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Tag: China

  • Nike Revamps China Strategy, Directs Online Sales to Exclusive Channels Amid Rising Domestic Competition

    Nike Revamps China Strategy, Directs Online Sales to Exclusive Channels Amid Rising Domestic Competition

    In a move to regain customer loyalty in China, American athletic wear giant, Nike, is taking control of its online product distribution. The company aims to drive consumers to official Nike channels and implement full-price sales as it faces increasing competition from domestic brands.

    Nike’s new strategy includes limiting online sales by wholesale distributors, according to Cathy Sparks, VP and GM of Greater China. From January, major sportswear retailers in China will cease online sales of Nike’s clothing and footwear, focusing instead on in-store transactions. Online, Nike merchandise will be available through new Nike-branded digital storefronts on popular Chinese e-commerce platforms such as Tmall, JD.com, and Douyin, as well as Nike’s own website and app.

    Sparks, who has spent 25 years at the company and was appointed to oversee Chinese operations earlier this year, stated, “Our marketplace has become so fragmented and cluttered.” She added that consumers desire a premium brand experience that is reliable and seamlessly integrates digital and physical aspects.

    Recovery Challenges in China

    China, the third largest market for Nike, presents a significant area of concern. As the company seeks to recover growth, it’s implementing a comprehensive strategy that includes this shift towards e-commerce.

    The company reported last month that sales in Greater China declined by 17% on a constant-currency basis in the fourth quarter. This drop is even more significant than the 10% decrease seen in the previous quarter. Nike’s market share has been impacted by the rise of local competitors Anta and Li Ning, as well as international brands like On and Hoka.

    Investors are keenly observing Nike’s recovery strategy led by CEO Elliott Hill. Despite facing substantial challenges, Hill, who has been at the company’s helm for nearly two years, is determined to refocus on sports, rebuild wholesale relationships in North America, and introduce new products.

    In line with these changes, most of Nike’s 16 store partners in China, who manage thousands of Nike stores, will halt their online sales, a Nike spokesperson confirmed.

    Topsports, a leading Chinese sportswear retailer that makes 22% of its revenue from online sales of Nike products, is among the distributors expected to be impacted. The company has warned of a “significant” short-term negative effect but remains committed to collaborating closely with Nike on offline sales arrangements.

    Nike’s decision to alter its e-commerce strategy was criticized by BNP Paribas senior analyst Laurent Vasilescu, who called it a “strategic misstep” that could benefit competitors.

    Furthermore, Sparks highlighted the need for Nike to launch products that resonate more with Chinese consumers. The company has appointed a vice president of local product creation in Greater China to address this need.

    Questions & Answers

    What is Nike’s strategy to regain customer loyalty in China?
    In an attempt to regain customer loyalty, Nike is controlling its online distribution by driving consumers to official Nike platforms and implementing full-price sales, despite facing competition from domestic brands.

    How is Nike’s market performance in China?
    Nike reported a 17% decline in sales in Greater China on a constant-currency basis during the fourth quarter, showing a larger decrease than the 10% drop in the previous quarter.

    Why does Laurent Vasilescu, BNP Paribas senior analyst, consider Nike’s e-commerce strategy changes a strategic misstep?
    Vasilescu believes that Nike’s problem is not with distribution in China and elsewhere, but with its product. He suggests that the changes in e-commerce strategy could give opportunities to the company’s competitors.

  • China’s Midea Doubles AC Production to Quench Heatwave-Driven Demand in Europe

    China’s Midea Doubles AC Production to Quench Heatwave-Driven Demand in Europe

    Midea, the Chinese home appliance heavyweight, recently revealed that it accelerated its production operations to deliver 20,000 air conditioning units to France in a span of seven days. This was in response to the escalating demand spurred by the severe heatwave that is engulfing Europe.

    In 2020, Midea led China’s air conditioning sector in terms of market share. It was able to double its production capacity to 6,000 portable units each day by initiating a fresh production line on July 7. As a result, the company managed to finish manufacturing all 20,000 units in just three and a half days. Midea prioritized the French order by designating additional labor and production capacity, even while its factories were operating at full tilt to satisfy local demand.

    Increased Demand for Chinese Home Appliances in Europe

    The ongoing heatwave in Europe has sparked a significant surge in demand for Chinese-made home appliances. Midea Group reported that sales of a portable split air conditioner, specifically designed for the European market, have exceeded 200,000 units this year, marking a twofold increase from the previous year. Furthermore, this particular model has sold out in Germany, France, the Netherlands, and the United Kingdom.

    Official data disclosed that more than 10,000 extra deaths were reported in European countries during the extraordinary heatwave that swarmed the western part of the continent in late June. The majority of these, over 9,000, were among individuals aged 65 and above.

    Surge in Online Sales of Air Conditioners and Fans

    Alibaba, the e-commerce juggernaut, has reported three-figure growth in sales of air conditioners and fans on its overseas platforms. On AliExpress, Alibaba’s international retail platform, warehouse inventory of a 2.35-kilowatt Midea air conditioner, which was released in Germany in June, was entirely sold out by Thursday.

