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Tag: China

  • Alibaba develops new technology to help the blind shop online

    Alibaba develops new technology to help the blind shop online

    E-commerce giant Alibaba has developed new technology to make it possible for blind and partially sighted people to shop online, according to an article on Alibaba’s news site Alizila. Alibaba plans to launch Smart Touch, an affordable silicone sheet that goes on top of smartphone screens, later this year. The plastic film includes three mini buttons on each side that sensory-enabled. Pressing on each one will trigger a different command, such as “go back”, “return to homepage” and “confirm”.

    Depending on the app, the buttons can lead to different destinations, such as “My Shopping Cart,” “Tmall Global,” and “Tmall Supermarket” in the Taobao app.

    Smart Touch is a joint effort of Alibaba’s Damo Academy and China’s Tsinghua University to improve the smartphone experience for the blind.

    The technology also has an “ear touch” feature, which gives blind and visually impaired users a simple way to listen to text clearly and privately in public, without the need for headphones. It senses when the users is holding the phone to their ear and automatically routes the sound output from the loudspeaker to the earpiece speaker.

    In October last year, Alibaba added Optical Character Recognition (OCR) technology to the pages of its online marketplace Taobao, an artificial intelligence-driven feature that reads text written on images.

    Before adopting OCR, Taobao’s 300,000 daily active users who are blind or have reduced vision would have used screen-reading software that simply announced “image” as it scanned the page. By early December, OCR was being used to read close to 100 million images per day, Alizila reported.

    “Images are becoming ever more important in the shopping experience,” said Wang Yongpan, algorithm specialist who led the OCR upgrade.

    “A typical product page on the site contains about 40 images, and most product specifications and descriptions are often found within images, rather than typed out in plain text.”

    Yongpan said that while Alibaba has been using OCR for many years in various capacities, the technology’s accuracy in reading images has grown exponentially due to advances in machine learning.

    According to Taobao president Jiang Fan, making the platform more inclusive, user-friendly and a home for creativity is part of its larger strategy.

    “If I had to do one thing this year, that would be to make Taobao simpler and bring [us] back to our original purpose,” he said.

    “Alibaba is famously known by its motto, ‘To make it easy to do business anywhere’.”

    The OCR launch was driven by Alibaba’s “Barrier-Free Lab”, which started with a handful of employees in 2011 and has since grown to hundreds of volunteers, ranging from programmers to user-experience designers.

    Now, similar tools can be seen across Alibaba’s ecosystem, expanding from Taobao to B2C e-commerce site Tmall, payments affiliate Alipay, online delivery platform Ele.me, enterprise chat app Dingtalk, navigation firm Amap, music streaming app Xiami and internet browser UC Web, from desktop to mobile.

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  • Mainland China, US and Japan fuel I.T Group sales growth

    Mainland China, US and Japan fuel I.T Group sales growth

    I.T Group sales slipped in the company’s home market, but the fashion retailer is achieving high growth in Mainland China, the US and Japan. Unaudited sales data for the three months to November show an 8.5 per cent year-on-year improvement in Japan and the US and 6.8 per cent growth on the mainland. Hong Kong and Macau sales slipped by 1.8 per cent in the same period.

    Figures for the nine months to November are even better in the US and Japan, up 11.1 per cent, while sales growth in the home market reached 4.8 per cent and on the mainland 1 per cent.

    I.T Group operates its own brands, including Chocoolate and 5cm, concept stores Izzue and Double-Park; international brands it has local licences for including Kurt Geiger and Camper; and A Bathing Ape, which the company rescued from Japanese owners in 2011.

    Chairman Sham Kar Wai said “complex macroeconomic conditions” affected the business in all three regions during the third quarter.

    “Our Hong Kong and Macau operations registered negative same-store sales growth as a result of multiple typhoons, and weaker consumption appetite during the period. In contrast, our Mainland China business delivered positive same-store sales growth, and our Japan and  the US regions continued to progress on a positive trend.”

    He said the group continued to execute measures to safeguard its gross margin, including holding back discounting.

