agency foresees external headwinds from trade protectionism to weigh on trade activity, while the review of infrastructure projects and slowdown in public spending will also prove to be a further drag to growth.
“Nevertheless, economic expansion will still stay stronger than the median average for A-rated sovereigns, even taking moderating growth into account,” it opined.
Moody’s said Malaysia’s credit profile, which is rated at “A3 Stable” reflects its large and diversified economy with healthy medium-term growth prospects, and relatively high government debt that is partly offset by a favourable debt structure and large domestic savings.
It pointed out that the govern-ment’s recent fiscal policy choices, particularly in abolishing the goods and services tax, will narrow its revenue base and reduce fiscal flexibility – while its debt burden which is significantly higher than the A-rated median, will remain a credit constraint.
“However, deep domestic capital markets and high savings provide a stable funding pool for the government’s debt, and partly offset these fiscal weaknesses. A solid institutional framework that includes effective monetary policy supports the country’s credit profile,” Moody’s said.
It also noted that pervasive corruption will likely to remain a challenge for the government, which will also undermine policy effectiveness.
Moody’s said that given a stable outlook of the sovereign rating, a change in the rating is unlikely in the near term, but could face upward pressure if the scope for fiscal consolidation increases.
Conversely, the rating agency said it would consider downgrading the sovereign rating in the event of weakened fiscal prospects, increased debt burden, growing political tensions and diverging views within the government, which could undermine policy effectiveness or impair the government’s ability to adhere to its fiscal consolidation objectives, potentially threatening the stability of capital flows to the country in the process.
Singapore’s Temasek Holdings is reportedly looking to quit its stake in Hong Kong-headquartered beauty products retailer AS Watson. Temasek spent US$5.6 billion to acquire a 25 per cent share of AS Watson in 2014 from Hong Kong’s CK Hutchison, which retains the majority stake. According to report, Temasek made the investment expecting the business to be listed within three years. But softening investor sentiment towards retail sector listings has weakened since that plan was first envisaged. Investors are spooked by the demise of a slew of brick-and-mortar-focused brands across developed markets.
AS Watson has some 14,500 stores in 24 markets around the world, and has market leadership in 15 of those. That could make the business an attractive target for private equity funds, despite the company appearing to be focused more on opening new stores than migrating online, where consumers are buying more beauty and healthcare products.
Bloomberg says in an analysis published online, that a private equity business would be among the more likely buyers for the Temasek stake, given the amount of industry money that’s sitting idle.
“That said, any acquirer will still be in a minority position, even if the entire 25 per cent is sold. Along with the business’s poor growth prospects, the absence of control is likely to be reflected in the valuation. This is one retail sale that will need a discount to be attractive.”
Design Orchard mall is set to open on January 25 hosting 61 homegrown labels. The new Orchard Road mall, a joint venture between the Singapore Tourism Board (STB), JTC Corporation and Enterprise Singapore, is conceived of as a home and exhibition space for local design work. It features a 9000sqft first-floor retail showcase, second floor incubation spaces, and a rooftop events area. The first level is currently leased to local retailer Naiise.
Featured supports for local designers include co-working spaces provided by Taff – equipped with professional sewing equipment, a fabric library and collaboration and networking opportunities with industry players – and a mentorship program from Naiise covering marketing and merchandising.
“Singapore is home to many global brands,” explained STB’s director of retail and dining Ranita Sundra, of the rational behind Design Orchard mall.
“As these brands become more ubiquitous, we noticed that more people are drawn to local products with a Singapore story. Design Orchard is thus an exciting opportunity for us to profile the best of Singapore talent under one roof.”
“We hope that it will inspire local talents to join the community, where they can develop and grow their brands with access to mentors, programmes and facilities in a vibrant space along Orchard Road,” added director of products at JTC Wee Pei Yean.
Vietnam’s newest airline, Bamboo Airways, has received a certificate that allows it to operate aircraft for commercial purposes. The Vietnam Civil Aviation Authority Tuesday granted the Aircraft Operator Certificate (AOC) to Bamboo Airways. The AOC is a certificate approved by a regulatory authority that allows a carrier to operate aircraft for commercial purposes within a specified scope of activities. As such, the FLC Group’s startup airline has completed all necessary regulatory procedures for commencing commercial operations in Vietnam’s aviation market.
“This AOC certification is a result of 4 years of effort, I believe it is an important first step for Bamboo Airways to serve passengers and devote themselves to the Vietnam aviation industry,” said Dang Tat Thang, CEO Bamboo Airways.
