Toyota Motor’s sales in China fell 1.3 percent in November from a year earlier to 109,600 vehicles, following a 13.5 percent gain in October, the company said on Tuesday.
The Japanese automaker’s sales during the first 11 months of the year totaled 1.18 million vehicles, up 7.5 percent from the same period a year ago.
Apple Inc’s chief executive Tim Cook said developers using its platform in China number 1.8 million and have earned a total 112 billion yuan ($16.93 billion), representing roughly a quarter of total global App Store earnings.
Cook shared the data on Sunday during a speech at China’s top public cyber policy forum, organised by the Cybersecurity Administration of China (CAC), which oversees internet regulation including censorship.
Earlier this year, Apple said that developers had earned roughly $70 billion in total revenue through the store.
Apple is facing criticism from local users and rights groups for bowing to pressure from Beijing cyber regulators after it decided to remove hundreds of apps from its Chinese store this year, including messaging apps and virtual private network (VPN) services, which help users subvert China’s Great Firewall.
Apple counts China as its third-largest region by sales but it has lost market share in recent years as high-end handsets from local rivals continue to gain traction. The firm is hoping to regain momentum following the release of its iPhone 8 and iPhone X models which shipped in November.
The U.S. tech giant said earlier it had moved its Chinese cloud data onto the servers of a local partner in the Chinese province of Guizhou.
Cook has come to China several times this year, including an October visit where he was among executives that met with President Xi Jinping, who also had prepared remarks read at the conference on Sunday.
Cook’s attendance is conspicuous at the conference, marking the first high-level executive to attend in the event’s four-year history.
Others included Google chief executive Sundar Pichai, who is also attending the conference for the first time.
Carrefour Taiwan has opened four more stores, three in Taipei and one in Tainan.
The French hypermarket chain introduced the stores all in a space of a week, and all will be open 24/7.
First up was Tainan Yu Nong at 650sqm, followed by Luzhou Guanghua (515sqm), Taipei Jinan (670sq) and Shi Lin Zhong Cheng.
These stores follow the Carrefour formula of offering fresh and grocery items as well as basic bazaar, textile and small-appliance items. Shoppers are offered free Wi-Fi access, dining, coffee and ice cream.
Carrefour has 64 hypermarket and 45 supermarket in Taiwan.
The world’s largest Starbucks Reserve Roastery opens in Shanghai tomorrow, a store the company also describes as its “most beautiful”.
At 2700sqm (nearly 30,000sqft) the store is twice the size of the Seattle Starbucks Reserve Roastery flagship. It features three coffee experience bars, the largest 27m long. The coffee bar was handcrafted by premiere Chinese artisans and references the unique roasting curve of individual coffee beans.
China is Starbucks’ fastest-growing market with a new store opening every 15 hours. The US coffee chain has been in China for more than 18 years and now has more than 3000 stores across 136 cities. More than 600 of those are in Shanghai.
The ambitious store expands Starbucks’ core offer, with more than 100 beverages on the menu, including Teavana tea infused with nitrogen and a new take on tea brewing with the Steampunk, which uses steam to extract unique flavors from each tea leaf.
Starbucks says the design is unique and will not be repeated elsewhere. Key design features include a ceiling consisting of 10,000 handmade wooden hexagon-shaped tiles inspired by the locking of an espresso shot on an espresso machine.
At the store’s entrance, mirroring the signature copper cask at the inaugural Starbucks Reserve Roastery in Seattle, customers will be greeted by the sight of a two-story, 40-ton copper cask adorned with more than 1000 traditional Chinese chops, or stamps, hand-engraved to narrate the story of Starbucks and its Reserve concept. The cask has a practical purpose, as well – connecting to the three coffee bars with pneumatic copper piping, replenishing all the roasted Starbucks Reserve coffee silos.
New bars and AR
Besides the coffee experience bars, the new store features Asia’s first Princi bakery and cafe, with more than 30 Chinese bakers and chefs baking 80-plus menu items fresh onsite daily, based on artisanal recipes created by Italian baker Rocco Princi.
And it features China’s first Teavana Bar. Made entirely from 3D printed recycled material, the bar’s light jade colouring was inspired by ancient green clay teapots and the stains formed by brewing over time. Starbucks will continue China’s brewing tradition alongside tea curators as they practice mixology with the help of the Steampunk system’s nitrogen flavor extraction.