    “However, enhancements to gross margin was overshadowed by the negative impact of the depreciation of currencies of our merchandise purchase. As a result, gross margin decreased during the period.”

    Sham Kar Wai said the company has been even more cautious about the overall operating environment over the last few months, as the recent escalation of trade dispute between Mainland China and the US has cast “greater uncertainties on the future economic outlook”. “Moreover, the warm weather in Hong Kong and Macau may further weigh negatively on the consumer spending momentum across the region.”

  • Taoyuanming Shanghai tests automated stores

    Taoyuanming Shanghai tests automated stores

    Swedish-Chinese firm MobyMart is expanding its automated store format in China in collaboration with Shanghai fruit retailer Taoyuanming. Two stores are operating, one in Hefei and one outside Shanghai. While expansion in the region is the firm’s priority this year, its long-term sights are set on Europe and North America. According to brand co-founder Per Cromwell, MobyMart initially opened a corner-store-format mobile vending platform for coffee, which evolved into MobyMart, a mobile platform for “vending everything”.

    “We found a very visionary fruit retailer in the suburbs of Shanghai, Taoyuanming, and basically they had physical stores but they wanted to have unmanned stores,” said Cromwell.

    “We saw that we didn’t actually need to make too many adjustments to our existing system because basically what we had to do was pre-pack all the fruit — we needed to have fixed units and not have people buying by weight … and when we opened it up to the public it was an instant success.”

    The store carries around 50 SKUs at a time.

    Taoyuanming is reportedly so pleased with the results that two more automated stores are scheduled to open early this year, which may be followed by staffless stores if successful.

    The firm’s strategy is to provide a platform to small retailers.

    “If you are for instance a fruit store outside Shanghai and you want to expand from a few stores to 10 stores in your neighbourhood, then you can’t really start buying BingoBoxes because it’s quite complicated and expensive technology,” says Cromwell.

    The MobyMart model relies on customers scanning their product, while cameras and sensors serve as a back-up. This  “very simple technology” allows for opening “a lot of stores at a very low cost,” Cromwell says.

    “It won’t be 100-per-cent staffless because you still need someone circulating the store and making sure everything’s fine and restocked, but one person in one day can operate eight to 10 stores depending on how spread out they are. So you have much more efficiency with the staff you do have.”

    He added that AI and big data will help store operators know what products will be needed at what locations and at what time.

    “If we have a request of some sort, that is something that will also solve the last mile problem,” he said.
    The whole store and system is expected to retail for around US$15,000. MobyMart also has a prototype mobile store with automated driverless vehicle capacity – although its rollout is restricted by legislation around the technology.

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  • Freshly brewed coffee is rising in China

    Freshly brewed coffee is rising in China

    Although Luckin Coffee, a chain of coffee shops in China,  disclosed a loss of 857 million yuan (RMB) last year, they are still positive about the potential for growth in China. Meanwhile, a Canadian coffee brand, Tim Hortons, announced its expansion into the country, planing to open more than 1,500 stores in China in ten years.

    Convenience store’s brewed coffee stand out in a crowded market

    Coffee brand giants are everywhere, but  coffee sales from convenience store never falls behind, occupying the lower level consumer market. According to the FamilyMart Co., Ltd., there are more than 2,000 stores in the country now selling freshly brewed coffee and the annual revenue in 2018 has exceeded 50 million cups. FamilyMart  revealed that their goal is to sell 100 million cups of coffee in 2019.

    Food plus coffee combo drives sales

    Another profitable coffee sales business people usually neglected is the Western-style fast food restaurant. Since KFC, also known as Kentucky Fried Chicken, upgraded the coffee products in 2015, their coffee sales has grown rapidly. In the first three quarters of 2018, KFC sold more than 63 million cups of coffee at an average rate of 2.5 cups per second.

    “The growth of coffee market among convenience store and western restaurant reflects the characteristics of current Chinese coffee market, a market with multi-level, multi-channel and multi-consumer profile.” China food industry analyst Zhu Danpeng said that this also proves the Chinese coffee market still have a big room to invest and develop.