After many delays, Bamboo Airways expects to start operating domestic flights with Airbus A321 NEO aircraft by mid-January. Bamboo Airways will prepare 20 planes for flight in the first quarter of 2019 and increase their fleet size to 40-50 aircraft by the end of the year.
Thang said that at the moment, Bamboo Airways has fully prepared their personnel, technical and material assets and affirmed its fitness for operation through many activities including test runs, maintenance, engineering and other commercial transport activities.
Bamboo Airways will operate 37 routes connecting all major cities and popular tourist destinations in Vietnam, as well as some international routes in 2019.
The first routes of the country’s fifth carrier would connect Hanoi and HCMC, and from Hanoi and HCMC to central provinces of Quy Nhon and Quang Binh, and northern Quang Ninh Province.
The new carrier plans start off with 60 domestic flights a day. Later this year, the company also plans to open international flights to Japan, Korea and Singapore.
Bamboo Airways was founded in mid-2017 with a charter capital of VND700 billion ($30 million), which it increased to VND1.3 trillion ($55.68 million) recently.
The airline has signed deals to buy 24 Airbus A320neo and 20 Boeing B787-9 Dreamliner aircraft worth a total of about $8.6 billion.
The other four carriers in Vietnam currently are Vietnam Airlines, Vietjet Air, Jetstar Pacific and VASCO.
LG Electronics’ operating profit fell nearly 80 percent in the fourth-quarter of 2018 year-on-year, according to preliminary figures disclosed in a Financial Supervisory Service regulatory filing Tuesday. The smartphone and household appliances manufacturer estimated 75.3 billion won ($67.0 million) in operating profit for the final quarter of last year compared to 366.8 billion won in the same quarter in 2017.
The estimate is far below the 398.1 billion won forecast by analysts surveyed by FnGuide, a data provider. The company anticipated 15.8 trillion won in revenue from October to December last year, a 7-percent decline from the same period a year earlier.
Analysts pointed to the slowing global smartphone market as a factor weighing on the company.
“With the smartphone market currently in a slump, [the company] is unable to find an opportunity to recover,” said Kim Ji-san, an analyst at Kiwoom Securities in a report Tuesday that predicted disappointing earnings prior to LG’s announcement. “Demand has slowed as smartphone replacement cycles have become longer in high-value markets such as Korea and the United States,” Kim added.
Meanwhile, the company estimated annual operating profit for 2018 at 2.7 trillion won, a 9.5 percent rise from the previous year.
The growth of the global economy is expected to slow to 2.9% in 2019 compared with 3% in 2018, the World Bank said on Tuesday, citing elevated trade tensions and international trade moderation. “At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead,“ World Bank CEO Kristalina Georgieva said in the semi-annual Global Economic Prospects report.
The World Bank outlook comes as the United States and China have been engaged in a bitter trade dispute, which has jolted financial markets across the world for months. The two economies have imposed tit-for-tat duties on each other’s goods, although there have been signs of progress.
Growth in the US is likely to slow to 2.5% this year from 2.9% in 2018, while China is expected to grow at 6.2% in the year compared with 6.5% in 2018, according to the World Bank.
Emerging market economies are expected to grow at 4.2% this year, with advanced economies expected to grow at 2%, the World Bank said.
French luxury house Kering has launched its first in-house Balenciaga eyewear line at British Dover Street Market stores. The new collection is exclusive to the DSM chain in the US, UK, Japan, Singapore and China, as well as the brand’s e-commerce channel. The high-end products are valued between US$290–570, with both sunglasses and prescription frames available.
The Balenciaga eyewear line represents the first in-house Kering Eyewear product range. Previous Balenciaga collections were produced under Marcolin Eyewear, the creator of shades for numerous luxury labels.
The Klang Valley office market is expected to remain vibrant this year, despite the influx of new buildings which is expected to affect occupancy rates, said Knight Frank Malaysia. “Due to the influx of new buildings, particularly in TRX, occupancy rate in Kuala Lumpur city is expected to decline marginally. However, rental rates will continue to hold steady as newer buildings tend to command higher rental rates,” it said in its Real Estate Highlights 2nd Half 2018 report.
The report highlighted the trend of co-working and shared services as a sweet spot in the challenging office market environment.
Labelled “space as a service”, the rising popularity of this market segment is demand driven by freelancers, start-ups and small and medium sized entrepreneurs. Knight Frank expects to see active take-up by co-working, shared services and IT related industries this year.
