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Tag: china retail

  • Amazon EU Faces Italian Trial over Alleged €3.52M Unpaid Import VAT

    Amazon EU Faces Italian Trial over Alleged €3.52M Unpaid Import VAT

    Amazon’s European unit and two senior managers could face trial in Italy over more than 1.5 million Chinese products sold without proper payment of import value added tax and customs duties.

    Milan prosecutors concluded their investigation following police raids conducted in November last year on Amazon’s Italian headquarters in Milan and a logistics hub near Bergamo. Formal legal notices under Italy’s corporate liability framework were served on Luxembourg-based Amazon EU and the two executives, a step that typically precedes a formal request for trial.

    Authorities put the unpaid import VAT at more than €3.52m ($3.9m), while customs officials continue to calculate the total evaded duties. A total of 70 suspects received the notice, including online store operators accused of moving non-EU merchandise through Amazon’s domestic logistics network while evading border declarations.

    Automated Systems and Missing Seller Data

    Prosecutors allege Amazon failed to implement organisational measures capable of preventing customs offences and allowed non-EU goods to circulate through its logistics network despite alleged customs compliance irregularities.

    They also allege Amazon knew, or should reasonably have known, that around 80% of goods handled through its Italian logistics system came from China, yet did not adequately check sellers, customs documentation or warehouse movements.

    The legal notice claims Amazon knew or should have known about the supply chain flaws. By leaving those gaps open, prosecutors argue, the marketplace functioned as an entry pipeline that allowed Asian goods to sidestep European borders without fiscal checks.

    Shifting Pressures on Cross-Border Chinese Merchants

    For manufacturers and direct-to-consumer exporters, the Milan inquiry shows that relying on Western e-commerce platforms no longer shields sellers from local fiscal enforcement. European tax authorities have moved past sending notices to remote offshore store entities, targeting the physical warehouses where goods actually sit.

    Direct-selling Asian brands operating on thin operating margins face immediate exposure. If marketplaces demand validated tax identification numbers and upfront proof of cleared duties before receiving stock, merchant inventory turnaround times will slow down and operating fees will climb.

    Amazon told the publication that it was “committed to complying with all applicable laws and regulations in every country where we operate and we require all sellers on our marketplace to do the same”.

    “We will vigorously defend our position in this ungrounded proceeding,” the US company said.

    It also said “unpredictable regulatory environments, disproportionate penalties, and protracted legal proceedings are increasingly affecting Italy’s attractiveness as an investment destination”.

    Raids and Cross-Border European Probes

    The formal notice follows police raids carried out in November last year across Amazon’s corporate headquarters in Milan and a regional fulfilment depot near Bergamo. Those operations initiated an inquiry into Asian import evasion that quickly expanded beyond Italian borders.

    Milan prosecutors later briefed judicial counterparts across multiple European jurisdictions through Eurojust to examine similar logistics networks across the continent. Investigators described the distribution mechanism as a setup that let offshore merchants bypass standard import filings on an industrial scale.

    Under Italian law, recipients can submit arguments, documents and evidence before prosecutors decide whether to seek a trial. Italian customs authorities are working to complete their calculation of unpaid duties, which will determine the final financial penalty sought in court.

  • Bubs Revenue Drops 9.8% to $23.1M as Asian Market Delays Bite

    Bubs Revenue Drops 9.8% to $23.1M as Asian Market Delays Bite

    Bubs Australia booked a 9.8 per cent drop in quarterly net revenue to $23.1 million for the three months to September 30, hit by currency swings and stalled export markets across Asia.

    The Victoria-based infant formula producer burned through $6.0 million in operating cash during the period, leaving it with $13.4 million in available liquidity to fund inventory and marketing.

    Foreign Exchange Pressures Erode US Gains

    Revenue in the United States, Bubs’ largest regional market, dropped 8.9 per cent to $15.3 million. Management blamed foreign currency translation for the headline decline, which masked diverging retail channels across North America.

