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Tag: China

  • L’Occitane growth and China’s contribution

    L’Occitane growth and China’s contribution

    China was among the fastest-growing markets for cosmetics and wellbeing products group L’Occitane International for the six months to September 30.

    Along with Japan and Hong Kong, it was among the key contributing countries to overall growth.

    China’s net sales rose 18.2 per cent year on year to €60 million (US$70 million), the group’s interim results show. At constant exchange rates, the growth was 22.7 per cent, driven mainly by same-store sales growth of 15.8 per cent. As well as the recovery of China’s retail market, the company says a marketing campaign featuring Chinese artist Lu Han continued to draw traffic both online and offline.

    T-mall sales continued to grow at triple digits and were ahead of plan, and B2B also delivered an excellent performance thanks to growing orders from independent hotels and the Shangri-La chain, says L’Occitane.

    In Hong Kong, net sales edged up 0.4 per cent to €51.1 million (2.6 per cent at constant exchange rates), growth being driven mainly by the travel retail channel. As well as duty free, this included airlines in China and Japan.

    The retail market was still sluggish, and two underperforming stores were closed. There were also some temporary closures for renovations.

    Hit by typhoons

    Typhoons forced store closures in Japan, where net sales fell 4.8 per cent (1.8 per cent at constant exchange rates) to €99.4 million. Same-store sales growth was 1.4 per cent. However, e-commerce showed low double-digit growth. Melvita remained the growth engine in Japan with new stores. At the end of September, Japan had 30 Melvita outlets.

    Same-store sales deteriorated by 7.9 per cent from the first quarter for Taiwan, where net sales for the six months dropped 3.6 per cent (71 per cent at constant exchange rates) to €15.3 million.

    “Retail sales were hindered by the less-generous summer promotion offered by department stores, a couple of mediocre launches and the timing difference in anniversary sales in department stores,” says L’Occitane.

    Nonetheless, sales of skincare products stayed strong, in particular the Immortelle and Reine Blanche ranges.

    Overall, despite a challenging retail backdrop, group net sales were €548.2 million, down 0.6 per cent (up 1.1 per cent at constant exchange rates), with like-for-like sales growth 2.3 per cent.

    Gross profit margin reached 82.8 per cent, 0.6 points higher, while operating margin fell by one point, mainly because of currency exchange headwinds. Profit for the period ended at €10.7 million.

    During the year the company disposed of Le Couvent des Minimes, and excluding this and a one-off deal for L’Occitane au Brésil in September last year, the group’s sales grew by 2.3 per cent at constant rates and 0.5 per cent at reported rates.

    Retail locations increased from 3037 at the end of March to 3104 as at September 30, while the group increased its own retail stores from 1514 to 1519.

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  • More online super sales for Asia online market

    More online super sales for Asia online market

    While the US formulated online super sales, such as this week’s Black Friday, Asia has adopted the concept with a vengeance.

    In fact, China has increasingly been exporting Alibaba’s Singles Day (11.11) event, which this month racked up a massive US$35 billion in sales. November is the favoured month for this new consumer mania, offering the Singles Day, Black Friday and Cyber Monday sales.

    Both Black Friday and Cyber Monday themselves have been catching on in the Asia Pacific, growing by 29 per cent last year, according to global payments company WorldPay.

    It says that despite forking out $17.8 billion on Singles Day last year, Chinese consumers still went hunting Black Friday bargains, with overall spending on the day up by 37 per cent from the previous year. In Hong Kong, the rate of growth was 32 per cent, and in Singapore 21 per cent.

    While retailers are among the biggest Black Friday winners, new WorldPay data suggests this year could also be a great opportunity for savvy APAC businesses in the travel and digital sectors. In Hong Kong, spending with travel and airlines saw a 30 per cent surge last year, with Singapore figures up 20 per cent as travellers jumped online to search for flight and hotel deals.

    Not just retailers

    Shoppers are also increasingly seeking out bargains for digital content such as subscriptions, e-books and on-demand box sets. Black Friday spending in this sector last year grew 62 per cent in Hong Kong and 14 per cent in Singapore.

    Not just retailers can benefit from Black Friday, but also a range of e-commerce businesses, says WorldPay Asia Pacific GM Phil Pomford.

    “While Black Friday and Cyber Monday have typically been the realm of retailers, a more diverse range of businesses are now recognising they can also take can take advantage of this special online opportunity.

