Tag: China

  • Hermès enhances China digital game with first WeChat pop-up store

    Hermès enhances China digital game with first WeChat pop-up store

    French luxury brand Hermès launched its very first WeChat pop-up store, a strategic move signaling the brand’s ambition to step up its digital innovation in China. But it also raises the question of just how aggressive it can be in the digital space.

    The WeChat post by the brand to introduce the pop-up store has a 13-second promotional video about the new Éperon d’Or Hermès x Apple Watch.

    The product, in collaboration with Apple, features the classic pattern of Hermès scarf on the wristband. The pop-up store will last for two weeks.

    When clicking on “read more” at the bottom of the post, readers are taken directly to Hermes’ watch collection page which offers a detailed view of six models.

    The prices range from 8,988 yuan ($1354) to 10,988 yuan ($1655). Buyers need to register an account with the site—leaving their phone number and other relevant information—to track the order, and they must use WeChat Pay to complete the deals.

    Chinese consumers have shown high interest in Hermès’ WeChat offering: by the time of this publication, the post had attracted 15,986 pageviews.

    According to Hermès’ earnings results of the first six months of 2017, China led the growth in the Asia-Pacific region, contributing 14 percent to the region’s total revenues.

    The brand continues to see rising interest among Chinese customers in purchasing its signature handbags, namely the Birkin Kelly, Constance, and Lindy models.

    “We have really seen a recovery of China,” the global chief executive of Hermès International Group Axel Dumas said in an interview with Financial Times, “and the beginning of growth again in Hong Kong and Macau.”

    For Hermès, the rebound of luxury consumption in China posed the question of how it can best capture the demand in the market for digital shopping.

    Compared to many other luxury powerhouses, Hermès is a latecomer to the digital shopping game in China.

    Hermès set a textbook example for hunger marketing, a strategy often deployed by brands to make consumers feel hungry for certain type products through a limited number of offers. Hermes has used this strategy before to promote the Birkin bag. With limited time and quantity, the offer of Apple Watch in the WeChat store has employed a similar technique.

    However, this strategy of utilizing a sense of urgency is certainly not a new approach. Many brands, namely Dior, Longchamp, and Bulgari, were early adopters of WeChat flash sales, making headlines with impressive sales numbers from the flash sales. For example, during last year’s Chinese Valentine’s Day, Dior offered a Lady Dior handbag for 28,000RMB ($4,210) for four days; the media reported that all 200 models were sold out by 2 August 2017.

    As the brand’s key rivals like Louis Vuitton and Gucci are selling online in China, there is a possibility for Hermès to open an exclusive e-commerce site for the country’s consumers, too.

    There might be reasons why Hermès has been slow to adopt this digital trend; it is a reflection of a general attitude of the luxury industry to digital change.

    They face many questions such as whether going digital can deliver the same luxury experience to consumers, or if it can become a steady purchase channel for high-priced goods. Luckily, the past experiences of early adopters show that the value of luxury can still be held if the brands approach it appropriately.

    For Hermès, it is going to be a task to balance exclusivity and availability on the digital channel in China and their answer to it will set up an example for many luxury brands.

  • 11/11: everything you need to know about Singles’ Day

    11/11: everything you need to know about Singles’ Day

    It is that time of the year again. China’s – and the world’s – biggest online shopping event is about to take place on 11 November.

    Known as Singles’ Day, Alibaba and its founder, Jack Ma, transformed the de facto holiday from an ‘anti-Valentine’s Day’ for Chinese singletons to a global shopping festival back in 2009 – and made billions of dollars in the process.

    How did it start?

    Singles’ Day, also known as ‘bare sticks holiday,’ started in 1993 at Nanjing University as a day for students to celebrate their singledom. The date 11 November was chosen as it resembles 4 solitary bare sticks.

    The annual event kicks off on the midnight of 11 November and runs for 24 hours featuring steep discounts that are driven by the main Alibaba-owned platform, Tmall.

    Essentially, think of it as the Asian version of America’s Black Friday and Cyber Monday shopping sales – but bigger than the two combined.

    Who’s participating?

    This year, Alibaba says over 15 million products from more than 140,000 brands, including 60,000 international brands, will be offering discounts on Tmall – up from 100,000 in 2016.

    Besides the e-commerce giant, other platforms like JD.com have become a key competitor and will be pushing equally hard to attract shoppers.

    11/11: everything you need to kn ow about Singles' Day

    How much is spent?