    Brick-and-mortar scan sales held up across major retailers. Sales through Walmart and Target grew strongly as distribution widened to more than 12,000 stores across all 50 states, but lower sales volumes on Amazon blunted those physical retail gains.

    Delays in Singapore and Vietnam Hit Regional Books

    Trading beyond the Pacific showed acute regional friction. Revenue from the Rest of the World division plunged 36 per cent to $1.2 million as planned market re-entries into Singapore and Vietnam ran into operational delays.

    China provided a modest buffer. Revenue from mainland buyers crept up to $2.6 million, giving the company small volume gains in an import market where rival dairy labels have written down excess inventory.

    The Tradeoff Behind America’s Permanent Authorisation

    Bubs gained permanent US Food and Drug Administration authorisation in September for three infant formula lines. That clears regulatory uncertainty that lingered after emergency pandemic-era supply waivers expired, giving the business a permanent footing against incumbent American brands.

    Yet chasing US market share carries clear capital risks for Asia-Pacific consumer operators. Supplying 12,000 North American storefronts locks up operating cash in long shipping lanes, and physical shelf space cannot cover the drop when digital orders on platforms like Amazon slip. Diverting corporate attention to satisfy Western regulators has clearly left flank markets in Southeast Asia vulnerable, stalling recovery timelines in key consumer hubs such as Vietnam.

    From Daigou Crash to Big Box Retail

    The quarterly slide traces the longer remaking of Bubs from an Australian domestic exporter into a Western big-box supplier. When cross-border daigou channels into China dried up, the business pivoted its goat milk and dairy infant nutrition inventory toward North American shortages.

    That strategy broadened its retailer network, but the margin profile now depends on continuous physical sell-through across massive US chains while local sales in Australia face lingering household budget pressures.

    Executive attention now turns to inventory replenishment and the commercial rollout of relaunched distribution runs in Vietnam, with full-year liquidity levels tied directly to how quickly Southeast Asian trade recovers.

  • Judydoll Enters Turkey with Displays Across More Than 300 Gratis Stores

    Judydoll Enters Turkey with Displays Across More Than 300 Gratis Stores

    Chinese cosmetics label Judydoll entered Turkey in October 2026, marking its latest push into Europe and broader international markets.

    The company partnered with personal care retailer Gratis to place dedicated branded displays across more than 300 physical stores nationwide.

    Alongside the brick-and-mortar rollout, Judydoll launched online on Turkish e-commerce platform Trendyol, working with Turkish distributor Afili Brands and the GloworKs team.

    Physical Reach through Gratis

    Securing space in more than 300 Gratis branches gives the cosmetics label immediate shelf presence in major retail corridors across Turkey. Physical beauty displays allow consumers to test formulations directly, which remains a key driver for cosmetics adoption in competitive mid-tier price segments.

    Selling through Trendyol covers the digital side. The marketplace dominates local e-commerce volume, letting the brand capture consumer demand outside the core metropolitan store network without heavy direct capital investment.

    The C-Beauty Export Path

    Domestic cosmetics competition in China has pushed domestic brands to look overseas for margin stability and volume growth. While Southeast Asia served as the initial proving ground for Chinese beauty exports, brands are increasingly testing peripheral European and Middle Eastern consumer markets.

    Turkey sits at the crossroads of European and Asian retail networks. Consumer demographics skew young, and demand for affordable colour cosmetics aligns with the pricing and product architecture that mainland Chinese beauty labels perfected through domestic livestream selling.

    Distribution Model and Local Execution

    Relying on Afili Brands and GloworKs keeps operational overhead light. Working with third-party logistics and regional distributors shields manufacturers from managing local import compliance, currency volatility and retail inventory directly on company balance sheets.

    The structural risk sits in retail partner concentration and Turkish lira fluctuations. Distributor-led wholesale agreements offer immediate distribution points, yet long-term margin retention depends on whether the label builds independent brand recognition or stays confined to discounted promotional shelves.