    The trend was significantly evident in southern Europe as well. In Spain, fan sales skyrocketed by 94% between June 17 and 23 compared to the same period in May. Meanwhile, Italy witnessed a 100% month-on-month surge in sales of cooling appliances and sun-protection apparel in June.

    The rush by European consumers was also mirrored on Alibaba.com, the company’s business-to-business platform, displaying urgent procurement by local merchants. In June, air conditioner orders in Spain almost doubled from a year earlier. Simultaneously, wholesale fan orders saw a staggering increase of 378% in Sweden and 114% in Belgium.

    Questions & Answers

    What has been Midea’s response to the increased demand for air conditioners in Europe?
    Midea has ramped up production and shipped 20,000 air conditioners to France in just seven days to meet the increased demand due to the intense heatwave.

    What is the sales trend of the portable split air conditioner designed for Europe?
    Sales of the portable split air conditioner, specifically designed for the European market, have exceeded 200,000 units this year, marking a twofold increase from the previous year.

    How has the demand for cooling appliances and sun-protection apparel changed in Italy?
    In Italy, there has been a 100% month-on-month increase in sales of cooling appliances and sun-protection apparel in June due to the heatwave.

  • Five Guys Burgers Set for Beijing Expansion Amid Uptick in US Fast-Food Foothold in China

    Five Guys Burgers Set for Beijing Expansion Amid Uptick in US Fast-Food Foothold in China

    Next month, the renowned American burger establishment, Five Guys, is all set to launch in Beijing. This event signifies the continued expansion of U.S. restaurant brands in China, undeterred by the escalating competition in the market.

    Five Guys plans to establish three eateries in Beijing’s shopping centers, strategically located in areas favored by the younger demographics. The brand’s entry into Mainland China came about in 2021, facilitated through a collaboration with local franchise operator, JumboFive. The inaugural restaurant, located at Shanghai’s Printemps Mall on Huaihai Middle Road, attracted considerable consumer attention. The brand reported that customers started lining up from as early as 2 am, enduring waits of over three hours on the opening day.

    The rapid expansion of Five Guys in China aligns with a larger trend noticed among American fast-food companies. These organizations are seeking growth opportunities in China as the prospects in the U.S. become more saturated. Domino’s Pizza China serves as a representative example, recently extending its franchise network to encompass 1550 stores. The pizza chain added a net of 235 new outlets in the first half of the year, concurrently reporting a surge in sales during the second quarter.

    In an akin move, Yum China recently decided to purchase the Pizza Hut business in mainland China from U.S.-based Yum Brands. The deal, worth US$1.2 billion in cash, aims to tap into the potential of Pizza Hut as the country’s largest casual dining restaurant brand. Last year, Pizza Hut generated a substantial revenue of $2.3 billion and an operating profit of $183 million.

    Questions & Answers

    What is Five Guys’ plan for expansion in Beijing?
    Five Guys plans to open three restaurants in Beijing, targeting shopping malls frequented by young consumers.

    How was Five Guys’ entry into Mainland China facilitated?
    Five Guys entered Mainland China in 2021 through a collaboration with the local franchise operator, JumboFive.

    What are some other examples of American fast-food chains expanding in China?
    Additional examples include Domino’s Pizza China, which expanded its network to 1550 stores recently, and Yum China, which acquired the Pizza Hut business in mainland China.

  • China Targets $9 Trillion Retail Sales in Unprecedented Consumption-Driven Five-Year Plan

    China Targets $9 Trillion Retail Sales in Unprecedented Consumption-Driven Five-Year Plan

    China has unveiled its inaugural five-year scheme centered on consumption, where it anticipates annual retail sales to reach approximately 60 trillion yuan (US$9 trillion) by 2030. This indicates a deceleration in year-on-year growth to roughly 3.7 per cent, compared to the estimated 5 per cent noted between 2021 to 2025.

    Encouraging Household Consumption and Spending

    In addition to scaling retail sales, China also committed to enhancing household incomes and significantly augmenting the share of household consumption in the economy, which presently stands around 40 per cent. The yearly target for retail sales growth mirrors a declining impetus in goods consumption, prompting policymakers to shift the focus towards bolstering household expenditure as a key growth propeller.

    China’s State Council approved and unveiled the plan on Monday, with a pronounced focus on service consumption. Target sectors encompass elderly care, childcare, healthcare, culture, tourism, sports, and education. The State Council anticipates that, by 2030, the consumer market will expand further, the household consumption rate will increase considerably, and the economic growth’s reliance on consumption will be solidified further.

    The new blueprint also advocates for substantial tourism-related spending, broadening of visa-free entry to additional countries, and increasing direct international flights to Europe, the US, and countries involved in the Belt and Road Initiative.

    Addressing Consumption Imbalances and Enhancing Services

    While China’s services expenditure has outpaced goods consumption growth in recent years, it remains significantly behind developed economies. In 2025, per capita services consumption amounted to 46.1 per cent of total consumption, markedly lower than the approximately 70 per cent observed in the US.