    The current high profit of the coffee industry leads to competition

    Some industry consulting companies predict that the sales of the Chinese coffee shop will grow at a compound annual growth rate of 15% from 2017 to 2025, and will reach more than 100 billion yuan (RMB) by 2025. The number of coffee shops in China is expected to reach more than 80 thousand in the near future.

    However, the competition between freshly ground coffee market cannot be avoided. Zhu believes that one of the fundamental reasons for tight competition is that the profit of the this particular beverage industry is extremely high.

    Recently, Zhu went to Yunnan for site visit and he communicated with the local farmers. He said that the coffee bean purchase price of the famous coffee brand is about 12-16 yuan/kg, which can be used to brew 10-12 cups of coffee. In other words, the cost of coffee beans is less than 2 yuan (RMB) per cup. “It is obvious that the gross profit of this industry has reached several hundred percent.”

     

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  • Tourists devote a quarter of budget to shopping

    Tourists devote a quarter of budget to shopping

    Retail shopping continues to be the largest expense for tourists from China, according to a survey from Nielsen and Alipay, accounting for almost a quarter of total spend. The 2018 trends of Chinese mobile payment in outbound tourism survey revealed that retail spending took up 24.6 per cent of Chinese tourists average spend, followed by accommodation, dining and tourist attractions.

    Interestingly, the report found that Chinese millennials are no longer the single most dominant user of mobile payments.

    “In 2017, 55 per cent of Chinese tourists born between 1960-1979 used mobile payments while travelling overseas – significantly lower than the proportion of millennial tourists,” the report reads.

    “In 2018, the usage rate rose to 68 per cent, almost equalling their younger peers.”

    Average budget for the typical Chinese tourist increased 15 per cent to AU$9,382 over the year, and a familiarity with mobile payments drove increased spend, with 56 per cent of surveyed merchants claiming improved sales after adopting mobile payment system Alipay.

    However, a study by Coresight research in October 2018 found that, while Chinese tourists were travelling more often they were spending around 18 per cent less in the retail environment – a figure driven by a recorded 24 per cent decline in average shopping trip spend.

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  • AirPass helps Aussie retailers woo Chinese shoppers

    AirPass helps Aussie retailers woo Chinese shoppers

    Recently, Australia fintech company AirPay Financial Technologies announced its regional collaboration with China leading mobile payment technology company SwiftPass to form a new lifestyle brand “AirPass”. Connecting Australian merchants directly with Chinese consumers, AirPass lets local retailers accept WeChat Pay and Alipay both online and offline, as well as reach overseas markets to make the most of the global Chinese spending boom.

    AirPass is a lifestyle brand backed by Australian fintech startup AirPay Financial Technologies, in partnership with leading Chinese mobile payment provider SwiftPass. The new brand brings China’s most popular ePayment, eStore, eCard, eMarketing and eWallet services to Australia, allowing Chinese tourists, students and migrants to make over the counter purchases by simply scanning a QR code on their smartphone.

    The payment platform can also be integrated into Australian e-commerce websites and mobile apps, taking advantage of AsiaPay’s PayDollar payment gateway. Supporting multiple shopping cart plugins, PayDollar provides a one-stop online payment solution allowing local merchants to accept Alipay, WeChat Pay, Visa, MasterCard, Amex, PayPal and ZipPay

    “AirPass is providing a user-friendly platform for Australian retailers to build their own eStore to facilitate marketing and payment – which is the key to entering the Chinese consumer market,” says SwiftPass Technologies VP Tong Liu.

    Meanwhile, the AirPass app for iOS and Android lets Australian retailers connect directly with Chinese shoppers. AirPass assists Australian retailers and brands with setting up their own WeChat eStore to tap into Chinese social marketing channels. This allows local retailers to sell products via the WeChat ecosystem, reaching new customers in China along with Chinese communities around the globe.