    Tracking Market Penetration

    The Turkish launch serves as a testing ground for wider retail introductions across southern Europe and neighbouring markets. The immediate benchmark to watch is sell-through velocity across the initial more than 300 Gratis branches and whether the distributor adds further stock-keeping units to Trendyol inventory in coming quarters.

  • LVMH Loses $167 Billion in Value as Chinese Shoppers Cut Handbag Spending

    LVMH Loses $167 Billion in Value as Chinese Shoppers Cut Handbag Spending

    LVMH has lost more than $167 billion in market value this year as Chinese consumers pull back from expensive handbags, cutting group valuation by more than half from its peak above $500 billion.

    The selloff exposes the conglomerate’s heavy concentration in a single division and a single region, with Asia excluding Japan generating 35 percent of Fashion and Leather Goods revenue in 2025.

    Fashion and Leather Goods accounts for roughly three-quarters of recurring operating profit across LVMH’s 75 brands. UBS estimates the flagship Louis Vuitton label alone generates more than half of divisional earnings. Chinese shoppers account for nearly a third of all fashion and leather sales, leaving group performance tightly bound to domestic sentiment in mainland China.

    Bernard Arnault, the 77-year-old chairman and chief executive whose family controls 65 percent of voting rights through Agache, faces a market where the pricing power of the past five years has stalled. Average luxury prices rose 54 percent between late 2019 and September 2024, according to HSBC estimates. While that strategy lifted group revenue from €54 billion in 2019 to €86 billion in 2023, shoppers in Asia are no longer absorbing further price increases for coated canvas and leather.

    Mainland luxury market contracts for two straight years

    China’s personal luxury goods market shrank between 18 percent and 20 percent in 2024, followed by an additional decline of 3 percent to 5 percent in 2025, according to Bain estimates. Leather goods suffered the steepest drops, falling between 8 percent and 11 percent last year. Real estate weakness and employment concerns have eroded consumer confidence, while local fashion labels have gained market share by emphasizing cultural relevance.

    Consumer budgets are shifting rather than disappearing entirely. A 2026 survey by Oliver Wyman found 37 percent of affluent Chinese consumers plan to increase spending on prestige beauty, compared with just 4 percent planning higher spending on leather goods. L’Oréal recorded 10 percent revenue growth for its Luxe division in China during its latest reported quarter, while Compagnie Financière Richemont reported a 14 percent sales rise at constant currency for jewellery brands Cartier and Van Cleef & Arpels in the year to March.

    Rivals test price cuts while Vuitton protects margins

    Rival luxury groups are responding with aggressive regional pricing adjustments. Gucci reduced prices by 20 percent to 30 percent across several handbag collections to recruit entry-level customers, while Chanel rolled out smooth-leather accessories positioned below its signature quilted lines. Chanel lifted first-half comparable sales by about 16 percent following the adjustments.

    LVMH has resisted broad price reductions, choosing instead to invest in store upgrades and creative turnover at Dior and Loro Piana. Bernstein calculations indicate a hypothetical €1,350 entry-level Vuitton bag could generate €440 million in incremental revenue and boost divisional unit volume by 5 percent, even if average selling prices drop 1.8 percent. For now, the group relies on North America to offset Asian weakness, with Jefferies forecasting 5 percent growth in US fashion sales against a 10 percent contraction across its Chinese customer base in the third quarter.

    Local missteps add friction in mainland malls

    Brand perception in China has faced additional scrutiny. A trademark dispute in which Louis Vuitton successfully sued Shenzhen-based drinks chain Molly Tea over a floral pattern triggered public backlash from state media and social network users, who argued the design stemmed from traditional Chinese heritage. Jefferies reported the controversy caused a measurable drag on Vuitton’s mainland store sales.

    Direct acquisitions of Western luxury houses offer little help because LVMH’s current revenue base is too large for mid-sized European brands to move group earnings. Competitors have turned to minority equity investments in local players: Kering took a minority holding in Shanghai-based ICICLE parent ICCF, while L’Oréal backed domestic Chinese fragrance companies To Summer and Documents to tap shifting consumer taste.