    Shoppers during this time are highly engaged, proactive and looking for a wide range of online deals, so the potential to reach new customers and strengthen brand loyalty is huge, regardless of sector.

    “E-commerce businesses should set themselves up for success by ensuring their websites are prepared for heavy traffic, and offer simple payment options to drive shopping-cart conversions. They might also consider following the example of Amazon and kickstart Black Friday deals a week early.”

    Black Friday online sales surpassed $3 billion last year and are expected to rise this week, says Adobe Digital Insights, as buyers seek to avoid long queues and lost hours in retail stores.

    In Southeast Asia, Google searches for “Black Friday” have surged over the past five years, and 12 months ago major offline/online retailers like Robinsons, Sephora and Zalora offered generous discounts for the event.

    “Many industries rely on this event to make up a large portion of their fourth-quarter sales, in particular toys and games,” says Euromonitor International senior toys and games analyst Matthew Hudak.

    ‘Sure to jump on’

    Digital campaign company RTB House says Black Friday last year attracted 106 per cent more people to online stores, with 204 per cent more transactions.

    “We anticipate conversion rates surging this time,” says RTB House Southeast Asia country director Chandra Kuncara. “Customers who missed out on Singles Day will be sure to jump on this event.”

    He says personalised retargeting is an important selling tool during Black Friday. With AI technology and deep-learning algorithms, marketers can highlight most-desired products for each individual customer.

    More purchases mean more packages being shipped, and international courier service FedEx is again expecting to handle a record number of packages over the peak holiday shopping period, which starts on Monday and runs to December 24. This year it is expecting 380 to 400 million packages.

    The growth of cross-border e-commerce is turning the peak shipping season into a global phenomenon, says FedEx. For instance, 37 per cent of Singles Day purchases in China last year were from international brands or merchants. Cross-border shopping is expected to make up 20 per cent of e-commerce sales by 2022, led by Asia Pacific.

    “While an online purchase takes just a few clicks, logistics providers are working hard behind the scenes powering every moment,” says FedEx Express AsiaPacific president Karen Reddington. “Our business is the backbone of the e-commerce market.”

    Meanwhile, while shoppers scramble for Black Friday bargains this week, outdoor retailer REI is closing its 154 US stores for the third consecutive year, offering its nearly 12,000 employees a paid holiday. It is truly going against the tide by also putting a hold on online orders.

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  • Salvatore Ferragamo revamps its website in Europe and China

    Salvatore Ferragamo revamps its website in Europe and China

    Florentine luxury label Salvatore Ferragamo is busy deploying its new, revamped www.ferragamo.com website.

    After being first introduced in the USA and Canada, the new-look site, featuring fresh design and content, is now also available in Italy, the rest of Europe and China.

    “We wanted to blend the contemporary style of the Ferragamo world today with its brand’s unique heritage,” said Eraldo Poletto, the Ferragamo group’s CEO.

    The website will go live in the rest of Asia, in Australia and Latin America in 2018.

    Once fully deployed, it will be active in 28 countries, making it possible to buy and pay for the label’s products in 13 different currencies.

    The new site hosts all of Ferragamo’s collections: menswear, womenswear, accessories, handbags and footwear.

    The site’s omni-channel functionalities allow direct access to products available in-store, with the possibility of ordering online and picking up the items at the customer’s preferred store.

    The site is mobile and tablet-friendly and also features a news section with up-to-date information on the label’s initiatives and its history.

    As of the end of September 2017, the Ferragamo group employed about 4,000 people and, through its parent company and its US and Asian subsidiaries, it operated a network of 687 monobrand stores worldwide.

  • GM’s Cadillac expects China sales to jump 60 percent in 2017

    GM’s Cadillac expects China sales to jump 60 percent in 2017

    General Motors’ Cadillac luxury brand expects its China sales to surge 60 percent in 2017, faster than it had projected at the start of the year, on strong demand from younger buyers, the brand’s country chief said.

    The GM premium brand, which saw a sharp spike in sales after it opened its first dedicated factory in the country last year, had said in January that China sales would continue growing at a double-digit rate but at a slower pace than the roughly 50-percent growth it posted in 2016.

    Cadillac, relatively late to introduce local production in the world’s biggest auto market, is among a second wave of luxury car brands in China that seek to take market share from established brands such as BMW (BMWG.DE), Daimler’s (DAIGn.DE) Mercedes-Benz, and Volkswagen’s (VOWG_p.DE) Audi.