    AirPass’ arrival in Australia comes as Boxing Day saw record high sales to Chinese shoppers across major retailers and shopping centre groups such as Westfield, Chadstone, QVB and Pacific Fair.

    “We are thrilled to announce our regional partnership with SwiftPass and recently launch WeChat Pay and Alipay to Australia’s largest and oldest pearling company Paspaley,” says AirPay Financial Technologies chief executive Jimmy Zhu. “There is huge demand from the market pushing us to deliver more advanced payment and marketing products.”

    Another Australian family-owned luxury retailer, Harrolds recently launched a WeChat Official Account and will soon accept WeChat Pay and Alipay in-store.

    Other luxury brands such as Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Valentino, Mulberry, Givenchy, Off-White, Marais, Furla, Folli Follie and Sneakerboy are also adopting the AirPass platform in order to better reach Chinese shoppers.

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  • JD.com has just marked a breakthrough for drone delivery in Southeast Asia

    JD.com has just marked a breakthrough for drone delivery in Southeast Asia

    JD.com announced the completion of Indonesia’s first government approved drone flight – a breakthrough for drone delivery in Southeast Asia. The successful pilot opens the door for future commercial drone use in Indonesia and the Southeast Asia region, subject to further regulatory approvals. Representatives from Indonesia’s Ministry of Transportation, Civil Aviation and Air Navigation were present for the flight. The news was announced during the World Economic Forum Annual Meeting.

    The test flight took place on January 8, 2019, in West Java, Indonesia, where the drone flew from Jagabita Village, Parung Panjang to MIS Nurul Falah Leles Elementary School to deliver backpacks and books to students.

     

    The items delivered by drone were part of a larger donation of supplies from JD.com to the school. JD has a long history of offering philanthropic support to those in the communities where it operates. The company often taps its technology and nationwide logistics network to provide immediate support for natural disasters such as earthquakes in China.

    JD.com and its JV partner, e-commerce company JD.ID, were early movers in bringing high quality e-commerce to Indonesia. JD.ID, which launched e-commerce operations in 2016, sells 1 million SKUs and serves more than 20 million consumers across the country. Its operations leverage a logistics network consisting of ten warehouses across seven islands, covering 483 cities and 6,500 counties.

    Given the fact that the country is spread out across many islands, the implementation of drones for regular use in e-commerce deliveries, as well as other logistics-related services, will enable citizens in Indonesia to enjoy more efficient and reliable services, and help JD.ID realize its goal of being able to deliver 85% of orders same- or next-day. JD.ID is also committed leveraging its logistics and other resources to support humanitarian efforts like earthquake disaster relief.

    “It is a privilege to have contributed to this important moment in Indonesia’s history,” said Jon Liao, Chief Strategy Officer at JD.com. “We have been using drones for real deliveries in China for over two years now, and have seen the profound impact that the technology can have on people’s lives around the country. We look forward to working closely with WEF and the Indonesian government to realize the full potential of this technology, and provide more convenience to Indonesian citizens.”

    JD.com is a strategic partner of WEF and a partner of WEF’s Centre for the Fourth Industrial Revolution. The C4IR is a global hub for multi-stakeholder cooperation to develop policy frameworks and advance collaborations that accelerate the benefits of science and technology. Leveraging drone technology to deliver supplies to areas in need is a high priority on the C4IR’s agenda. WEF and JD have been working closely together to ensure the success of the pilot in Indonesia.

    “This trial represents the first government approved drone delivery operation in Indonesian history,” said Timothy Reuter, Head of Drones and Tomorrow’s Airspace at the World Economic Forum. “These tests are an opportunity for Indonesia to become a leader in the Southeast Asia region by leveraging drone delivery to improve access to vital medical, humanitarian, and commercial goods in remote areas.”

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  • Malaysia may feel bite of China economic slowdown

    Malaysia may feel bite of China economic slowdown

    The slowdown in China may impact Malaysia more given the strong trade linkage with China, according to PublicInvest Research. “China is not only our biggest trade partner in 2018 (YTD 2018: 16.7%) but also our largest export market (YTD 2018: 13.9%) and our second biggest import source after Singapore (YTD 2018:19.8%). This could bring negative ramifications not only to Malaysia but also to other peers like Singapore, Thailand, Indonesia and the Philippines and hence, the growth prospects of Asean-5,“ the research house said in a report.