    To redress the deepening imbalance between robust industrial output – buoyed by exports – and tepid domestic consumption, some government economists have advocated for long-overdue income and welfare reforms.

    The plan also aims to make China’s social security system more streamlined and sustainable, providing individuals with greater spending confidence and stability.

    The five-year plan underscores the need to strengthen household spending power via higher wages, increased property income, enhanced social security, and improved public services. Commitments have also been made to eliminate “unreasonable restrictive measures” in areas like car purchases, housing, and approvals for entertainment events.

    Fiscal and financial policy is expected to place heightened emphasis on direct benefits to consumers, spending related to livelihood, and consumption-related infrastructure.

    Questions & Answers

    What is China’s anticipated annual retail sales by 2030?
    China aims for annual retail sales to reach approximately 60 trillion yuan (US$9 trillion) by 2030.

    What sectors does China’s inaugural five-year scheme on consumption target?
    The industries of focus encompass elderly care, childcare, healthcare, culture, tourism, sports and education.

    What measures does China’s consumption plan propose to strengthen household spending power?
    The plan proposes measures such as increasing wages, enhancing property income, improving social security, and boosting public services. It also promises to remove restrictive measures in areas like car purchases, housing, and approvals for entertainment events.

  • China Dethrones US as Vietnam’s Top Seafood Consumer: A 40% YoY Increase

    China Dethrones US as Vietnam’s Top Seafood Consumer: A 40% YoY Increase

    In the first half of 2026, China became Vietnam’s largest seafood market, surpassing the United States. This shift resulted from an importation of Vietnamese seafood valued at nearly $1.4 billion, a 40% year-on-year increase. This accounted for almost a quarter of the $5.7 billion worth of Vietnamese seafood exports, a rise of 11.4%, as per the Ministry of Agriculture and Environment. Comparatively, the value of the U.S.’s imports was $898 million, while Japan, in third place, had $788 million worth of imports.

    Factors in Market Shift

    The rise in shipping costs has elevated China’s attractiveness due to its geographical closeness, according to Nam Viet Jsc, a seafood exporter. Furthermore, Le Hang, the Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers, noted that as the U.S. and Europe increased non-tariff barriers, many businesses turned towards China. She highlighted the U.S.’s requirement for businesses to provide extra admissibility certificates with a complex application process, particularly impacting tuna products. Additionally, shrimp exports faced high anti-dumping duties.

    Another contributing factor was the frontloading of shipments to the U.S., which led to significant inventories for importers in the country. This occurred during a period when consumers were restricting their spending and leaning towards lower-priced products.

    Adaptability and Future Outlook

    Hang stated that the growth in the first half was a reflection of the rebound in global demand and the adaptability of Vietnamese businesses, who adjusted their markets and product structures. Shrimp was the top export, valued at $2.3 billion (a 13.6% increase) and constituted over 40% of the total value. The demand from mainland China and Hong Kong primarily drove the growth. Moreover, exports of Pangasius, a white-flesh fish, increased by 12.1% to reach $1.1 billion, owing to Vietnam’s competitive pricing and the consistent demand in many markets.

    However, Hang predicts an uncertain future for exports in the second half of the year due to potential U.S. protectionist measures and trade barriers, ranging from regulations associated with “forced labor” to imposition of quotas on products. She emphasizes that in this rapidly evolving trade landscape, businesses must stay updated, adjust export plans, diversify markets, and increase the proportion of deeply processed products to manage risks and sustain growth.

    Questions & Answers

    What factors have contributed to China becoming Vietnam’s top seafood market?
    Shipping costs and non-tariff barriers in the U.S. and Europe have caused businesses to favor China. Additionally, China’s proximity to Vietnam makes it an attractive option.

    What was the largest exported seafood product from Vietnam?
    Shrimp was the top exported product, making up over 40% of the total export value and experiencing a 13.6% increase.

    What challenges do Vietnamese businesses face in the second half of 2026?
    They face potential U.S. protectionist measures and trade barriers, ranging from regulations related to “forced labor” to the application of quotas on products.

  • Five Guys Joins US Fast-Food Frenzy in China with First Beijing Outlet Opening

    Five Guys Joins US Fast-Food Frenzy in China with First Beijing Outlet Opening

    Five Guys, an American burger chain, is set to open its first outlet in Beijing in the coming month, joining a surge of American fast-food brands either entering or rapidly expanding within China. This comes on the heels of the establishment of the brand’s first Chinese outlet in Shanghai in 2021. According to a statement made by the company last week, it is aiming to open three outlets in Beijing’s prime shopping centers, primarily targeting younger consumers. Construction activities are already underway, indicating that the openings are not far off.

    American chains like Wendy’s, Chili’s, Texas Chicken, and Popeyes are all vying for a piece of the world’s second-largest consumer market as they face oversaturation in their domestic markets, according to industry analysts. Sandy Lim, a China consumer analyst at S&P Global Ratings, stated that some smaller American chains are exploring possibilities in China to counterbalance the oversaturation in their domestic markets.

    Lim elaborated, “Despite fierce competition, there are still pockets of demand within China’s large catering market.” She explained that unlike previous foreign brands that depended on direct operations overseen by overseas headquarters, exposing them to profits, losses, and market volatility, many American brands nowadays prefer franchising models.