    Earnings multiple resets to five-year lows

    The structural shift follows five years of rapid expansion that ended late in 2024, when LVMH posted its first quarterly revenue contraction since 2020. Divisional sales in Fashion and Leather Goods dropped 1 percent in 2024 and slipped another 5 percent in 2025, breaking an operating margin run that had peaked at 26.5 percent.

    Equity markets have adjusted valuations accordingly. LVMH trades at roughly 16 times forward earnings, down from 24 times at the start of the year, as institutional investors wait for third-quarter earnings figures to determine whether Chinese cluster sales can stabilize before year-end.

  • Musinsa Seeks 10 Trillion Won Valuation in Listing as Beauty and Overseas Bets Mount

    Musinsa Seeks 10 Trillion Won Valuation in Listing as Beauty and Overseas Bets Mount

    Musinsa filed a listing application on Sept. 7 that values the South Korean fashion e-commerce platform at up to 10 trillion won ($7.2 billion).

    That target sits well above the 5.5 trillion won implied by unlisted market trades. It also nearly triples the 3.5 trillion won figure secured during a 2023 funding round. To justify that price to institutional investors, the platform is expanding beyond online apparel into physical beauty retail while opening stores across key Asian markets.

    Recent earnings show the cost of that transition. Revenue reached a record 822 billion won in the first half of the year, following nearly 1.5 trillion won across all of last year. Operating profit fell 11.2 per cent to 52 billion won over the same six-month stretch. Store expansion, raw material costs and distribution logistics drove up overheads.

    Beauty Push Challenges Olive Young

    Musinsa is leaning on its pool of 16 million registered fashion users to fuel cosmetics sales. Over 80 per cent of Musinsa Beauty buyers previously purchased apparel on the platform. That gives the company a ready customer base without typical retail startup acquisition costs.

    Beauty inventory expanded from roughly 800 brands in 2021 to about 2,500 brands by August. Transaction value in the category jumped 1,340 per cent over the same three-year stretch. Sourcing includes Chinese makeup brands Into You and AZTK alongside domestic labels.

    Taking on CJ Olive Young represents an uphill fight for domestic market share. CJ Olive Young operates an extensive nationwide store network that dominates South Korean health and beauty retail. To differentiate its shelves, the platform is focusing on niche labels, medical tourism lines and dermocosmetics tailored for post-procedure skincare.

    Offline Footprint and Flagship Formats

    Physical store performance provides an early test for the retail crossover. In western Seoul’s Hongdae district, a pharmacy-grade beauty flagship generated 250 million won in gross sales across its first three days. Women accounted for 76 per cent of transactions. International visitors made up nearly 60 per cent of buyers.

    Inside the Musinsa Megastore in Seongsu, the country’s largest single fashion and cosmetics retail format, beauty transaction value increased 20 per cent in August compared to April. A second dedicated beauty branch will open in Seongsu in November. That launch puts the store in direct competition with Olive Young N Seongsu.

    Landlords and distributors gain a high-traffic tenant capable of drawing younger shoppers who bypass traditional department stores. Still, physical retailing alters capital requirements. Leases and store fit-outs shift the business from an asset-light marketplace into a capital-intensive brick-and-mortar operator with higher fixed liabilities.

    China Rollout Leads Global Push

    Overseas expansion forms the second leg of the listing pitch. China serves as the primary testing ground. The company aims to operate more than 100 stores there by 2030. It currently runs one multibrand store and four Musinsa Standard locations in Shanghai, where shoppers under 30 make up more than 85 per cent of sales.

    Southern China expansion starts on Oct. 31 with stores at Shenzhen’s One Avenue commercial complex. In Taiwan, the target is 15 stores within five years, focused on the private-label Musinsa Standard range. Distribution partnerships are also in place across Malaysia, Vietnam, Indonesia and the Philippines.