    In order to sustain the momentum in Cadillac sales in China, the brand plans to double the number of retail stores over the next five years to more than 300, from the current 180.

    “A lot of younger people in China are looking for something different to stand out of the crowd. We have a very young target audience. That is a significant difference to the other countries in the world,” Cadillac’s China chief, Andreas Schaaf, told Reuters in an interview on Friday.

    The average age of Cadillac buyers in China is 33 years, compared to 50 years in Europe and the United States combined, Schaaf said.

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  • L’Occitane ‘bullish’ on China

    L’Occitane ‘bullish’ on China

    L’Occitane International, the French cosmetics and personal-care products company, said it was optimistic on its outlook for mainland China, despite what it called a “challenging” global retail environment.

    “We are still very bullish on China,” Andre Hoffmann, vice chairman and managing director, said at a press conference in Hong Kong.

    “Today, China is the No. 3 market globally for the L’Occitane group,” Hoffman said. “We expect by the end of the fiscal year it could reach the No. 2 market status after Japan,” surpassing the U.S.

    The comments came as the Hong Kong-listed company reported a drop in fiscal first-half net income for the period ended 30 September 2017.

    Net sales in China for the first half were 60 million euros ($70.7 million), up 18.2% from a year earlier, boosted primarily by a 15.8% increase in same-store sales, the company said in a statement, adding that a marketing campaign featuring Chinese singer Lu Han “continued to draw traffic both online and offline.”

    While the company maintains its own e-commerce website in China, Hoffmann noted that “it really cannot compete in terms of traffic and awareness with the major marketplaces like [Alibaba Group Holding’s] Tmall.”

    “It is better that we focus our energy and investments to build up the brand through Tmall,” he said.

    L’Occitane said first-half net profit fell 59.4% to 10.7 million euros compared with 26.4 million euros in the same period a year earlier.

    Thomas Levilion, executive director and group deputy general manager of finance and administration, attributed the drop to unfavorable exchange rates, one-off costs and seasonal effects.

    Those included expenses related to the opening of two new flagship stores in London and Paris, marketing and promotional costs in preparation for the important Christmas shopping season, and a tax credit of 6.5 million euros in the year-earlier period.

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  • Alibaba to buy major stake in Taiwan’s RT-mart business in China

    Alibaba to buy major stake in Taiwan’s RT-mart business in China

    Alibaba Group Holding Ltd., China’s biggest e-commerce company, agreed to acquire a stake in a hypermarket chain partly owned by the Taiwan-based company Ruentex Group in its effort to push into offline retail.

    Alibaba said on Monday that it would invest US$2.87 billion for a 36.16 percent stake in China’s top hypermarket operator, the Hong Kong-based Sun Art Retail Group, which operates more than 440 RT-Mart and Auchan stores in China, reported CNA.

    Under the agreement between the three companies, the deal would give French retailer Groupe Auchan, China’s Alibaba Group and Taiwanese conglomerate Ruentex 36.18 percent, 36.16 percent and 4.67 percent stakes respectively in Sun Art.

    According to Financial Times, the investment is the latest in a series of deals by Alibaba designed to blur the lines between online shopping and physical stores and explore new opportunities in China’s food retail sector.

    Ruentex, meanwhile, said the deal will help the three partners to create a strategic alliance in the retail market in China.

    Ruentex Vice Chairman Peter Huang said in a statement: “Ruentex is delighted to see the win-win collaboration between Sun Art and Alibaba with high synergies in online and offline that will meet the needs of consumers for a better life with better products and services and higher efficiency.”

    Ruentex Group is a Taiwan-based company principally engaged in the manufacture of textile products, the wholesales of commodities and investment businesses.

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  • Victoria’s Secret gala stumbles across the line in China

    Victoria’s Secret gala stumbles across the line in China

    The glitzy Victoria’s Secret fashion show stumbled across the finish line Monday night in its first-ever China staging after a run-up marred by setbacks and reports of political interference by Beijing.

    Models breezed down the catwalk sporting elaborate feathered wings and billowing trains as the US brand held the racy show in Shanghai in hopes of making a splash in the country’s growing lingerie market to offset declining American profits.

    But the show, now in its 23rd year, suffered a blow when top US model Gigi Hadid announced Friday she was withdrawing.