Designed by Starbucks, and powered by Alibaba, the Shanghai Roastery will become the first Starbucks location, and the first-of-its kind in China, to seamlessly integrate a real-time, in-store and online customer experience. Roastery customers are invited to immerse themselves in the first Starbucks augmented reality (AR) experience by simply pointing their phones at key features around the Roastery to bring to life information about the Starbucks bean-to-cup story. Guided through the space by a custom-designed AR “tour-guide,” customers can unlock virtual badges and a unique Roastery filter to commemorate their visit.
“The affinity we have built with our partners (employees) and customers over the past 18 years in China is special and we knew we must bring the Reserve Roastery, our boldest, most premium store ever, to Shanghai, China’s bustling metropolitan hub and one of the world’s most dynamic retail destinations, as well as a gateway to customers from across Asia and the world,” said Howard Schultz, executive chairman of Starbucks Coffee Company. “We’ve created a space that both recognises and celebrates our 46-year history of coffee leadership and retail innovation with China’s rich, diverse culture.”
Here’s a video from Starbucks showing some of the interior (no sound):
U.S. electric-vehicle maker Tesla will set up an R&D center here as part of a Chinese expansion push that may also include local production.
The automaker established in Beijing a company for research and development of “new energy” vehicles, a government filing shows. The new business, capitalized at $2 million, is wholly owned by a Hong Kong arm of Tesla, according to local media.
Tesla sold an estimated 11,000 vehicles last year in China, its second-biggest market. Its cars are roughly 40% more expensive here than in the U.S., owing partly to a tariff on imported vehicles. Tesla is considering building cars in Shanghai to reduce prices, and it apparently decided that an R&D hub was needed as well in order to tailor its offerings to the Chinese market.
The Beijing location is close to government agencies that handle standards and regulations for new-energy vehicles, in addition to being near the headquarters of a number of major companies.
The Chinese government plans to relax ownership restrictions by June 2018 on joint ventures producing new-energy vehicles, letting foreign companies hold majority stakes in ventures based in free trade zones. The change — announced after U.S. President Donald Trump’s meeting this month with Chinese counterpart Xi Jinping — likely encouraged Tesla to expand its Chinese operations.
Volkswagen may expand cooperation with China’s Anhui Jianghuai Automobile (JAC) beyond electric cars to jointly develop and build commercial vehicles in the world’s largest autos market.
The German group and JAC announced in June they were to set up a joint venture to develop and build zero-emission passenger cars as Volkswagen (VW) is pushing efforts to achieve the Beijing government’s production and sales quotas for new-energy vehicles.
On Monday VW said it was looking along with its commercial vehicles division at deepening the cooperation with JAC to include the design, technology, product quality and development of multi-function vehicles.
The venture would affect combustion engined and alternative-energy powered vehicles, would be owned equally by JAC and VW and would be based in JAC’s home town of Hefei, VW said.
“VW Commercial Vehicles has a growing number of loyal customers in China,” executive Joern Hasenfuss said. “But there are significantly more opportunities,” he said without elaborating.
Under the tie-up, VW and JAC could jointly tap growing demand for light pick-up trucks in China while the German group would also save customs duties by building its multi-van and Caddy vehicles at JAC facilities, analysts said.
It’s also the latest evidence of VW’s foreign expansion not being confined to its passenger car operations.
In September VW’s commercial vehicles arm started building the Amarok pick-up truck in Ecuador with local partner FISUM after starting production of the box-type Caddy model at a new multi-brand facility in Algeria two months earlier.
Oakley China has its first dedicated store, in Xinjiekou’s Deji Plaza, Nanjing.
The Nanjing store follows the opening in Shanghai of a one-of-a-kind store for the group, being half Oakley and half Ray-Ban. “This Nanjing store is the first Oakley-only store in China, and it not only glasses focused.”
It also offers the brand’s speciality activewear for such outdoor sports as skiing, cycling and running, and is situated beside other sporting giants Evisu, Nike and Puma, and is across from Adidas.
Owned by Luxottica, Oakley works not only with Ray-Ban in China but with LensCrafters, another US retailer of prescription eyewear.
Attending the official opening were Oakley president of retail for greater China Alessandro Donadelli, and LensCrafters, Ray-Ban and Oakley GM for greater China Carl James.
French carmaker PSA Group is increasing shipments of Chinese-made gasoline engines to Europe as it adapts to a consumer shift away from diesel, Les Echos reported on Monday.