    Export sales across digital channels are growing quickly from a low base. The cross-border Global Store platform, serving 13 markets, reported a 143 per cent lift in second-quarter transaction value. First-half export revenue rose ninefold to 37.2 billion won. Even so, the overseas subsidiary Musinsa Shanghai has not yet reached operating profitability.

    Margin Squeeze Tests Listing Thesis

    Growth limits at home explain the transition from a 2001 online sneaker community into a regional omnichannel chain. South Korean apparel platforms face limited runway once domestic user numbers peak. Moving into beauty offers a standard way to defend growth.

    Public market investors face margin dilution risks. Sourcing private-label inventory and signing multi-year leases in tier-one Chinese cities requires sustained cash commitments. Those fixed overheads can erode operating margins during retail downturns.

    Past valuations relied on high-margin marketplace commissions from independent domestic streetwear brands. As the revenue mix shifts toward owned inventory and physical shopfronts, working capital needs will expand significantly.

    Upcoming milestones will test whether the company can maintain revenue momentum while turning foreign outposts cash positive. Key checkpoints include an Osaka pop-up show in October, the Shenzhen store debut on Oct. 31, and the Seongsu beauty flagship opening in November.

  • China’s Kailas Opens First Directly Operated European Store in Chamonix

    China’s Kailas Opens First Directly Operated European Store in Chamonix

    Chinese mountain sports brand Kailas opened its first European retail store in Chamonix, France. The site gives the brand a direct physical foothold in the continental outdoor hub.

    It is the company’s first directly operated store outside China. Kailas already runs more than 300 wholesale and retail sales outlets worldwide.

    Direct operations replace third-party distribution

    Founded in 2003, Kailas built its business across mountaineering, rock climbing, ice climbing and trail running. The Chamonix store shifts that strategy. Instead of relying on wholesale accounts, event sponsorships and athlete outfitting, the brand now operates its own storefronts in competitive Western markets.

    Inside, the branch focuses on the Kailas Fuga trail-running line and doubles as a community hub for local runners. Kailas used the location to launch its Fuga Ex Pro G shoe. More than 80 runners and ambassadors from its Fuga Team and Fuga Mountain Club attended the debut.

    Challenging established alpine competitors

    Setting up shop in Chamonix puts Kailas in direct competition with European mountain sports incumbents on their home terrain. The French Alps draw dense traffic from elite trail runners and mountaineers. That makes the town an expensive proving ground rather than a high-volume revenue generator.

    For Asian sportswear makers, direct European retail brings higher overhead, strict labour regulations and steep lease commitments compared to domestic operations. Kailas bets that technical validation in the Alps will lift brand equity across international accounts and its core domestic market in China.

    Building on athlete partnerships

    This opening follows years of sports marketing that assembled an international roster of 107 sponsored athletes. Those sponsorships previously fed third-party retail distribution and online orders rather than dedicated company-owned doors.

    Future expansion will show whether the Chamonix location remains a standalone flagship or serves as a template for more direct-to-consumer stores across Western Europe.

  • Dada-JD Daojia, Carrefour to collaborate online

    Dada-JD Daojia, Carrefour to collaborate online

    Chinese online grocery and delivery firm Dada-JD Daojia is partnering with French hypermarket chain Carrefour. The collaboration, which involves listing Carrefour China stores on the Dada-JD platform, has already resulted in a 720 per cent increase in the chain’s online sales compared with the month previous. Some 4000 Carrefour products are available to be traded on the platform.

    So far, 158 Carrefour stores are listed on Dada-JD, with plans being to have 200 listed by the end of the year.

    Dada-JD Daojia offers two distinct services, the “Dada” on-demand logistics platform (which covers 400 major Chinese cities) and the “JD Daojia” e-commerce platform that has more than 50 million users. It has collaborated with Walmart since 2016 as well as other chain supermarkets.