    She gave no reason for the decision but it came after Chinese internet users savaged the 22-year-old over a video clip showing her squinting her eyes in an apparently derogatory facial expression.

    US media also reported that singer Katy Perry was expected to headline the musical acts but was denied a visa by China. Instead, England’s Harry Styles led the way.

    The reports suggested that China was upset that Perry had previously draped herself in the flag of diplomatic rival Taiwan and performed in colors implying support for those on the island opposing closer relations with China.

    Neither Perry, Victoria’s Secret, nor China’s government have confirmed the reports but the state-aligned Global Times suggested in an editorial Sunday that Hadid and Perry had “dropped a stone” on their own feet.

    “Payback was unavoidable. Those who are serious about developing careers in the Chinese market can draw lessons from this case and learn to abide by the rules in China,” it said.

    Tripped up

    The stumbles continued Monday night at Shanghai’s Mercedes-Benz arena, whose exterior was bathed in garish pink.

    A system breakdown slowed the entry of the thousands of invited guests, delaying the show’s start, and the Chinese crowd largely resisted entreaties to show much enthusiasm.

    According to reports, as part of its China charm offensive Victoria’s Secret selected a record seven Chinese women to be among the 55 models.

    But one of them, Ming Xi, tripped on her costume and went down hard on the catwalk, triggering an outpouring of sympathy on the Chinese internet.

    Read also: Victoria’s Secret to charm China with fashion gala

    The scene is certain to be excised when the edited production airs in more than 190 countries on November 28.

    Earlier during make-up, China’s top model Liu Wen, a veteran of several Victoria’s Secret shows, told AFP that Monday’s version was “even more special” to her this year because it was held at home.

    “We can be thankful that China is such a big market, so there could be so many Chinese faces appearing. So personally I feel proud of my own country,” Liu, 29, said.

    Victoria’s Secret is hoping to win a slice of that market, opening its first two super-stores in China this year, in Shanghai and Chengdu.

    The company’s US sales have sagged, with analysts blaming its slow-footed response to a trend away from constructed bras towards more comfortable intimate wear.

    Victoria’s Secret is banking on its name recognition and on top models like Adriana Lima and her Chinese counterparts winning over women in China who are increasingly interested in expressing their sexuality, say social and fashion analysts.

    Lingerie is one of the fastest-growing segments in Chinese women’s apparel, according to market-intelligence firm Mintel.

    Mintel predicts it will grow to 148 billion yuan ($22 billion) by 2020, up 32 percent from 2015 numbers.

    The show’s priciest piece of lingerie was the annual “Fantasy Bra”.

    This year’s version, worn by Brazil’s Lais Ribeiro, was a $2 million creation by Swiss-based luxury-goods company Mouawad, studded with nearly 6,000 gemstones.

    Matthew Crabbe, Mintel’s regional trends director, said the fashion show was “a great way to raise consumer awareness”.

    But he added that Victoria’s Secret was entering “a tough retail market with many competitors”, both foreign and domestic.

    US fashion media have also run unconfirmed reports that three Russian and one Ukrainian model were denied visas.

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  • Alibaba, Auchan, Sun Art partnership goal in China market

    Alibaba, Auchan, Sun Art partnership goal in China market

    A new Alibaba, Auchan, Sun Art partnership will further strengthen Alibaba’s efforts to integrate online and offline, say analysts.

    China’s Alibaba Group Holding, France’s Auchan Retail and Taiwan’s Ruentex Group have formed a strategic alliance to bring together their online and offline expertise to explore opportunities in China’s food-retail sector.

    As part of the deal, Alibaba is investing HK$22.4 billion (US$2.8 billion) to obtain an aggregate direct and indirect stake of 36.16 per cent in Chinese food retailer Sun Art Retail Group by acquiring shares from Ruentex.

    Auchan Retail is also increasing its stake in Sun Art, with the transaction giving it, Alibaba and Ruentex about 36.18, 36.16 and 4.67 per cent economic interest respectively in the multi-format offline food retailer.

    Sun Art had a total gross floor area of about 12 million sqm in China at June 30. It has 446 hypermarkets as large as 17,000sqm across China under the Auchan and RT-Mart banners. It also has superstores and unmanned stores under the Auchan Minute brand.

    Alibaba says the alliance reflects its “new retail” concept, while Auchan Retail says it aligns with its “Auchan changes lives” vision.