    In fact, it said, the simmering trade stress has caused noticeable dent to export momentum in November with Singapore, Thailand and Indonesia suffering a contraction in exports. This could be repeated in December.

    PublicInvest Research said unfavourable outcomes to the trade negotiation may see longer times taken for growth to normalise due to demand deficiencies which are always more damaging than supply shocks.

    “Other than this, the pullback in global financial and commodity markets arising from pockets of stress mentioned above can hurt Malaysia as well due to contagion effects. This can bring down the ringgit in addition to putting a cap in the prices of our key commodity exports like crude oil, crude palm oil and rubber,“ it explained.

    The slowdown in China is particularly alarming and shows signs of worsening following the release of its 2018 growth of 6.6% (2017: 6.8%), the slowest since 1990.

    “We don’t see negative surprises in this as it is within the People’s Bank of China’s estimates,“ it said, adding that the International Monetary Fund (IMF) expects China’s slowdown to continue, forecast to ease to 6.2% in 2019 amid firmed commitment to reforms and rebalancing on the back of the trade collision with the US.

    PublicInvest Research said the slew of IMF downgrades could result in negative ramifications not only to global financial markets but also commodities. Risk aversion could heighten, pushing investors to take less risks which may be precursor to elevating demand for safe haven assets particularly bonds.

    “Among all the growth risks mentioned by IMF, we are particularly concerned over China given its extensive trade network and huge economy.”

    PublicInvest Research said unfavourable trade negotiations could be harmful not only to China’s outlook but also emerging economies, particularly Asean, given their strong interdependence on trade. This could lead to inexorable downturns to Asean economies, particularly those that depend on China’s exports (intermediate goods).

    “Over and above all, we think that China still has sufficient tools to support growth should trade negotiations turn unfavourable although the impact could still be there.”

  • Xiaomi opens massive Mi store in Paris

    Xiaomi opens massive Mi store in Paris

    Chinese electronics firm Xiaomi has opened its largest European Mi Store in Paris. Queues for the January 18 1pm opening started to form at the Champs-Elysees location at sunrise, despite freezing temperatures. The store is hosting a reportedly comprehensive selection of the brand’s full product range, including smartphones, headphones, cameras and home appliances.

    In celebration of the launch, Xiaomi held a three-day sale on its French online store featuring discounts of up to €50. The supersized flagship is Xiaomi’s second location in Paris.

    View the gallery below for images of the stores (11 images) :

  • The Palace Museum in Beijing promotes beauty products

    The Palace Museum in Beijing promotes beauty products

    For 500 years the Forbidden City in central Beijing was the seat of power in imperial China. Today it is home to the Palace Museum, a tourist magnet that houses some of the country’s most treasured cultural relics from the Ming and Qing dynasties. But this shrine to the past is rapidly becoming a very modern fashion phenomenon thanks to a new range of beauty products that have proved a massive hit with young Chinese women.

    Online buyers snapped up more than 100,000 lipsticks developed by the Palace Museum within four days of their launch earlier this month, helping to turn the historic landmark into a trendy consumer brand.

    What captured their hearts was the lipstick’s elegant packaging inspired by the national treasures on display in the museum – the lipstick tube bears patterns such as royal embroideries, antique furniture and fairy cranes – heavenly birds symbolising longevity.

    Lizzy Wong, a 24-year-old from the southern metropolis of Guangzhou, is one of millions of loyal new fans of the Palace Museum.

    “I bought them mainly for the beautiful cases. Their functionality doesn’t really matter to me,” Wong said. “We girls just can’t resist the charm of pretty designs.”

    For several years, the former imperial palace has attracted something of a cult following by developing and selling its own original products, from Chinese-style paper tapes to modern essentials like phone cases, with designs or branding inspired by the past.