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  • New McDonald’s set to expand faster in China

    New McDonald’s set to expand faster in China

    Some 2,000 quick service outlets to open by 2022 in small cities

    McDonald’s Corp, the global fast-food chain that has forged a new partnership in China last month, will expand faster by opening 2,000 new restaurants in the next five years.

    They will be set up mostly in third-and fourth-tier cities with a focus on take-aways and digitalized services.

    The company said it will increase its expansion pace from about 250 new outlets this year to 500 per year from 2022 onward.

    It did not disclose other details like the scale of new investments that would ensue.

    The new partnership, jointly established by CITIC Ltd, CITIC Capital, Carlyle Capital and McDonald’s, paid $2.08 billion for the US-based fast food chain’s business in the Chinese mainland and Hong Kong.

    The deal received regulatory approval and was completed on July 31.

    The new company will become McDonald’s largest franchisee outside of the United States.

    CITIC Ltd and CITIC Capital together hold a majority 52 percent stake in the new company, while Carlyle Capital will hold 28 percent, and McDonald’s 20 percent.

    Currently, McDonald’s operates and manages 2,500 restaurants in the Chinese mainland, including 600 franchises, and 240 restaurants in Hong Kong.

    The new company will manage all the 2,000 new restaurants directly.

    Despite McDonald’s global dominance, KFC, owned by Yum China, has bigger presence in the Chinese quick service restaurant. Yum China runs more than 5,000 KFC restaurants in over 1,100 cities and counties.

    KFC’s wide presence in China appears to have bolstered the confidence of McDonald’s investors in the new expansion plan, industry insiders said.

    The new partnership of McDonald’s aims to achieve double-digit sales growth annually in the next five years.

    The goal includes delivery coverage of 3,375 restaurants or over 75 percent of the total.

    “China will soon become our largest market outside of the United States,” said Steve Easterbrook, McDonald’s president and CEO.

    “The mainland and Hong Kong are leading the global system in capturing new consumer trends such as delivery and digitalization and it is driving strong performance and growth momentum.”

    Zhang Yichen, the new chairman of McDonald’s China, said restaurant ownership at the local level will foster entrepreneurial spirit within the company.

    For example, considering the strong demand for takeout food and the population density in China, Zhang emailed Easterbrook regarding the need to develop a customized software system for the Chinese market.

    The latter dispatched McDonald’s global IT team to support the China business. Now, the take away operation in China tops the global chain’s comparable systems across markets.

    Zhang said CITIC has more than 1,400 bank branches in China. Besides, CITIC and Carlyle’s extensive resources and market expertise in real estate, supply chains, retail, consumer goods and technology, coupled with the global quality standards and branding of McDonald’s, will prove to be a winning formula.

    Jason Yu, general manager of Kantar Worldpanel China, a firm that researches shopper behavior, said, “CITIC operates many branches in third-and fourth-tier cities, and they understand the local market, hence will be able to help McDonald’s to choose appropriate sites for new restaurants and also provide useful real estate information.”

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  • Chinese consumers crave premium products

    Chinese consumers crave premium products

    Chinese consumers are increasingly craving premium-tier products to underscore their success, says Nielsen China.

    The market research company defines premium-tier products as items that cost at least 20 per cent more than the average price for the category.

    The global information company’s retail sales data, which covers major retail chains, shows that factors on both the supply and demand side are driving the growth of the premium segment in China.

    And in a Nielsen survey, 56 per cent of Chinese said they buy premium products in order to feel successful or show their success to others.

    Also, 48 per cent of consumers said they are willing to pay a premium for electronics, followed by clothing and cosmetics (both 38 per cent).

    Many consumers have greater buying power than ever before, with purchasing power growing from 7 to 9 per cent annually in China.

    “With increasing affluence, consumers are craving products that offer an enhanced, premium experience,” says Nielsen China MD Vishal Bali. “Beyond basic needs and benefits, Chinese consumers are making purchase decisions based on how products make them feel.”