    Wendy’s, listed on Nasdaq, announced in May its plans to open up to 1,000 stores across China in the next decade. As per its first-quarter earnings report, the company has entered into a new franchise agreement with an experienced local restaurant operator, who remains unnamed.

    In the first quarter, the burger chain’s sales, in the same stores, fell by 7.8% year on year, while its system-wide sales in international markets rose by 6% from the previous year.

    Texas Chicken, another American fast-food chain, plans to open its first Chinese outlet in Shanghai this summer. In an April statement, the company announced its partnership with Deke Shengtang, a well-established local operator with several quick-service restaurant brands, to develop a minimum of 600 restaurants across the country over the coming years.

    Chili’s, yet another American chain, opened its second store in Beijing in May. Meanwhile, the Louisiana-based fried chicken brand, Popeyes, made a comeback to Beijing in April, nearly twenty years after it left China in 2003. This chain currently has over 80 outlets in Shanghai.

    Adapting to the Chinese Market

    Fu Yifu, a special research fellow at Su Merchants Bank, noted that inflation continues to affect household spending in the U.S., while the presence of Western fast-food brands in China continues to grow.

    Early market entrants like KFC, McDonald’s, and Starbucks have developed localized franchising models to mitigate risks. Five Guys is positioning itself to appeal to quality-conscious consumers in first-tier cities. Fu emphasized that Chinese consumers are not automatically attracted to foreign brands anymore. To succeed, these brands must offer differentiated products and adopt localized operations.

    Questions & Answers

    What is Five Guys’ expansion plan in China?
    Five Guys plans to open three stores in Beijing’s popular shopping centers, targeting younger consumers. This follows the opening of its first China outlet in Shanghai in 2021.

    What strategy are American fast-food chains employing in China?
    Many American fast-food chains are opting for franchising models in China, partnering with experienced local operators. This model reduces their exposure to market volatility compared to direct operations managed by overseas headquarters.

    What approach is Five Guys taking to appeal to Chinese consumers?
    Five Guys is targeting quality-focused consumers in first-tier cities. As Chinese consumers are not automatically attracted to foreign brands, the company is focusing on offering differentiated products and adopting localized operations.

  • Luxshare Skyrockets, Raking in $3bn from Hong Kong Listing for AI and Auto Tech Expansion

    Luxshare Skyrockets, Raking in $3bn from Hong Kong Listing for AI and Auto Tech Expansion

    Luxshare Precision Industry, headquartered in China, announced on Tuesday that its Hong Kong listing has been priced at the upper limit of its target range, resulting in the raising of approximately HK$24.27 billion (US$3.09 billion).

    The Apple supplier, listed in Shenzhen, revealed the offer price was set at HK$63.28 per H-share, resulting in the sale of 383.5 million shares.

    Luxshare plans to use the proceeds from the listing to enhance its manufacturing capacity within the automotive and consumer electronics sectors. The raised capital will also be used to fund artificial intelligence-powered factory upgrades, facilitate potential acquisitions, repay existing debt, and bolster the firm’s working capital.

    A significant part of the raised funds will be dedicated to the expansion of Luxshare’s automotive electronics business. This is indicative of the firm’s strategic move beyond consumer electronics and into the rapidly expanding field of intelligent vehicle supply chain.

    Luxshare revealed that it anticipates announcing the level of investor demand for its international offering, as well as the allocation results, on July 8. The company’s shares are expected to commence trading on the Hong Kong Stock Exchange at 9:00am local time on July 9.

    Luxshare was founded by Chinese billionaire Wang Laichun and is counted among Apple’s largest suppliers. The firm is responsible for the manufacturing of a range of electronic devices, comprising routers, wireless charging modules, and video conferencing equipment.

    Questions & Answers

    What does Luxshare Precision Industry plan to do with the proceeds from its Hong Kong listing?
    Luxshare plans to use the raised capital to expand its manufacturing capacity, fund factory upgrades, pursue acquisitions, repay debt, and support working capital.

    How is the company expanding its business?
    Luxshare is looking to move beyond the sphere of consumer electronics and delve deeper into the rapidly growing intelligent vehicle supply chain.

    When does Luxshare plan to begin trading its shares?
    Trading of Luxshare’s shares is expected to begin on the Hong Kong Stock Exchange at 9:00am local time on July 9.

  • Domino’s Pizza China Hits 1550 Outlets: Unveils Expansion Strategy and Partners with Megamall Operator SCPG Group

    Domino’s Pizza China Hits 1550 Outlets: Unveils Expansion Strategy and Partners with Megamall Operator SCPG Group

    Domino’s Pizza China has made significant strides in expanding its presence across the country, with its total number of outlets now reaching 1550. This was achieved through the addition of 235 new stores during the first half of the year, a move that has led to an increase in sales momentum as reported in the second quarter.