    Before cosmetics, the Palace Museum found success with products which usually added a humorous twist to the serious traditional culture.

    Veronica Wang, associate partner at OC&C Strategy Consultants, which specialises in consumer goods, said the Palace Museum has turned itself into something more than a brand.

    “Young consumers are seeking things that are different and new. The Forbidden City captured this need,” Wang said.

    The success of the make-up range hasn’t been without challenges. The museum has two online outlets, the Palace Museum Cultural and Creative Store – which is accessed via WeChat and the Palace Museum’s Taobao store, and this has caused some confusion.

    The Palace Museum’s brand management was chaotic and would benefit from marketing and brand professionals, said Shaun Rein, the managing director of China Market Research Group.

    “When you think of The Metropolitan Museum of Art (in New York), you know that the quality will be pretty good and authentic. But when it comes to the Forbidden City, we really don’t know what the position is,” he added.

    Analysts also worry about whether the Palace Museum can replicate its past successes in the future.

    “The sustainability of this success will depend on their products and capability to continually innovate,” said Wang.

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  • How to be a successful KOL in China?

    How to be a successful KOL in China?

    Why luxury brands willing to expand in China seems to never get enough of  so-called KOLs (key opinion leaders) Tao Liang, nickname “Mr bags”, is a graduate of the University of Southern California and Columbia University. Although he is only 26-year-old, he has already become one of the most successful digital influencers in China, in terms of the ability to drive sales.

    People call him Mr Bags because Liang has an unapologetic love for handbags. So, he has worked on capsule collections with different luxury brands such as Givenchy, Longchamp and Montblanc, boasting a huge following on WeChat and Weibo, which are two of the largest social media networks in China. And he also knows how to sell them to his over 3.5 million readers on China’s biggest social media platform Weibo and more than 850,000 followers on WeChat, a microblogging messaging app.

    In just six minutes, Liang helped Tod’s sell 3.24 million RMB worth of handbags on his new Mini Program shop within WeChat, called “Baoshop.” The second collaboration between the Beijing-based fashion blogger and Tod’s, 500 pieces of the limited-edition “Wave” backpacks were created — double the amount from last year’s capsule collection.

    But how did Liang become a sort of “bag whisperer”? He says that when he was studying in the universities in Los Angeles and New York, he fell in love with luxury bags and loved going on shopping sprees with his friends. It didn’t take long for him to realize that he could turn his passion for handbags into a full-time job but even after he started getting some traction while still in the US, his parents were not entirely happy with his career choice. “Only after I started working with big brands and celebrities like Fan Bingbing they thought that perhaps this was a real business,” he says.

    One issue that often comes up with KOLs is authenticity. When you work with different brands, how do you maintain your integrity without alienating your fans, who trust your opinions to be genuine and unbiased? “This is key for me and I really try our best to maintain that,” says Liang. “One of my advantages is that until not long ago I was based in the US so I wasn’t exposed to all the brand partnerships and advertising that the KOLs were doing in China so my content was 100 per cent pure editorial, but then I started working with brands and get first hand information while also giving my followers the right information and guidance.”

    So how does Mr Bags, a young man with an innate fashion sense and an encyclopedic knowledge of handbags, guide his followers and win their trust? He only works with brands that his fans “naturally love” and turns down offers all the time. Liang’s fan base is mostly female, and he feels that being a man is not a hindrance. On the contrary, by virtue of being a guy, he is able to provide useful and unbiased advice.

    “My name is Mr Bags and lots of people find this name interesting but also confusing because generally bags are for women,” he says. “Normally when girls shop for a bag they don’t think too much and buy it right away, on impulse, so I help them think more rationally. For example, I categorize all the bags and tell them which ones are the classic pieces and the ones that have more staying power and the most iconic ones so I provide some logic behind their purchases. I think that as a guy I’m more objective and I can give them useful tips. I tell them that if you buy a bag that you can use in your life and enjoy it then you feel that your money is well spent and worth it.”