    In its study, 65 per cent of online respondents in China said they will try a new and innovative premium product based on the recommendations of friends and family. Additionally, 60 per cent said  of respondents said they are “very willing” to pay for premium products with high quality and safety standards.

    Electronics favoured

    Chinese consumers are most willing to pay a premium for electronics, says the study. Globally, 42 per cent of consumers say they are willing to pay a premium price for electronics, while in China the number reaches 48 per cent.
    Apart from electronics, 38 per cent of respondents in China said they are willing to pay for a premium offering in clothing and cosmetics. Globally however, 39 per cent are willing to buy premium clothing while only 33 per cent say they would buy a premium offering in cosmetics.

    Other key categories where Chinese consumers are willing to pay a premium include dairy products (37 per cent), cars (32 per cent), oral care (31 per cent) and meat and seafood (30 per cent).

    Status is also a more important consideration for consumers in China compared to the rest of the world, with 54 per cent of respondents saying they buy premium products because these items show other people that they have good taste. Premium products are also regarded as an important indicator of accomplishment, with 56 per cent of Chinese respondents saying they buy premium products because it makes them feel successful or (also 56 per cent) shows other people that they are successful.

    “Emotional motivation is a key factor for Chinese consumers, and we see premium products driving this trend,” says Bali. “Consumers want unique experiences they can share with their friends. They want products that express their individual taste while also projecting a positive image of success and status.”

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  • Australian Wine to China

    Australian Wine to China

    Australian wine exporters expect to receive a profit boost from this week, with a further reduction of tariffs to China now in effect.

    China is now Australia’s biggest export market for wine — worth almost half a billion dollars.

    Gemtree vineyards in McLaren Vale, near Adelaide, is confident its 2016 shiraz is a good match for the Chinese market.

    The winery has a Chinese joint venture, and was one of the first to crack the market seven years ago.

    Growth has since stabilised, but from this week exporting to China may be more profitable, with tariffs down to 5.6 per cent.

    The free trade agreement has led to a staged tariff reduction from 14 per cent, hitting zero in 2019.

    “China’s now our biggest market, so this is a great chance to increase our profits,” Tony Battaglene from the Winemakers’ Federation said.

    The Chinese export market grew 50 per cent last year and wine exporter Kandy Xu said her business had also doubled.

    “[In the] beginning we exported about two containers per year, but now from last year we export 15 containers,” she said.

    She said Chinese consumers had developed a wine drinking culture and Australia was now China’s biggest supplier.

    “We’ve got around 24 per cent, 25 per cent of their market ahead of France. We’re now beating the old world at their game so that’s a really good outcome for us,” Mr Battaglene said.

    According to winemakers, about 1.8 million tonnes of grapes were crushed for wine last year in Australia.

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  • Why obsessing over GDP is no longer in China’s best interests

    Why obsessing over GDP is no longer in China’s best interests

    China’s leadership has always seen gross domestic product (GDP) numbers as the most important indicator of their ability of govern; thus their whole apparatus does whatever it can, in terms of policies, to make sure a politically acceptable growth rate is achieved.

    With a persistent slowdown, the government has to adjust its target to a maximised but achievable goal. Between 2010 and 2015, the world’s second-largest economy witnessed a steady slowdown, with annual percentage growth rates of 10.5, 9.5, 7.9, 7.8, 7.3 and 6.9, respectively. Averaged annual GDP growth rates between 1989 and 2009 were around 10 per cent.

    Last year, the government set a range of 6.5 per cent to 7 per cent as a growth target, the lowest in decades. As expected, China is on track to meet that 2016 goal after three straight quarters of 6.7 per cent expansion.

    However, such growth was achieved with an expansive fiscal policy, higher government spending, a housing rally, ultra-loose monetary conditions and record bank lending, which have also led to an explosive increase in debt.

    Government spending from January to September 2016 was 12.5 per cent up on the same period a year earlier, while revenues increased by 5.9 per cent. Of the 8.2 per cent overall growth in fixed-asset investment in the period, state firms jumped by 21.1 per cent and private firms rose 2.5 per cent.