    Alibaba Group CEO Daniel Zhang says the move aims to redefine traditional retail through digital transformation. “Physical stores serve an indispensable role in the consumer journey, and should be enhanced through data-driven technology and personalised services in the digital economy.”

    ‘Positive impact’

    “Bringing together the leaders of instore retail and of online retail will allow us to offer hundreds of millions of Chinese consumers a fully integrated, world-class shopping experience,” says CEO Wilhelm Hubner of Auchan Retail, which has a presence in 17 countries with 3715 points of sale.

    “Consumer demands have changed tremendously with the rapid growth of the mobile internet, and Sun Art is also trying to move from offline to online,” says Ruentex Group vice-chairman Peter Huang.

    “I think this deal will have a positive impact for all involved,” says OC&C Strategy Consultants associate partner Veronica Wang.

    “It will further strengthen Alibaba’s efforts to integrate online and offline,” says Wang. “Alibaba has been quite aggressive in investing offline in the past two to three years with its continuous investments in the likes of retailer Suning and mall company Intime, as well as its own launch of Hema supermarkets.”

    She says the alliance could help Sun Art build digital capabilities, with the company trying to tap into e-commerce and build an O2O business since 2014, but with limited success. “Feiniu.com was the first attempt, which is still losing money after three years, and Sun Art launched cashier-free self-service convenience stores this year which are still in the stage of trial and error.”

    OC&C associate partner Steven Kwok says the move is no surprise “especially when retailers in general are finding that grocery retailing, unlike other categories thus far, has encountered greater barriers to the shift online”.

    He says Sun Art’s reach across China not only gives Alibaba an enhanced distribution network, but also serves as a testing ground for digital initiatives.

  • It Is All About Tencent In China

    It Is All About Tencent In China

    Asia has been the best performing region globally this year as China 2.0 kicked in as a theme with China (at the MSCI level) being the best performing market and tech being the best performing sector. As Mark Tinker, responsable de AXA IM Framlington Equities Asia, comments: “In Hong Kong the story has all been about Tencent, while in Korea it has been about Samsung.”

    In fact, in Hong Kong in particular the impact of Tencent has been extra-ordinary as the largest stock in the market with a current weighting of almost 12% has effectively doubled over the last 12 months, while the second biggest, HSBC, is up a mere 17% – albeit with a significant dividend to yield a total return of 23%. In South Korea, where Samsung Electronics is more than 20% of the index, it has risen by 83%. Probably not since Apple became the biggest stock in the US market back in 2011/2 and then doubled has the index effect had such a big impact on so many active institutional investors.

    “Of course the argument threatens to become circular” says Tinker.  Therefore, he wonders if Tencent or Samsung are up so much because people are buying the index or vice versa?

    For Tencent there may well be some influence from the fact that mainland Chinese investors can buy it through the Southbound Stock Connect, which continues to expand its influence on Hong Kong markets. Tencent is affecting the real economy in China as well as here in Hong Kong.

    As previously noted by Will Chuang in Hong Kong, “it is not only possible but actually significantly easier to spend a weekend in Shanghai without using either cash or a credit card, simply using WeChat pay by Tencent. Tinker adds that “all you have to do is click on your phone to call up a quick response (QR) code that the merchant scans and you are done.”

    It is now said that you can always spot the tourists in Shanghai as they are the ones using credit cards, or if they are really old fashioned, cash.The fact that the largest note in China is RMB100, which is the equivalent of around EUR15 is probably a factor in using WePay to replace cash, but even here in Hong Kong it is increasingly being used.

    Tencent is mainly Chinese but it is also having something of a wealth effect here in Hong Kong as the number of people trading the stock and several of the connected spin-offs that have recently IPO’d here are clearly celebrating their ‘success’ in the bars and restaurants in Central. The expert of AXA IM in Asia explains:

    The retail offering of Tencent spin-off China Literature for example was 625 times oversubscribed and effectively doubled on opening, having caused a huge spike in interbank rates as money was locked up in anticipation.

    Former Hong Kong Chief Executive Chun-ying Leung used to refer to Hong Kong as “where the rest of the country meets the rest of the world” and as well as offering an outbound conduit for mainland investors through its H share listing, the company itself is, like a number of others, investing overseas, most notably when it picked up around 12% of SNAP as that particular stock continued to slide. Many have noticed the contrast between the performance of US tech IPOs and their Chinese equivalents.