    Liang believes that his editorial work must come first.“Many people think that KOLs just have fancy lives and go everywhere for fun but in China we have so many channels, like WeChat and Weibo, so it’s really a lot,” he says. “I was just updating my channels on the way here. Editorial content is more important for me; 60 per cent of what we do is still editorial.”

    Achieving the right balance between authentic content and remunerative ad-driven projects is the key factor for being a successful KOL, something that is not always as easy as it seems but Liang has already mastered so far.

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  • LVMH invests into Gabriela Hearst

    LVMH invests into Gabriela Hearst

    LVMH Luxury Ventures, an investment arm of the multinational conglomerate, has taken a minority stake in New York-based luxury label Gabriela Hearst. The terms of the deal were not disclosed, although LVMH Luxury Ventures typically invests between €2 and €15 million.

    Hearst, who ran contemporary-priced label Candela for more than a decade before launching her upscale luxury offering in 2015, has briskly built a ready-to-wear business based on sharply tailored silhouettes rendered in ultra-expensive fabrics, with a focus on sustainably sourced materials. In 2018, just three years after she launched her label, the collection — which also includes a robust handbag business, mostly sold direct-to-consumer — generated between $15 and $20 million, according to sources familiar with the business.

    Launched in 2017, LVMH Luxury Ventures is an investment vehicle within the LVMH group that aims to invest in emerging labels that have already shown an ability to scale.

    Investments have included French apothecary brand Officine Universelle Buly and sneaker resale shop Stadium Goods, which was subsequently acquired by Farfetch for $250 million in December 2018.

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  • Trade war could drag Malaysia’s GDP down to 3.2% this year

    Trade war could drag Malaysia’s GDP down to 3.2% this year

    A full-blown trade war could drag Malaysia’s gross domestic product (GDP) growth to 3.2% this year, from an earlier projection of 4.7%, according to Affin Hwang Investment Bank Bhd head of research and chief economist Alan Tan. Tan said if the trade spat between the US and China were to escalate to a situation where tariffs are fully implemented on all Chinese goods, Malaysia’s GDP growth could be hit closer to 1.5 percentage point.

    “If Malaysia’s GDP is at 5%, the 1.5% will push the GDP growth down to 3.5%,” he told reporters at the press conference in conjunction with the bank’s launch ceremony of its Securities Borrowing and Lending (SBL) facility for retail investors yesterday.

    “Malaysia is an open economy and is still relying on trade. As we know, China today is the major market for Malaysia and if the global trade war were to escalate, we think that the Chinese economy, which has already shown signs of slowing down, may slow even further.

    “Therefore, we are of the view that Malaysia’s exports to China will be slowing down towards the second half of 2019 assuming if the trade war continues to drag on,” he added.

    However, Tan said domestic demand will continue to support the economic growth this year driven by several measures introduced by the government in Budget 2019, supporting the bank’s forecast on the GDP growth at the region of 4.7% this year.

    Additionally, he said that the bank opined that this time around, both US and China will be more willing to negotiate and possibly come out with a trade compromise by end of the first quarter this year, in view of the external uncertainties and weaker business sentiment.

    “Going into 2019, we already seeing signs of slowing down in the US and China. Unlike six months ago, where both economies continue to do relatively well,” he noted.

    Therefore, he said the bank believes that in the second half of 2019, following the resolutions of the global trade war, coupled with the weakening US dollar, interest will come back to the emerging market, including Malaysia.

    However, Tan said the bank expects that the market will remain flat in the first half of 2019 and looking at end-2019 target for the FBM KLCI at 1,810 points.

    On ringgit, he said the local currency is expected to appreciate to RM3.90-RM4.00 level in the second half of 2019, and possibly ending the year at RM3.90 against the US dollar, as the greenback is likely to soften towards the second half of the year.

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  • Beijing approves blueprint for ‘Greater Bay Area’

    Beijing approves blueprint for ‘Greater Bay Area’

    Chinese Vice-Premier Han Zheng, the point man on Hong Kong and Macau affairs, recently gave the green light to the official document on the “Greater Bay Area” following extensive consultations with local governments, a Beijing source said. “No party or agenda, including even environmental protection, will be left behind by this all-inclusive blueprint,” the official said.