    The growth of the pizza chain has been overseen by DPC Dash, who moved into 15 fresh urban markets within this six-month period. This has brought the total number of cities with a Domino’s presence to 75. The brand’s expansion strategy, dubbed ‘Go Deeper, Go Broader’, has proven successful, focusing on amplifying store density in current markets while simultaneously branching out into new ones. Lower-tier markets now account for 1018 stores, leaving 532 in Tier 1 cities.

    Strategic Partnerships and Expansion Targets

    DPC Dash formed a strategic alliance with SCPG Group, one of the largest shopping mall operators in China, within the quarter to hasten their store launch process. This collaboration will facilitate Domino’s expansion into new markets while reinforcing its presence in the cities it already operates in. By the end of June, the number of stores that were opened, under construction, or signed for accounted for about 89% of DPC Dash’s full-year 2026 opening target. This was a progressive leap from the 65% recorded at the end of the first quarter.

    Domino’s now considers mainland China as its second-largest international market in terms of store count. The company now holds all top 70 positions in the first 30-day sales ranking, illustrating the potential of China’s market, and the efficacy of DPC Dash’s store execution model.

    The successful performance has been credited to its ‘4D’ strategy, a blend of network expansion, value-oriented products, effective delivery capabilities, and a robust digital investment.

    Leadership Changes and Future Plans

    On the personnel front, DPC Dash bolstered its leadership team during the quarter, by appointing Joanne Xie as the new Chief Marketing Officer. Xie, who has previously held senior positions at McDonald’s China, Coca-Cola, and Mondelez, will now be responsible for brand strategy, digital marketing, customer engagement, and product innovation.

    Looking forward, the company anticipates maintaining its expansion momentum for the remainder of the year while continuing its investment in operations, product development, and enhancing the customer experience.

    Questions & Answers

    What is Domino’s expansion strategy in China?
    Domino’s expansion strategy in China, supervised by DPC Dash, is titled ‘Go Deeper, Go Broader’. It focuses on increasing store density in existing markets and extending into new cities.

    Who is the new Chief Marketing Officer of DPC Dash?
    Joanne Xie has been appointed as the new Chief Marketing Officer of DPC Dash. She has previously held senior roles at McDonald’s China, Coca-Cola, and Mondelez.

    What does Domino’s ‘4D’ strategy entail?
    Domino’s ‘4D’ strategy combines four elements: network expansion, value-focused products, delivery capabilities, and digital investment.

  • Vietnamese Lobster Exports to China Skyrocket to $506M in 5 Months, Up 44.3% YoY

    Vietnamese Lobster Exports to China Skyrocket to $506M in 5 Months, Up 44.3% YoY

    China has solidified its position as the leading consumer of Vietnamese lobster for the first five months of this year, purchasing over $506 million worth of the seafood delicacy. This figure represents an impressive increase of 44.3% compared to the same period last year. The surge in imports reached its zenith in February, when China imported $154 million worth of Vietnamese lobster, a staggering 150% increase year-on-year. In the subsequent months, the importation figures have remained consistently strong, ranging between $78 million and $87 million.

    Unwavering Demand and Favorable Conditions

    The steady consumption of Vietnamese lobster in China is largely attributable to the incessant demand for live seafood, particularly within the more opulent spectrum of the market such as restaurants, banquets, and gift-giving. Vietnamese lobster boasts several competitive advantages in the Chinese market, such as its geographical proximity which guarantees shorter transportation times, thereby maintaining the quality of live shipments.

    Additionally, transportation methods are diverse, with exporters having the capacity to supply the market via both land and air transport. Notably, small to medium-sized blue lobsters have proven to be competitively priced and well aligned with the taste preferences of Chinese consumers.

    The Changing Dynamics of Seafood Supply

    Apart from these natural advantages, shifts in the global supply chain have opened doors for Vietnamese exporters. In recent times, several traditional suppliers, such as Canada, the U.S., and Australia, have been impacted by tariffs, trade disruptions, or slow recovery in production. This has created a niche for Vietnamese lobster to broaden its market share.

    As a result, Vietnam has evolved into one of China’s critical suppliers of lobster. This progression has laid a strong foundation for continued export growth within this year.

    Industry specialists project that if the consumer demand in China remains steady and exporters persist in supplying high-quality products, there will be additional room for growth in Vietnamese lobster exports in the second half of the year. However, it will be crucial for the industry to keep a close eye on any changes in China’s import policies, quarantine requirements, and quality standards to retain its competitive advantage and sustain its growth.

    Questions & Answers

    What has contributed to the increase in Chinese imports of Vietnamese lobster?

    The surge in Chinese imports of Vietnamese lobster can be attributed to the steady demand for live seafood, particularly in upscale settings, as well as the competitive advantages Vietnamese lobster offers, including close geographical proximity and diversity in transport methods.

    How have global supply chain shifts benefited Vietnamese lobster exporters?

    Changes in the global supply chain, including tariffs, trade disruptions, and slow production recovery affecting traditional suppliers, have created opportunities for Vietnamese lobster to expand its market share.

    What factors will be crucial for the future growth of Vietnamese lobster exports?

    The future growth of Vietnamese lobster exports will depend on the stability of consumer demand in China, the ability of exporters to maintain a reliable supply of high-quality products, and careful monitoring of changes in China’s import policies, quarantine requirements, and quality standards.