    In terms of sales, Singles’ Day is known for racking up record numbers – more so than Black Friday, Cyber Monday or Amazon Prime Day sales. In 2016, Alibaba made a staggering $17.8 billion ($5 billion in the first hour alone) and intends to break that record this year.

    How is the high demand met?

    Shoppers purchase everything – home appliances, electronics and even cars – on the day. To manage the high volume of deliveries, Alibaba opened its first automated, robot-managed warehouse. JD.com is not resting on its laurels either. It has teamed up with Walmart to simplify shopping processes and speed up deliveries.

    2017 : Increased focus on luxury

    This year, through strategic partnerships with international fashion luxury brands like Jason Wu, Opening Ceremony and Robert Geller, Alibaba is focusing heavily on the luxury sector. Similarly, JD.com is appealing to high-end consumers by launching a new luxury e-commerce site, TOPLIFE, which will go live on Singles’ Day.

    The ‘New Retail’ strategy

    This year also marks the one-year anniversary of Alibaba’s ‘New Retail’ strategy launch. The term coined by Ma aims to depict the increasingly blurry lines between offline and online shopping. As such, Alibaba is partnering with 52 shopping malls to set up 60 pop-up stores across 12 cities in China.

    100,000 stores will also become ‘smart stores’ with tech features ranging from facial recognition-powered payment solutions, scan-and-deliver O2O shopping feature and AR beauty tutorials to create a much more immersive experience.

    Entertainment will be big

    To kickstart the event, Tmall will host a four-hour star-studded countdown gala on the night before, where Pharrell Williams is expected to perform alongside other Chinese celebrities. Last year, the glitzy show attracted over 400 million viewers – three times the number of those who watched this year’s Super Bowl.

    Jack Ma to unveil debut movie

    Starring alongside action superstars Jet Li and Donnie Yen, Ma will be unveiling his martial arts film, Gong Shou Dao (The Art of Attack and Defence), on video platform Youku on Singles’ Day. To promote the film, Ma also released a theme song entitled Feng Qing Yang that he recorded with Chinese singer Faye Wong.

    Going global

    “We want to make this a global holiday, a global festival for every consumer… We want [to] help global small business…” Ma told CNN in 2016. To demonstrate it, this year Tmall will bring 100 Chinese brands overseas offering special promotions to target millions of consumers around the world.

    If you’re in China…

    Timing is everything, so be sure to prepare your shopping list early instead of browsing the entire site once the sale starts. While you’re checking out, also look out for additional promo vouchers that you can use to gain further discounts. Payment can be made with Alipay, UnionPay or major credit cards.

    If you’re abroad…

    Since most of the sites are in Chinese, prep yourself with a translation tool like Google Translate to help you navigate. Before checking out, ensure the products can be shipped to your destination. Lastly, do a quick research to find out which credit cards offer the lowest rates for inter-bank transactions and exchange rates.

  • Singles’ Day trumps Black Friday and Cyber Monday combined

    Singles’ Day trumps Black Friday and Cyber Monday combined

    Alibaba, the Chinese e-commerce giant, said on 11 November 2017 its Singles’ Day sales extravaganza hit $25.4 billion, smashing its own record from last year and cementing it as the world’s biggest shopping event.

    Once a celebration for China’s lonely hearts, Singles’ Day has become an annual 24-hour buying frenzy that exceeds the combined sales for Black Friday and Cyber Monday in the United States, and acts as a barometer for China’s consumers.

    As tills shut midnight on Saturday, Alibaba’s live sales ticker registered 168.3 billion yuan, up 39 percent from 120.7 billion yuan in 2016. The dollar figure was up more steeply due to the strength of the yuan against the greenback in 2017.

    The event began soon after a star-studded event in Shanghai late on 10 November 2017. As midnight hit, a deluge of pre-orders helped drive a billion dollars of sales on Alibaba’s platforms in the first two minutes and $10 billion in just over an hour.

    “In terms of scale it just dwarfs any other event out there,” said

    Ben Cavender, Shanghai-based principal at China Market Research Group.

    At just past the halfway mark, the headline gross merchandise volume swept past last year’s dollar total just shy of $18 billion. Shortly afterward, sales surpassed the 2016 total in the local currency.

    The event gets shoppers around China scouting for bargains and loading up their online shopping carts, while delivery men – and robots – brace for an estimated 1.5 billion parcels expected over the next six days.

    “This is a big event for China, for the Chinese economy,” Joseph Tsai, Alibaba’s co-founder and vice chairman, said. “On Singles Day, shopping is a sport, it’s entertainment.”