The maker of Peugeot and Citroen cars now expects to source 100,000 gasoline engines from Chinese plants, an increase on the 55,000 it had previously planned to import in 2017-18, the French financial daily said.
A PSA spokesman declined to comment.
Paris-based PSA had announced the import plans earlier this year to accommodate the shift in demand while it converts some domestic engine production capacity from diesel to gasoline.
Both online and offline business showed strong growth for electrical appliance retailer Gome Retail Holdings during the nine months to the end of September.
Total gross merchandise volume (GMV) of the group for both online and offline grew by 20.04 per cent, while GMV of online e-commerce business grew by 58.13 per cent.
Sales revenue was about RMB57.4 billion (US$8.6 billion), up 3.68 per cent on the same period last year.
Consolidated gross profit margin was about 17.05 per cent, up 1.03 points, while profit attributable to the owners of the parent was about RMB220.1 million, a decrease of 10.71 per cent.
Swiss watch exports jumped 9.3 percent in October 2017, on strong sales in Hong Kong and China, despite a lag in U.S. imports, according to the Federation of Swiss Watches.
For the month-period, sales of Swiss watches totalled 1.85 billion Swiss francs, or $1.86 billion. The federation said that the monthly result confirms a solid improvement in the watch industry, with consolidated growth for the past ten months sitting at 2.4 percent.
In September 2017, sales rose 3.7 percent and 4.2 percent in August.
In October 2017, Japan recorded the fastest growth, where exports leapt 21.7 percent. Exports to China were up 18.2 percent, while Hong Kong, which is also the industry’s largest market, rose 15.8 percent.
Outside Asia, the U.S. market remained dire, down 7.3 percent. Growth in Europe was a placid 5.9 percent, hurt by a 0.7 percent decline in Italy. Big player Britain inched forward 1.2 percent, showing signs of a slow down in October, said the federation.
By watch category, exports of watches worth between 500 Swiss francs and 3,000 Swiss francs grew the fastest, up 20.3 percent in value terms, while watches priced between 200 Swiss francs and 500 Swiss francs rose 10.4 percent.
The most expensive range, above 3,000 Swiss francs, rose 6.3 percent. Meanwhile, timepieces priced at below 200 Swiss francs dropped 3.4 percent, said the federation.
Looking forward, the federation noted a “declining medium-term trend” in Japan.
Analysts also fear that the ongoing weakness in exports of cheaper watches could prompt the resurgence of smartwatch domination over the longer term.
The Hang Seng Index topped 30,000 for the first time in a decade on Nov. 22 amid a market sea change that is bringing mainland Chinese companies to the fore and leaving many big local names behind.
The Hong Kong benchmark ended the day at 30,003.49, up 0.62%. It has gained 36% year to date, outpacing major indexes in Japan, South Korea, India and Singapore. The gains have been “driven first and foremost by Western investors,” said Sze Tung, asset manager at Victory Securities.
Alex Wong Kwok-ying of Ample Capital additionally cites an influx of money from the mainland, where “investors have capital to spare.” Funds flow in via stock connect links established with Shanghai three years ago and with Shenzhen last December.
Much has changed since the Hang Seng last topped 30,000 in November 2007, including an increase in the number of constituents from 40 to 50. Mainland companies now make up half the index, up from 38% a decade ago, and will become a majority in December when a reshuffle will add Sunny Optical Technology (Group) and Country Garden Holdings.
The main engine powering the Hang Seng’s ascent also hails from the mainland: Tencent Holdings. The Shenzhen-based internet conglomerate listed in Hong Kong in 2004 and joined the benchmark index in June 2008. It tops the Hang Seng’s weighting list at 10.75%, beating such traditional Hong Kong powerhouses as HSBC Holdings and CK Hutchison Holdings.
Tencent shares have more than doubled this year, buoyed by a number of positive factors, including China’s large internet user base, the release of mobile game “Glorious Mission” and news of the company taking a substantial stake in Snap, the American operator of photo- and video-sharing app Snapchat. Tencent’s market capitalization recently exceeded $500 billion, a first for an Asian enterprise. The milestone saw Tencent briefly surpass Facebook to become the world’s fifth-largest business by market cap.
Tencent is not the Hang Seng’s only mainland-based standout. Geely Automobile Holdings’ shares have nearly quadrupled this year and those of Apple supplier AAC Technologies Holdings more than doubled.