  • China faces waste hangover after Singles’ Day buying binge

    China faces waste hangover after Singles’ Day buying binge

    China’s Singles’ Day online discount sales bonanza on Saturday saw bargain-hungry buyers spend over $38 billion, flooding the postal and courier businesses with around 331 million packages – and leaving an estimated 160,000 tonnes of packaging waste.

    The annual Nov. 11 buying frenzy is a regular fillip for giant online retailers like Alibaba and JD.com, but the mountains of trash produced from just one day of conspicuous consumption have angered environmentalists.

    “Record-setting over-consumption means record-setting waste,” said Nie Li, toxics campaigner at Greenpeace, which estimates this year’s orders will produce more than 160,000 tonnes of packaging waste, including plastic, cardboard and tape.

    Total sales from Singles’ Day hit 254 billion yuan ($38.25 billion), with 1.38 billion orders placed, state media reported. Around a quarter of the total sales involved household electric devices or mobile phones.

    China’s State Post Bureau (SPB) said postal and courier companies are having to deal with at least 331 million packages, up 31.5 percent from last year.

    Greenpeace described the annual promotion as a “catastrophe for the environment” that not only creates waste, but leads to a surge in carbon emissions from manufacturing, packaging and shipping. In a report published last week, it estimated that total orders last year produced 52,400 tonnes of additional climate-warming carbon dioxide.

    E-commerce firms have drawn up measures aimed at solving the problem, and aim to replace cardboard boxes with reusable plastic ones that courier companies can share. They have also experimented with biodegradable delivery bags and tape-free boxes, but Nie said the efforts were still not enough.

    “China’s online retail giants have taken few real steps to reduce delivery packaging waste,” she said. “Ultimately, packaging that we throw out after one use is not a sustainable option.”

    A spokesman for JD.com said it is “continually improving ways to better reduce waste and pollution” and, among other measures, aims to raise the proportion of biodegradable materials in its packaging materials to 80 percent by 2020.

    Alibaba’s Cainiao logistics arm said in emailed comments that it had launched initiatives aimed at minimising its environmental impact. “We are committed to work closely with different stakeholders to protect the environment and contribute to the sustainable development of the industry,” it said.

    MOUNTAINS OF WASTE

    China’s packaging waste problems are not confined to Singles’ Day.

    Official data shows China’s courier firms delivered around 20 billion orders in 2015, using 8.27 billion plastic bags, 9.92 billion packing boxes and enough sticky tape to go around the globe more than 400 times.

    Overall deliveries continue to surge, with the number of packages expected to hit 50 billion next year, up from 30 billion in 2016, according to forecasts by the SPB.

    But even that’s only a small part of China’s mounting waste problem, with large sections of the country’s soil and water contaminated by untreated industrial, rural and household trash.

    With China’s major cities producing around 2 billion tonnes of solid waste a year, they are already surrounded by circles of landfill known in Beijing as the “seventh ring road”.

    China has also struggled to finance the infrastructure required to handle surging volumes of discarded white goods, consumer electronics and batteries.

    Despite massive production volumes that have left the country dependent on imported raw materials, overall recycling rates in industries like steel, glass or textiles remain way behind their international counterparts.

    On top of that, China has only just started to impose restrictions on imported waste, which stood at 47 million tonnes in 2015.

    Recycling of foreign and domestic trash was traditionally handled by migrant workers, known as “scavengers”, who ripped apart discarded goods in back-street workshops.

    But rising economic prosperity means fewer people seek to make a living recycling waste, and tougher environmental regulations have forced small-scale recyclers to close.

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  • Premier outlet malls to receive some financing

    Premier outlet malls to receive some financing

    A US$750 million fund to finance premier outlet malls in China has been set up by asset manager Allianz and realty investor TH Real Estate.

    The Eres APAC II – China Outlets fund will be established by the Allianz real-estate investment arm Allianz Real Estate. It aims initially to raise the target commitments ($750 million) to acquire two established outlet malls, Florentia Village Jingjin, between Beijing and Tianjin, and Florentia Village Shanghai.

    In fact, say the asset managers, the fund has identified a pipeline of targets.

    Allianz will be the anchor investor with a 30 per cent share, the balance to be held by institutional investors like TH Real Estate, which will also act as fund manager. RDM Asia, part of Italy’s Fingen Group, will be asset manager.