    More than three years in the making, the Greater Bay Area was first mentioned in a development action plan jointly outlined by China’s top authorities on economic planning, commerce and foreign affairs to create a new economic growth engine by pooling together Hong Kong, Macau and nine neighbouring cities in Guangdong province.

    The mega zone covers 56,500 square kilometres, has a combined population of about 67.6 million and accounted for 12.5 per cent of the country’s gross domestic product in 2016.

    Hong Kong leader Carrie Lam Cheng Yuet-ngor has taken part in discussions on the scheme since August last year, becoming the city’s first chief executive to join a leading group under China’s cabinet, the State Council.

    Authorities were now working on the implementation plan, Zhang said in an interview with state broadcaster CCTV which was aired on Saturday night.

    Hong Kong, Macau, Guangzhou and Shenzhen would be the central cities in the bay area, and each had their own unique positioning, he said.

    Hong Kong will be the international finance, navigation and trade centre, as well as a transport hub. It will have the role of pushing finance, trade, logistics and professional services towards the high-end market.

    Macau will be an international tourism city and a platform for trade with Portuguese-speaking countries. Guangzhou will take a leading role as a national central city while Shenzhen will take a leading role as a special economic region and an innovative city, he said.

    The planners hope the advantages these four cities enjoy can complement each other and offset the challenges brought by gaps in the legal and economic systems.

    The international network and mature market economy of Hong Kong and Macau could have big potential when combined with the vast hinterland and market Guangzhou enjoyed, he said.

    “Under the new circumstances, Hong Kong and Macau still have their unique position and advantages that cannot be replaced,” Zhang said.

    He revealed for the first time that there were almost 100,000 Hong Kong residents and nearly 20,000 Macau residents who had applied for a new identity card that would grant them access to a wide range of social and public services on the mainland. The arrangement was introduced on September 1 last year.

    There were high expectations that Beijing would reveal the blueprint when Premier Li Keqiang said in March last year there would be an announcement soon. But the central government has since been embroiled in a trade war with its biggest trading partner, the United States.

    Sources said that the tussles over political interests and dominance among the Greater Bay Area parties was a reason behind the delay and meant the central government had to step in to coordinate.

    “But the most important question here is whose model to follow and whether the tussle is about Hong Kong converting mainland cities or the other way around?” said an academic who has direct knowledge of the blueprint’s planning.

    “Mainland cities are hesitant to follow Hong Kong’s model in case they lose official powers.”

    An internal study by an official think tank seen by the Post said the crux of the Greater Bay Area integration was about putting “one country, two systems” into practice but differences in economic, tax, customs and legal systems that would ensure Hong Kong and Macau’s high degree autonomy have remained key challenges.

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  • Chow Tai Fook sales slip amid consumer uncertainty

    Chow Tai Fook sales slip amid consumer uncertainty

    Chow Tai Fook sales declined by 11 per cent in same-store sales volume in both Mainland China and Hong Kong & Macau in the December quarter. However the decline in value was less, at 7 per cent in Mainland China and 6 per cent in Macau. Retail sales on the mainland rose by 1 per cent, which seems a modest rate given the company opened 259 new points of sale there during the quarter. Total retail sales value in Hong Kong fell by 1 per cent, despite five new stores opening there.

    In a stock exchange filing, the company said the decline in same-store sales came “amid an uncertain macro environment”.

    In Mainland China, same-store sales of gem-set jewellery declined by 5 per cent, while the average selling price (ASP) fell from HK$6900 in the preceding quarter to $6600.

    In Hong Kong and Macau, gem-set jewellery sales fell by 8 per cent and the ASP from $11,800 to $11,500.

    Sales of gold products in both markets was affected by a decline in volume growth as the gold price strengthened, the company reported. That drove the ASP from $7000 to $7400 in Hong Kong and Macau and from $3900 to $4300 in Mainland China.