  • Beijing Liyuan Shakes Up Beauty Industry: Eyes Exit from Shiseido China Venture

    Beijing Liyuan Shakes Up Beauty Industry: Eyes Exit from Shiseido China Venture

    Beijing Liyuan is said to be planning a sale of its 35% stake in its longstanding cosmetics joint venture with Japanese beauty firm Shiseido. This decision would conclude a partnership that has spanned more than thirty years.

    According to information available on the China Beijing Equity Exchange, Beijing Liyuan is looking for a minimum of RMB199.5 million (US$29.3 million) for its stake in Shiseido Liyuan Cosmetics.

    Details of the Proposed Sale

    Shiseido China Investment, which owns the remaining 65% of the joint venture, has confirmed the planned sale. However, they haven’t specified if they plan on acquiring the stake.

    Shiseido Liyuan Cosmetics was established in 1991 with a focus on developing products specifically for Chinese customers.

    Their leading brand, Aupres, was exclusively designed for the Chinese market. Over the years, this brand became a significant part of Shiseido’s local strategy as the company expanded its operations throughout the country.

    The proposed sale is still in progress and remains subject to completion. Both Beijing Liyuan and Shiseido have refrained from disclosing any additional details about the transaction.

    Questions & Answers

    What is the proposed sale price for Beijing Liyuan’s 35% stake in Shiseido Liyuan Cosmetics?
    Beijing Liyuan is seeking at least RMB199.5 million (US$29.3 million) for its stake in Shiseido Liyuan Cosmetics.

    Who owns the majority stake in Shiseido Liyuan Cosmetics?
    Shiseido China Investment owns the majority stake, holding 65% of the joint venture.

    What is the significance of the Aupres brand in Shiseido’s strategy?
    The Aupres brand, which was exclusively created for the Chinese market, became a cornerstone of Shiseido’s local business strategy as the company expanded its presence across China.

  • Lululemon Issues Apology in China for Cultural Misstep at Great Wall Event

    Lululemon Issues Apology in China for Cultural Misstep at Great Wall Event

    Lululemon, the popular athleisure brand, has publicly apologized in China following controversy surrounding a performance during a company-sponsored event at the Great Wall. The incident incited negative reactions on social media due to the apparent use of a Japanese drum, viewed as culturally insensitive by some.

    Controversy and Apology

    The company expressed remorse on Weibo, the Chinese social media platform, acknowledging that they had failed to anticipate the potential cultural sensitivities associated with the drum performance. They attributed this oversight to “limitations in professional knowledge”. Lululemon went on to apologize both to their customers and brand ambassador Zhu Yilong, a well-known Chinese actor. The company also announced that they had taken down all promotional materials related to the event.

    The controversy was triggered by a grand yoga festival organized near Beijing in the previous month to commemorate Lululemon’s decade-long presence in mainland China. The event attracted over 2,000 participants and was part of the brand’s broader initiative to further engage with Chinese consumers through community-centered experiences.

    A drum performance featuring Zhu Yilong and the HiiKo Drum Group became a hot topic of debate when some social media users noted the drum used resembled a Japanese taiko drum, not a traditional Chinese one. The criticism rapidly proliferated across Chinese social media platforms.

    In their public apology, Lululemon stated that the event was designed to honor Chinese culture, but conceded that they had underestimated the cultural implications. They expressed that they have “learned profound lessons” from the experience and will improve their review processes for upcoming events.

    Challenges for International Brands

    This incident underscores the difficulties global brands can encounter when attempting to understand and respect cultural nuances in foreign markets. Earlier in the year, French fashion brand, Lemaire, also found itself apologizing after a fragrance campaign was criticized by Chinese consumers who felt the brand had used culturally insensitive imagery and messaging.

    Questions & Answers

    What was the cause of the controversy involving Lululemon in China?
    The controversy was sparked when Lululemon used a drum in a performance that was alleged to be a Japanese taiko drum instead of a traditional Chinese drum. This was viewed as culturally insensitive by some.

    What was Lululemon’s response to the backlash?
    Lululemon issued a public apology on Weibo, acknowledging their failure to anticipate potential cultural sensitivities. They also removed all promotional materials connected to the event and apologized to their customers and brand ambassador, actor Zhu Yilong.

    What lessons has Lululemon learned from this experience?
    According to their public apology, the company “learned profound lessons” and intends to strengthen its review processes for future events to better recognize and respect cultural nuances.

  • Domestic Demand Dwindles in China Despite Soaring Industrial Output

    Domestic Demand Dwindles in China Despite Soaring Industrial Output

    The second-largest economy in the world is currently experiencing a dual-speed growth pattern. While factories are flourishing due to robust exports, domestic demand is on a downward trajectory due to an ongoing slump in the property market.

    In May, retail sales, which serve as a critical measure of consumption, decreased by 0.6%, a significant drop from April’s 0.2% rise, and below the predicted 0.0%. This decline in retail sales marks the first reduction since December 2022. Even the extended Labour Day holiday was unable to boost consumer morale, and the government’s consumer goods trade-in initiative is gradually losing its effectiveness. An inflated base from the previous year’s May further added to this downturn.