    It is not the first partnership for Allianz and TH Real Estate, but is their first bid to form an investment fund in China. In 2004, both parties invested in Europe Outlet Mall Fund followed in 2008 by the UK Outlet Mall Fund.

    Three months ago Allianz partnered with Singapore’s Keppel Group to buy Hongkou Soho in Shanghai for $525 million.

    “China is moving toward an economy led by services and domestic consumption,” says Allianz Real Estate Asia-Pacific CEO Rushabh Desai. “Alongside the traditional brick-and-mortar retail formats, outlet malls have been successful in attracting buyers looking for branded products at discounted prices. We look forward to replicating our European outlet mall performance in China.”

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  • Sales plunge for Salvatore Ferragamo

    Sales plunge for Salvatore Ferragamo

    Asia Pacific, particularly China, was best dressed for Italian luxury brand Salvatore Ferragamo as it foundered overall in negative territory for the nine months to the end of September.

    Asia Pacific was its top market, with revenues growing by 2.8 per cent (3.5 per cent at constant exchange rates), despite softness in South Korea through significantly reduced tourism from China, and ongoing negative performance in Hong Kong.

    Meanwhile, says its consolidated interim report, China recorded 8.1 per cent retail grown (15.5 per cent at constant exchange rates) for the period, while there was a 6.7 per cent (4 per cent) drop in the Japanese market.

    Ferragamo says a strategic rationalisation of its wholesale channel saw revenues drop 0.8 per cent to €1 billion (US$1.1 billion), while overall retail revenue rose 1.2 per cent. The wholesale channel was also penalised by political tensions in South Korea and a strategic rationalisation in Japan.

    Its gross operating profit (EBITDA) fell by 25.1 per cent to €162 million, and its net profit by 28.3 per cent to €79 million.

    Footwear sales were down by 1.2 per cent, and handbags and leather accessories by 0.6 per cent, while fragrance sales were up 3.2 per cent.

    At the end of September, the group’s retail network comprised 687 points of sales including 407 directly run stores and 280 third-party outlets in the wholesale and travel retail channel, as well as its presence in department stores and multi-brand specialty stores.

    With a positive net financial position of  €100 million compared to debt of €18 million at the same time last year, Ferragamo says the current year is a transition period for the group which will see the introduction of strategic initiatives.

  • Koda is off to a flying start

    Koda is off to a flying start

    Expansion in China of its in-house brand Commune has kickstarted the latest fiscal year for Singapore furniture group Koda.

    With seven more Commune stores on the mainland, coupled with rising exports, Koda’s first-quarter net profit jumped 64 per cent to US$1.4 million while revenue rose 4.5 per cent to $12.3 million.

    This, coupled with lower production costs, improved economies of scale and more efficient supply chain, lifted the group’s gross profit margin by 6.1 points to 34.5 per cent.

    At the end of the quarter on September 30, Commune had 50 outlets across Singapore, China, Malaysia and Australia, and says it is on track to setting up 100 outlets in China by 2020. Over the next 12 months, Commune will be rolled out in fresh markets within Asia.

    In China, Commune is seen as being different, even avant-garde, says Commune CEO Joshua Koh. “Commune’s growing appeal among younger home-owners gives us confidence to roll out more stores in China and elsewhere in Asia.”

    Founded in Singapore in 1972, Koda is an original design manufacturer that has production and sourcing bases in China and Vietnam, plus a specialist manufacturing plant in Malaysia. Established in 2011, Commune Lifestyle is a wholly owned subsidiary managed by the third generation of the founding Koh family.

  • Korean retailers shifting to ASEAN from China

    Korean retailers shifting to ASEAN from China

    Lotte, Shinsegae and other retailers in Korea have been shifting their focus to Southeast Asia as it has become difficult to conduct business in China amid deteriorating Korea-Sino ties.

    The increasing number of middle-class consumers in Vietnam and other countries has also encouraged the retailers to establish a larger presence in the rapidly-growing region.

    The exodus from the Chinese mainland has been accelerating as the Chinese government shows no signs of easing economic retaliation against Korean firms and their products because of Seoul’s decision to deploy a Terminal High Altitude Area Defense (THAAD) battery here.

    Of the Korean retailers, Lotte Group has engaged most actively in the Southeast Asian markets, pushing ahead with its plan to carry out multi-complex construction projects in Southeast Asia as the group’s new growth engine.