DROPPING OFF THE MAP
Hong Kong-based companies, meanwhile, are fading into the background. Prominent names such as PCCW — the telecommunications company run by Richard Li Tzar-kai, younger son of tycoon Li Ka-shing — and Li & Fung, known for sourcing Chinese products for U.S. retail behemoth Wal-Mart Stores, have dropped off the benchmark index. Cathay Pacific Airways, Hong Kong’s de facto flag carrier, will lose its decades-old blue chip status in December.
Mainland businesses, including both H-share companies based on the mainland and “red chips” incorporated in Hong Kong, are latecomers to the territory’s bourse. They gained a foothold in the early 1990s as China sought to work around diplomatic sanctions imposed by Western powers after the 1989 Tiananmen Square crackdown and to get its reform and opening-up policy back on track.
The first H-share listing came in July 1993 with the Hong Kong debut of Tsingtao Brewery. A watershed followed in September 2006 with the inclusion of China Construction Bank (CCB) in the Hang Seng Index — the first H-shares to make it to the big leagues.
Mainland companies increasingly favor Hong Kong as a listing destination for its better access to global investment capital and more predictable regulatory framework. These enterprises have a growing presence in the Hong Kong market as a whole. A total of 378 mainland Chinese businesses were listed there as of the end of October, including 226 H-share listings, accounting for almost 40% of the bourse’s total market cap.
Victoria’s Secret, the global lingerie name known as much for its “Angel” supermodels and its “Bombshell” branded products, has brought its iconic fashion show to Shanghai, with Alibaba Group’s Tmall and Taobao marketplaces and video-streaming site Youku used as broadcast channels to reach the world’s most sought-after consumers.
In addition to locating the event in the world’s second-largest economy—the first time it has been held outside of the U.S. or Europe—the company is leveraging the “See Now, Buy Now” format made popular in China by Alibaba. All items seen on the runway, aside from those not yet released in the market, will be available for immediate purchase as Chinese shoppers watch the show.
Alibaba’s See Now Buy Now fashion show kicks off the 11.11 Global Shopping Festival season every year. Last month, the show mixed the latest clothes and accessories from international names such as Ralph Lauren and MAC with performances by Chinese female rap sensation VaVa and pop icon Chris Lee to create a retail-as-entertainment experience for viewers.
In a golden first half, jewellery group Luk Fook Holdings (International) saw revenues and profits rise as it continued to expand its retail outlets.
As well as a return to growth for same-store sales and a doubling of e-commerce sales, its interim results show a 14.9 per cent rise in revenue to HK$6.2 billion (US$794 million) for the six months to the end of September.
A relatively stable gold price resulted in the group’s overall gross margin dropping to 26.2 per cent from 28 per cent a year earlier, but gross profit rose by 7.5 per cent to $1.6 billion. Profit attributable to equity holders grew by 21.3 per cent to $520.3 million.
During the six months, the group added 46 Lukfook shops worldwide – 47 (29 licensed) in Mainland China and one in San Francisco, with two closures in Hong Kong. This took its global network to 1542 Lukfook shops (up from 1455 shops a year earlier), spanning Australia, Canada, China, Hong Kong, Korea, Macau, Malaysia, Singapore and the US. It also had 10 3D-Gold shops in China (an addition of one).
Retail was the group’s primary source of revenue, which grew by 17.1 per cent to $4.7 billion, accounting for 75.1 per cent (up from 73.7 per cent) of total revenue.
Slide reversed
Back on track after three years of decline, first-half overall same-store sales growth was 11.2 per cent (minus 31.5 per cent a year earlier). There was double-digit growth in both Hong and Macau and Mainland China at 10.5 per cent (-32.3 per cent last year) and 16.7 per cent (-23.7 per cent) respectively.
Hong Kong was the key market for the Group with the recovery of both retail sentiment and visitor arrivals. In terms of tourist spending, sales of jewellery, watches, clocks and gifts rose about 4.3 per cent, according to the Census and Statistics Department of Hong Kong. This was reflected in an 8.4 per cent lift in the group’s retail revenue in Hong Kong to $2.8 billion.
Similarly, official figures in Macau show a 17.5 increase in tourist spending while the group’s revenue grew by 18.8 per cent to $790 million for the half-year.
Meanwhile, retail revenue from the Mainland China market grew by 43.6 per cent to $924 million, attributed to an improved retail environment and more self-run shops. It accounted for 14.7 per cent of the group’s total revenue, up from 11.8 per cent a year earlier.