    Tsai said rising disposable incomes of China’s “over 300 million middle-class consumers” was helping drive the company’s online sales — and would continue. “This powerful group is propelling the consumption of China,” he said.

    The final total — more than the GDP of Iceland or Cameroon — leaves other shopping days in the shade. Cyber Monday in the United States saw $3.45 billion in online sales last year.

    Investors closely watch the headline number, though some analysts say the way it is calculated is too opaque. The U.S. Securities and Exchange Commission launched a probe into Alibaba‘s accounting practices in 2016, including into its Singles’ Day data. That investigation is as yet unresolved.

    Last year, the sales number rose by nearly a third at the eighth iteration of the event – though that was slower than the 60 percent increase logged in 2015.

    Slower growth?

    At Alibaba’s Friday night gala on 10 November 2017, the company’s co-founder and chairman, Jack Ma, hosted guests including the actress Nicole Kidman, singer Pharrell Williams and Chinese musicians and film stars such as Zhang Ziyi and Fan Bingbing.

    Singles' Day trumps Black Friday and Cyber Monday combined 5

    The excitement around the shopping blitz, however, masks the challenges facing China’s online retailers such as Alibaba and JD.com Inc., which are having to spend more to compete for shoppers in a broader economy where growth is slowing.

    “A lot of the lower hanging fruit has been picked and there’s increased competition for a share of consumer spending,” said Matthew Crabbe, Asia Pacific research director at Mintel. The sale did though beat his forecast of 20 percent growth.

    Online retailers were being forced to push offline as well as overseas to attract new shoppers, and the overall online retail market was close to “saturation,” raising questions about whether current rapid growth could be sustained.

    “They’re having to spill over out of the purely online realm into the wider consumer market,” Crabbe said.

    This has sparked deals to buy bricks-and-mortar stores in China, and overseas tie-ups, especially in Southeast Asia. Technology, too, has been key, with virtual reality dressing rooms and live fashion shows to attract shoppers.

    Alibaba also said it had turned 100,000 physical shops around China into “smart stores” for this year’s event. Goods perused by people at the stores, but then bought and paid for on Alibaba’s platforms, were added towards the sales total.

    China Market Research Group’s Cavender said brands were also increasingly making smaller price cuts to avoid “margins getting killed,” and were often asking for deposits in advance. In previous years, prices were often halved.

    Fu Wenyue, a 23-year-old dresser in Shanghai, said offers this year were smaller but more “personalized” as brands used big data to hone their targets. Fu spent 4,000 yuan on clothes, cosmetics and kitchen utensils in pre-event sales, and kept shopping on the day.

    “In actual fact, I think I spent even more than I did last year,” she said.

  • Is McDonald’s story over for Chinese?

    Is McDonald’s story over for Chinese?

    It is always tricky for multinationals to pick a name that sounds right to Chinese ears, but few went as wrong as McDonald’s latest business tweak.

    When the news broke last week that the American fast-food giant had changed its business name in China, ditching the previous Maidanglao – a transliteration of the company’s English name – in favour of Jingongmen, which roughly translates as “Golden Arches,” Chinese social media gorged itself with amusement.

    “[The new name] sounds like a furniture store. Are you sure the food is edible?” one wrote, while another observed “even Ronald McDonald cannot stand the new name”, referring to a widely circulated image of the clown mascot on the phone, saying: “Boss, I have to quit. The new name is unbearable.”

    Construction on mainland China’s first McDonald’s in Shenzhen takes place in 1990.

    McDonald’s responded online, reassuring its customers that no one would dine at restaurants carrying the Jingongmen label and the change was for official paperwork only. It is unclear whether McDonald’s will manage to shake off this PR disaster, but even if it does, there are worries the American food giant cannot escape the fate of being downgraded.

    “McDonald’s and KFC do not command the brand power they used to in the 1990s,” Jeffrey Towson, a business professor at Peking University in Beijing, said. “They are not viewed as upscale as they were in the 2000s.”

    Once a tourism destination in China and a symbol of rapid modernisation, McDonald’s is now known as a low-end, cheap eat for many Chinese. Experts say this colossal change in attitude mirrors the rise of China, where local businesses have become increasingly competitive and Chinese customers no longer have to rely on Ronald McDonald to get a taste of America.

    The first McDonald’s in Hong Kong opened in 1975 on Paterson Street in Causeway Bay.