    Lotte Mart, the hypermarket brand of the nation’s largest retailer, is currently operating 45 stores in Indonesia and 13 in Vietnam, industry sources said. It will also open another store in Lampung Province, Indonesia, in December 2017.

    In September 2014, Lotte built the Lotte Center in Hanoi, Vietnam. The 65-story multi-complex offers the group’s various shopping and accommodation brands, including Lotte Department Store, Lotte Mart and Lotte Hotel.

    Lotte is building a large-size shopping mall with a gross floor area of 200,000 square meters in Hanoi, with completion scheduled for 2020. It is also reviewing its plans to invest about 2 trillion won (US$1.74 billion) to build another 100,000-square meter multi-complex in Ho Chi Minh City.

    Lotte Duty Free, the group’s duty free store affiliate, has also recently entered Vietnam. It partnered with a local retailer to establish the Phu Khanh Duty Free at the Da Nang International Airport, and the company official said it has a similar plan to open business in other major cities in Vietnam.

    Shinsegae Group’s discount chain brand E-Mart is also shifting to Southeast Asian markets.

    It has officially announced its exit from the Chinese market, and chose Vietnam as its new overseas growth engine. E-Mart opened its first store in the Go Bap area of Ho Chi Minh City, in December 2015, and is planning to open its second store in the city soon.

    The E-Mart Go Bap store recorded 41.9 billion sales the previous year to exceed its sales target by 20 percent. Its sales performance also marked 25.8 billion won during the first half of this year, up 27.5 percent from the same period the previous year.

    It signed an MOU deal with Ho Chi Minh City last year to invest $200 million in September, and an E-Mart official said it will enter Laos, Indonesia and Cambodia soon.

    GS Retail, the nation’s convenience store brand is also entering Southeast Asian markets.

    GS Retail, which operates the GS25 convenience store chain, has recently established a joint venture with Vietnamese SonKim Group. Taking 30 percent in shares, GS Retail plans to open its first store in Ho Chi Minh City.

    GS Retail opened its first GS Supermarket in Indonesia in October 2017.

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  • DHL Express to expand opration at HKIA hub

    DHL Express to expand opration at HKIA hub

    Growing regional e-commerce trade has prompted DHL Express to expand its central-Asia hub (CAH) in partnership with Airport Authority Hong Kong.

    Costing about HK$2.9 billion (US$371.4 million), the expansion takes DHL’s commitment for the hub to about $4.5 billion.

    Recording an average 12 per cent year-on-year growth in its shipping volume in the past decade, CAH is one of three global hubs for DHL. With its expansion, it will handle more than 40 per cent of DHL’s Asia Pacific shipments.

    DHL Express CEO Ken Allen says the hub is based in a location that is strategically important for the company as the region’s international trade demands continue rapid growth.

    As part of the expansion, CAH will be equipped with an enhanced material-handling system that will improve productivity and increase throughput from 75,000 shipment items an hour to 125,000 items. The annual throughput of the expanded hub is expected to rise by 50 per cent to 1.06 million tonnes.

    As a dedicated air express cargo unit at Hong Kong International Airport (HKIA), the expanded CAH can handle six times more in terms of shipment volume than when it was established in 2004.

    Three times faster

    “Connecting with more than 70 DHL Express gateways in the region, the hub plays a significant role in strengthening our network in Asia Pacific, including Bangkok, Shanghai and Singapore,” says DHL Express Asia Pacific CEO Ken Lee.

    “The expansion will also help us capitalise on the growth in intra-Asian trade that currently contributes more than 40 per cent of our revenue in Asia Pacific. Equipped with fully automated X-ray inspection machines, the expansion will make our shipment inspection three times faster.”

     

    “The strong growth of cross-boundary e-commerce has generated new opportunities for the air-cargo industry,” says Airport Authority Hong Kong CEO Fred Lam. “We have taken an array of measures to further strengthen our role as an international and regional aviation hub, which include reserving land on both the airside and landside to support the growth in transshipment, cross-boundary e-commerce and the high value-added air-cargo business.”

    The CAH extension is expected to start work in early 2022, in time to capture demand in the Pan-Pearl River Delta region and completion of the airport’s three-runway system in 2024. The expansion will increase the CAH warehouse space by about 50 per cent to 47,000sqm.

    Its security system will have 520 CCTV cameras and an advanced access-control system, and a quality-control centre will monitor flight uplift/landing times and reporting any irregularities so DHL can notify customers of flight delays or cancellations.

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