    In the previous year, state firms registered a much more moderate 10.9 per cent in fixed-asset investment, year on year, while private investment went up by 10.1 per cent.

    Recent growth has been achieved with the help of record bank lending, which is on pace to top 2015’s record 11.71 trillion yuan (HK$12.2 trillion). Last year, the central bank injected a net 1.5 trillion yuan into money markets through open market operations, many multiples of its net 10 billion yuan injection in 2015.

    The eased monetary policy helped stoke a housing boom that saw prices rise to a historic 12.6 per cent year on year in November and made houses in Chinese cities among the least affordable in the world.

    The state investment-fuelled growth led to alarming combined public and private debt of 260 per cent of GDP by the end of last year, the highest debt-to-GDP ratio in the world. The Bank for International Settlements (BIS) recently warned this was excessive and dangerous. In the first six months of last year, China’s domestic debt ratio rose by an astonishing 28 per cent of GDP.

    Last year the party set a target of 6.5 per cent annual growth for five years through to 2020, in its 13th five-year plan, just to meet the leadership’s promise of doubling the country’s economic size and per capita income from 2010 to 2020, a political symbol of building a “moderately prosperous society”.

    To support such short-term growth, the government had to delay, stall or even hold back some sorely needed reform measures which will help regain long-term growth momentum.

    Realising the challenge of taming asset bubbles, solving rising bad debt and checking unbalanced growth, the leadership recently pledged to shift its focus away from growth towards dealing with risks this year.

    If the leadership makes good on what they claimed – giving market forces a decisive role in the distribution of resources – they should abandon arbitrary growth targets, a remnant a Stalinist command economy.

    China’s economy is going through a critical transition, from manufacturing-oriented and state investment-fuelled expansion to service-centred and consumption-driven growth. What the government should do is push forward reforms that remove the obstacles to such transitions. ■

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  • China retail sales grow 10% on-year in October

    China retail sales grow 10% on-year in October

    China’s retail sales growth rose to 10.0 per cent on-year in October, missing analysts’ forecasts of 10.7 per cent growth — the rate sales grew at the previous month. Thus there was a slowdown in retail sales despite the growth.

    Industrial output rose 6.1 per cent in October from a year earlier, the National Bureau of Statistics said, again below analysts’ estimates of 6.2 per cent.

    The world’s second largest economy has been facing slowing growth of late.

    China is predominantly an export-led economy but with global demand falling, the country needs to re-work its growth strategy. The country has been trying to move towards consumption-led growth but the transition has been bumpy.

    Recent data points to the fact that China’s growth is increasingly dependent on government spending and ballooning debt as private investment hovers around record lows.

    Last week, Alibaba’s Singles’ Day festival posted record sales of $17.73 billion.

    While sales were good, the day-long shopping gala saw slow growth as Chinese shoppers searched for heavier discounts and lower price tags.

    China’s fixed asset investment rose by 8.3 per cent in the first ten months of the year, slightly higher than market expectations.

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  • China’s retailer files bid for McDonald’s China operations

    China’s retailer files bid for McDonald’s China operations

    Beijing-based retail giant WuMart has filed a bid to take over McDonald’s operations in both the mainland and Hong Kong, according to a report from Caixin.com.

    Someone familiar with the case revealed that Wumart’s bid is being backed by TPG capital, one of the largest private equity investment firms globally.

    WuMart is said to be one of a number of Chinese-based companies looking to take over the McDonald’s operations.

    A source says other participants who vie for the bid include a consortium joined by investment corporation CITIC Group and Carlyle Group and Beijing Capital Agribusiness Group.

    The case is among a series of similar bids coming after McDonald’s announced earlier this year the sale of their franchise rights for its operations on the Chinese mainland, Hong Kong and South Korea.

    Up till now the participants have declined to comment on the case, according to Caixin.