Revenue from e-commerce in China jumped by 104.7 per cent to $136.6 million, accounting for 14.8 per cent of retail revenue, up from 10.4 per cent.
Overall, first-half revenue from China grew by 25.5 per cent to $2.1 billion, accounting for 34.4 per cent of total revenue (31.5 per cent a year earlier).
Japan on Thursday released preliminary October data for industrial production, setting the pace for a busy day in Asia-Pacific economic activity. Industrial output is expected to rise 1.8% on month and 7.2% on year after falling 1.0% on month and gaining 2.6% on year in September.
Japan also will see October figures for vehicle production, housing starts and construction orders. Housing starts are expected to fall 2.8% on year to 950,000 after sliding 2.9% in September to 952,000.
Vehicle production was up 1.7% on year in September, while construction orders plummeted 11.6%.
China will see November numbers for its manufacturing and non-manufacturing PMIs; in October, their scores were 51.6 and 54.3, respectively.
The central bank in South Korea will wrap up its monetary policy meeting and then announce its decision on interest rates, with the bank widely expected to keep its benchmark lending rate unchanged at 1.25%.
South Korea also will see October numbers for industrial production and retail sales. Output is expected to add 0.6% on month and 6.1% on year after gaining 0.1% on month and 8.4% on year in September. Retail sales were up 3.1% on month and 8.3% on year in September.
Australia will provide October numbers for private sector credit and building approvals, plus Q3 data for private capital expenditure.
Private sector credit is expected to add 0.4% on month and 5.3% on year after gaining 0.3% on month and 5.4% on year in September.
Building approvals are expected to sink 1.0% on month and surge 14.1% on year after adding 1.5% on month and 0.2% on year in the previous month. Capex is expected to rise 1.0% on quarter after adding 0.8% in Q2.
New Zealand will see November results of the activity outlook and business confidence indexes from ANZ; in October, their scores were 22.2 and -10.1, respectively.
Hong Kong will provide October figures for retail sales – which are expected to rise 6.2% on year after gaining 5.5% in September.
Thailand will release Q3 data for current account and October trade data. In the third quarter, the current account surplus was USD8.32 billion and the financial account deficit was USD6.89 billion. In September, imports were worth USD16.47 billion and exports were at USD21.87 billion for a trade surplus of USD5.40 billion.
Malaysia will see October numbers for producer prices; in September producer prices were up 1.1% on month and 6.0% on year.
LVMH-backed private-equity firm L Catterton Asia has launched a JV between two of its portfolio companies, Chinese menswear fashion group GXG, and Australian compression activewear company 2XU.
The strategic partnership will enable both companies to capitalise on the growing fitness and sportswear market in China.
Established in 2007, GXG has a portfolio of four brands – GXG, gxg.jeans, gxg.kids and Yatlas. Its lines are available in more than 2100 stores across China, as well as online through third-party platforms such as Tmall and VIPshop. Its e-commerce GMV is expected to surpass RMB2.5 billion (US$378.5 million) this year, an increase of more than 50 per cent over last year. The company also achieved record sales of RMB485 million in this year’s Tmall 11.11 shopping festival.
Since acquiring a controlling stake in GXG last year, L Catterton Asia has been working with the company’s management team to expand into new categories. It has supported GXG by offering extra collaboration opportunities and helping with global expansion.
“GXG and 2XU are led by seasoned management teams with deep understanding and complementary knowledge of the fashion and retail industries, and we look forward to continuing to work alongside and support both teams,” says L Catterton Asia chairman/managing partner Ravi Thakran.
Founded in 2005, 2XU produces technical athletic wear that is endorsed by elite athletes internationally.
“Since L Catterton Asia’s investment in 2013, 2XU has experienced significant growth and I am grateful for their partnership as we continue to expand into attractive markets around the world,” says 2XU CEO Paul Higgins.
With more than $14 billion of equity capital across six fund strategies in 17 offices globally, L Catterton has a team of more than 140 investment and management professionals. L Catterton Asia (previously L Capital Asia) was launched in 2009 and manages more than $ 1.6 billion across two private equity funds, and more than $2 billion including co-investments. It has offices in Singapore and Mauritius, with a regional advisory presence in Hong Kong, Mumbai and Shanghai.
L Catterton Asia draws on its strategic relationship with Groupe Arnault and LVMH across the investment process. Its investments include Jorya Group, Marubi, Pepe Jeans, Sasseur, Trendy International and YG Entertainment.