    According to Zhiwei Zhang, chief economist at Pinpoint Asset Management, the disappointing retail sales data puts increased pressure on the government to contemplate policy measures aimed at stabilizing consumption. “Policy ‘fine tuning’ is anticipated around July, following the release of the second quarter GDP data,” Zhang added.

    On the other hand, data from the National Bureau of Statistics (NBS) revealed that industrial output in May grew by 4.5% compared to the previous year, an increase from the 4.1% growth recorded in April. This rise surpassed the projected 4.3% increase.

    Divides in the Economy

    A boom in global AI investment and related tech demand has allowed the world’s largest manufacturer to counterbalance the anticipated export blow from the Iran war. However, a 19.4% increase in exports has yet to positively impact domestic consumption.

    The economic weakness was particularly noticeable in the automotive sector, as domestic car sales suffered a decline for the eighth consecutive month in May. This trend hints at a diminishing demand in the world’s biggest car market, a pressure that is expected to linger throughout the year.

    Senior economist at the Economist Intelligence Unit, Xu Tianchen, identified several divisions in the May economy. “The divide between domestic and external demand, the divide between AI and traditional industries, and the divide between goods retail and services consumption,” he mentioned.

    He expects the second quarter’s economic growth to slow down to 4.5% from the first quarter’s 5%.

    Growing investment weakness and ongoing property drag

    Investment figures were also significantly weaker than expected. Fixed-asset investment dropped by 4.1% in the first five months of 2025, a fall from the 1.6% decrease recorded from January to April. Economists had anticipated a 2% decline.

    According to NBS spokesperson Fu Linghui, this fall is partially due to extreme weather conditions in several regions, as well as the shift from old to new growth drivers. Fu added that China still has substantial room for future investment, with urbanisation, rural revitalisation, the development of new quality productive forces, and public service improvements all requiring support.

    Questions & Answers

    What contributed to the decline in retail sales in May?
    Several factors contributed to the decline in retail sales in May, including a lack of consumer confidence, the waning effectiveness of the government’s trade-in scheme, and a high base from the same period last year.

    How are the car sales in China currently?
    Car sales within China have been on the decline, with May marking the eighth consecutive month of decreasing sales. This is indicative of a softened demand in the world’s largest auto market.

    What are the expectations for China’s economic growth?
    It’s anticipated that China’s economic growth may slow in the second quarter, dropping to 4.5% from 5% in the first quarter. While it might not be difficult to achieve a full-year growth target of 4.5-5%, the sluggish domestic demand may necessitate policy intervention in the second half of the year.

  • Billion-Dollar Bite: Yum China Gobbles up Pizza Hut in Transformative $1.2B Deal

    Billion-Dollar Bite: Yum China Gobbles up Pizza Hut in Transformative $1.2B Deal

    Yum Brands, the global owner and franchiser of popular restaurant chains such as KFC, Pizza Hut, and Taco Bell, operates Yum China as a master franchisee. The franchisee oversees the operation of these three brands within Mainland China and has been accountable for a 3% royalty fee on its overall sales to the US-based conglomerate. However, with the conclusion of a recent deal, Pizza Hut China will be exempted from these licensing fees.

    Pizza Hut, as disclosed by Yum China, holds the title of the largest casual dining restaurant brand in China. Last year, the brand generated a segmental revenue of $2.3 billion and an operating profit of $183 million. Yum China has set ambitious growth objectives for the Pizza Hut network. Its goal is to increase the number of Pizza Hut restaurants from 4375 in over 1100 cities to over 6000 stores by the year 2028. Furthermore, the company intends to double the chain’s operating profit by 2029.

    From Franchisee to Brand Owner

    Joey Wat, CEO of Yum China, stated that transitioning from an exclusive licensee to the brand owner of Pizza Hut in Mainland China is a significant turning point for the company. This move solidifies their belief in and long-term commitment to the Chinese market.

    Being the brand owner will enable the company to have more strategic freedom to encourage innovation across the menu, store formats, new modules, and operations. Wat foresees that the cessation of licensing fees will bolster store economics and lower the threshold for opening new stores, thus aiding in margin expansion and growth.

    The transaction is slated to finalize in the third quarter, subject to standard closing conditions. Yum China asserts that their financial guidance for FY26 will remain unaffected by this transaction.

    Global Divestment

    This deal forms part of Yum Brands’ strategy to divest from the Pizza Hut segment internationally. Outside of Mainland China, the company has agreed to offload the Pizza Hut brand to private equity firm LongRange Capital for approximately $1.5 billion.

    This sale comes in the wake of Pizza Hut’s underperformance compared to KFC and Taco Bell, as evidenced in Yum Brands’ recent financial outcomes.

    Questions & Answers

    What effect will the elimination of license fees have on Pizza Hut in China?
    The elimination of license fees is expected to improve store economics and lower the requirements for opening new stores, ultimately supporting margin expansion and growth.