    Back in 1975, when McDonald’s opened its first store in Hong Kong, the popularity of McProducts in the then British colony created a phenomenon one local newspaper described as “Big Mac” fever. The fervour spread to Shenzhen, where McDonald’s made its debut in 1990. Media reports showed hundreds of Chinese queuing up outside McDonald’s first store on mainland China, and in the first three hours of its opening day, a week’s supply of products had sold out.

    According to Yan Yunxiang, a professor at the University of California who studied the company’s operations in China in the 1990s, McDonald’s was so popular some parents thought the Big Mac contained a hidden ingredient luring their children to this exotic food.

    And it was not just the children who had an appetite for it. When the first McDonald’s outlet arrived in Beijing in 1992, 82-year-old Wang Yonglu was one of the first customers. Munching on a hamburger, Wang explained to the United Press International: “I am just a retired proletarian. What chance do I have to go to the United States? This way, I can spend only 10 yuan (US$1.75) to see what America is like.”

    Beijing’s first McDonald’s opened in Wangfujing in 1992. 

    Fast forward to the 21st century, the landscape in China is somewhat different. In 2016 alone, roughly 122 million Chinese – equivalent to the population of France, Spain and Denmark combined – went abroad, according to Beijing-based think tank China Tourism Academy.

    “McDonald’s has lost that position because Chinese consumers are getting more sophisticated,” Shaun Rein, managing director for Shanghai market consultancy CMR China, said. “If they want Western culture and Western food, they can go to America.”

    Zhang Yue, a 34-year-old marketing specialist in Chongqing, knows this well. When McDonald’s entered her hometown in southwestern China in the early 2000s, Zhang happily stood in line as she loved its “spotless dining environment.”

    But now, she rarely goes. “There are so many good restaurants out there.”

    In recent years, a growing number of Western brands have flocked to China, hoping for a bite of the world’s biggest consumer market. Starbucks has opened 2,600 stores, and plans to add a coffee shop a day for the next five years. Meanwhile, home-grown food firms are catching up. Dicos, China’s third-largest fast food chain by retail value, has almost as many outlets as McDonald’s.

    The boom of delivery businesses has made getting fed as simple as tapping a smartphone. Last year, at least 7.5 million hungry mouths a day were sated this way, according to a government report. That, in turn, has hampered the business for chains such as McDonald’s.

    To lure in more diners, McDonald’s China has localised its menu. Currently, nNearly a quarter of items in its breakfast menu is Chinese food, including congee and soy milk.

    To lure in more diners, McDonald’s China has localised its menu. Nearly a quarter of its breakfast menu is Chinese food, including congee and soy milk. Earlier this year, the American food chain also sold most of its business in China and Hong Kong to a Chinese consortium for more than US$2 billion. With the help of its new partner, McDonald’s said it will increase the number of Chinese outlets from 2,500 to 4,500 by 2022, with most of the new stores in smaller cities.

    “When I studied McDonald’s in the early 1990s, I was told by management the strategy was to stick to the original American menu, not to apply McDonald’s franchise model in Beijing, and not to offer breakfast,” recalled Yan, the university professor. “It looks like the company has done everything now that it said it would not do in the early 1990s … either proactively to go [to] the next level or reactively to meet new challenges.”

    The name tweak came after McDonald’s completed its China sale. A spokeswoman said it hasn’t affected the business in China and the company is happy Chinese diners no longer view it as an upscale brand. “After all, we never meant to be a five-star restaurant; McDonald’s is created to serve everyone,” she said.

    China’s propaganda authority also had its say. The Beijing-based Guangming Daily, a newspaper backed by the Publicity Department of the Chinese Communist Party, wrote in a commentary last week: “Foreign brands have become ‘rustic’ [as] we Chinese have become more international.”

  • LANCÔME Travel Retail Asia Pacific Kicks Off ‘Declaring Happiness’ Global Campaign

    LANCÔME Travel Retail Asia Pacific Kicks Off ‘Declaring Happiness’ Global Campaign

    Leading French luxury beauty brand LANCÔME

    Travel Retail Asia Pacific is delighted to announce the launch of a global campaign,
    ‘Declaring Happiness’, which will be celebrated through a series of brand events across
    Asia. In line with the global direction to strengthen LANCÔME’s digital presence in the
    region, each of these events will leverage on the digital influence of celebrities and key
    beauty opinion leaders to engage a broader audience, and at the same time converge the
    offline and online retail experiences to foster a stronger brand engagement with
    consumers.