“Moving into 2019, occupancies in selected sub-office office markets are expected to be under pressure due to heightened competition from impending and existing office stock while rentals will continue to hold steady as newer buildings tend to command higher rates.
“We continue to observe active enquiries and leasing activities in the co-working and IT related segments. Also, an increasing number of older buildings are looking into repositioning and refurbishment to meet current occupier needs,” said Knight Frank Malaysia executive director of corporate services Teh Young Khean.
Dated but well located office buildings such as Menara Weld, Menara Standard Chartered, Menara Maxis and Menara Milenium will reportedly be undergoing repositioning/upgrading works to improve their market competitiveness in terms of rental and occupancy levels.
Knight Frank noted that the new government’s concerted efforts to implement numerous regulatory reforms will augur well for the business operating environment and this is expected to be positive for the country’s economic and property market performance over the longer term.
Looking back at 2H2018, the cumulative supply of purpose-built office space in Kuala Lumpur and Selangor stood at 103.17 million sq ft following the completion of six buildings with a combined space of 1.84 million sq ft.
In 1H2019, office buildings slated for completion include The Exchange 106, Menara Prudential, Menara Star 2, 1Powerhouse and Symphony Square.
Overall occupancy rate for Kuala Lumpur city was about 78.7% in 2H2018 compared with 79% in 1H2018. The overall occupancy rate for decentralised office locations in Kuala Lumpur fringe fell to 82.2% from 83.8% during the same period.
In Selangor, overall occupancy was slightly lower at 78.3% in 2H2018 compared with 79.2% in 1H2018.
The average rentals in Kuala Lumpur fringe and Selangor rose marginally in 2H2018 to RM5.75 psf and RM4.22 psf respectively compared with RM5.72 psf and RM4.20 psf respectively in 1H2018.
However, average rental in Kuala Lumpur city remained flat at RM7.15 psf as owners and landlords of newer office buildings offered competitive rental and attractive tenancy terms to improve take-up.
Hyundai Motor will recall about 79,000 diesel-powered vehicles to fix faulty emission-related components, the Environment Ministry said Tuesday.Korea’s biggest carmaker by sales is expected to recall 78,721 vehicles encompassing three different models due to problematic parts that emit excessive nitrogen oxide into the air. The recall will start Wednesday and be carried out for one and a half years, an official at the Ministry of Environment said.
The three models are the 2.2-liter diesel-powered Grandeur sedan, the Megatruck and the Mighty truck.
“The ministry recommended Hyundai to recall 30,945 units of the Grandeur diesel sedan due to a faulty emission part,” the official said over the phone.
“As for the two truck models, however, the carmaker has voluntarily submitted its recall plan to the ministry, with an approval due to be made this week.”
Hyundai’s recall plan is in line with the government’s push to reduce diesel-powered vehicles on roads and fine dust, which is harmful to your health.
Kamereo, a Vietnamese sourcing platform for restaurants, has raised $500,000 in seed funding from Japan’s Genesia Ventures and Velocity Ventures Vietnam. Japanese Taku Tanaka, founder of Kamereo, said the newly acquired money would be used to upgrade the platform’s service offerings and strengthen the customer care team. “We use technology to solve the buying and sourcing problem, and restaurants can focus on their core business to bring the best culinary experience to customers. In future we will expand our services to other sectors and regions.”
From his experience, Tanaka, who moved to Vietnam in 2015 as CEO of a pizza chain, found that procurement operations were mainly labor-intensive and inefficient.
“We believe that technology can solve this problem, providing solutions to reduce the cost of personnel in a transparent and accurate manner,” he said.
The Ho Chi Minh City-headquartered business-to-business procurement platform, established last June, now has more than 4,000 product categories, 120 partner suppliers and 200 registered restaurants.
While Kamereo will focus its resources on Vietnam for now, it is planning a series A round of funding involving a few million U.S. dollars in late 2019 or 2020 to expand in Southeast Asia.
The funding came amid a technology startup boom in Vietnam’s F&B market where delivery platforms such as GoViet and Grab battle for market share down the supply chain.
A report published last October by Vietnam Research said Vietnamese spend more than a third of their income on food and beverages ahead of education and utilities.
Global research firm Nielsen also considered F&B one of the most attractive industries, with the potential to become a major player in the Vietnamese economy, citing findings from one of its studies which found food and beverages were two of the 10 most bought products online in 2017.