    What are Yum China’s growth goals for Pizza Hut?
    Yum China intends to expand the Pizza Hut network in Mainland China from 4375 restaurants across more than 1100 cities to more than 6000 stores by 2028. The company also aims to double the chain’s operating profit by 2029.

    Why is Yum Brands divesting from the Pizza Hut segment worldwide?
    This move follows a period of underperformance by Pizza Hut compared to KFC and Taco Bell, as reflected in Yum Brands’ latest financial results.

  • China Cracks Down on Walmart’s Sams Club Over Food Safety Concerns

    China Cracks Down on Walmart’s Sams Club Over Food Safety Concerns

    In a recent development, China’s market regulator has enforced stringent measures on the supermarket chain, Sam’s Club, which is owned by Walmart. The regulator has initiated these steps as part of a bid to eradicate food safety risks from the company’s supply chain and ensure public dietary safety.

    The directive comes as Sam’s Club is actively pursuing expansion activities in China. As a result of new store openings, the company achieved double-digit growth in its transactions last year. This has increased the number of its membership-only stores to 63 across the nation, as per the data available on the company’s website.

    The decision was made following a meeting with a top-level executive from the U.S. retail giant to address recently identified food safety concerns. The State Administration for Market Regulation shared this information in an announcement on Monday, without specifying the date on which the meeting took place.

    As of now, Walmart’s China office has not responded to any requests for comments on this matter.

    In response to the regulator’s directive, Sam’s Club has issued an apology stating, “We will consistently report the progress of our rectification measures to the regulatory authorities and willingly accept their supervision.”

    In an effort to rectify the situation, the grocery chain has established an exclusive task force, headed by its management. This team is responsible for conducting supply chain inspections to ensure compliance with regulations and maintain the highest standards of product quality control.

    Questions & Answers

    What actions has China’s market regulator taken against Sam’s Club?
    The regulator has ordered Sam’s Club to enforce strict measures to eliminate food safety risks in its supply chain and ensure public dietary safety.

    What was the reason behind the regulator’s directive?
    The decision was made following a meeting with a top-level executive from Sam’s Club to address recently identified food safety concerns.

    What steps is Sam’s Club taking in response to the regulator’s orders?
    Sam’s Club has established a specialized task force, led by its management, to ensure strict compliance with regulations and maintain the highest standards of product quality control. The company will also regularly update the regulatory authorities about the progress of these rectification measures.

  • Thriving Puppy Preschools: Chinas New Trend in Pet Pampering

    Thriving Puppy Preschools: Chinas New Trend in Pet Pampering

    In the bustling city of Shanghai, a unique business model is quickly gaining popularity. Paw, a self-proclaimed preschool for dogs, is leveraging a new trend among Chinese millennials who are increasingly viewing their pets as family members and investing more in their care and wellbeing.

    A Day at Paw

    Pets start arriving at Paw by 9 a.m. daily. Unlike traditional dog daycares where focus is put primarily on training or age-specific activities, Paw provides a varied schedule of activities suited to each dog’s needs and interests. The daily routine includes interactive games, challenges on obstacle courses, and even leisurely strolls on specially designed dog treadmills. The pups are also treated to freshly made snacks and calming nap times accompanied by soothing classical music played by a pianist. Pet owners can rest assured knowing their beloved companions are well taken care of and can pick them up at around 7 p.m.

    Qian Yi, a regular patron of Paw, explained how she treats her one-year-old Border Collie, Harry, like a child. “We raise our dog like a child,” she said, adding that she spends approximately 4000 yuan (US $560) each month on Harry’s daycare, meals, grooming, swimming, and visits to dog parks.

    Emerging Trend in China’s Pet Industry

    The launch and growth of Paw reflects larger shifts in China’s consumer economy. Young, urban consumers are increasingly prioritizing spending on experiences and emotional fulfillment. This is particularly true in the pet care sector, where services like daycare, grooming, and training are seeing significant growth.

    Pet Data, a local industry research firm, estimates the urban pet consumption market reached 312.6 billion yuan (US $46 billion) in 2025, with projections to exceed 405 billion yuan by 2028.

    Paw’s founder, Jann Zhang, explains that the idea for this doggie preschool came about after he struggled to find help for his anxiety-ridden Golden Retriever, Fuzai. He felt that lack of socialization was the primary issue and wanted to provide a space where dogs could interact and play. He started Paw with less than 20 pups and has since grown his clientele to 200. He charges a daily fee ranging from 98 yuan to 138 yuan, depending on the size of the dog.

    Questions & Answers

    What is Paw?
    Paw is a unique dog daycare business in Shanghai, China, that treats dogs as pupils, providing them with a variety of activities, socialization opportunities, and care services.

    What services does Paw offer?
    Paw offers a range of services including interactive games, obstacle courses, freshly made snacks, nap times with soothing music, and walks on specially designed dog treadmills.

    How does Paw reflect larger trends in China’s consumer economy?
    The rise and success of Paw mirrors a larger shift in China’s economy, where young, urban consumers are spending more on experiences and emotional fulfilment. In the pet care sector, this translates to growth in services like daycare, grooming, and training.