    Beginning in Korea, the global initiative was kickstarted with a store event
    and cocktail party graced by renowned Korean actress, Kim Go-Eun, at Lotte Hotel, the
    first 2020 concept store for LANCÔME Travel Retail Asia Pacific to offer a unique retail
    experience with its consumer centric and high retail quality that allows travellers to freely
    discover various travel exclusive products in the shop. After which, the campaign landed
    on the shores of Singapore, with a resplendent LANCÔME Holiday Wonders pop-up
    store that lit up Singapore Changi Airport in festive spirit for the holiday season. Moving
    forward, the campaign will make a stop in China, with a launch event in November at
    Haitang Bay that is set to continue the brand’s journey in sharing happiness with all
    women, before concluding with a Hong Kong event in December.

    The Soul Behind The Campaign

    “The LANCÔME ‘Declaring Happiness’ global campaign richly illustrates our passion to
    inspire and share happiness with women by making their lives more beautiful. Ultrafeminity,
    emotion, joie de vivre and beauty have always been at the heart of LANCÔME’s
    DNA. Through this series of ‘Declaring Happiness’ events across Asia, we hope to
    continue creating moments of happiness for all women by exploring different consumercentric
    innovations at our events that allows us to foster a deeper connection and
    engagement with our consumers.” says Ms. Tao Zhang, General Manager of
    LANCÔME Travel Retail Asia Pacific.

    ‘Declaring Happiness’ Kick-off Event in Seoul

    The ‘Declaring Happiness’ campaign started off in Seoul on 12 October 2017 with
    LANCÔME Travel Retail Asia Pacific’s first-ever live streaming event, attended by
    guests from all across Asia – most notably, renowned Korean actress Kim Go-Eun and
    social media influencers from China. The 11 Chinese social media influencers livestreamed
    at both the event venue and concept store through Weibo, creating organic,
    user-generated content by sharing their experience with millions of their followers and
    interacting with them during the live feed.

    At the beauty talk session, Kim Go-Eun revealed her beauty secret for porcelain skin and
    attributed it to some of her favourite LANCÔME products – the UV Expert Aqua Gel
    and Blanc Expert Cushion.

    Other highlights of the event also include activities for new product launches such as the
    ‘Génifique’ zone, which employed touch-screen gaming technology to create a unique
    platform on which guests could experience the Génifique Sensitive. Guests were also
    given the opportunity to be the first to experience the fruity floral scent of LANCÔME’s
    new fragrance, the Miracle Secret, as well as the newly launched L’absolu Gloss.

    LANCÔME Holiday Wonders Pop-Up Store at Singapore Changi Airport

    Following its launch in Seoul, the ‘Declaring Happiness’ campaign arrived in Singapore
    with a much-anticipated LANCÔME Holiday Wonders pop-up store at Changi Airport
    on 16 October 2017, the first of its kind to blend retail with entertainment to create a
    captivating pop-up experience. The launch event was officiated with a ribbon cutting
    ceremony and champagne toast graced by VIPs and partners, followed by a speech given
    by Ms. Tao Zhang, General Manager of LANCÔME Travel Retail Asia Pacific.

    Pop-up store is designed to enrapture travellers at Singapore Changi Airport with various
    multi-dimensional retailtainment. An instant crowd-favourite at the launch event is the
    Virtual Mirror, a LANCÔME Travel Retail Worldwide exclusive at Singapore Changi
    Airport that allows guests to try on different makeup looks via a augmented reality virtual
    makeover application. Fans of Virtual Mirror at the event included notable beauty
    personalities and key opinion leaders such as Andrea Chong, Christabel Chua, Kimberly
    Wang, Liv Lo, Mongchin Yeoh, Sheila Sim, and Chinese fashion opinion leader Lu Min,
    all of whom indulged in the exciting opportunity to experience the Virtual Mirror. Guests
    were also kept entertained with a LANCÔME photobooth at the storefront which
    featured a splendid backdrop of floating balloons over Paris. Finally, for a chance to win
    the brand’s bestselling L’Absolu Rouge lipstick samples, guests did their best to clock up
    top scores at the LANCÔME digital touchscreen game.

    Consumers at the LANCÔME Holiday Wonders Pop-up store will also be treated to a
    complimentary engraving service for the ‘LANCÔME x SINGAPORE’ luggage tag, an
    exclusive holiday collectible for those who purchase the ‘Your Perfect Travel
    Companion’ sets.

    Hereafter, consumers can look forward to a uniquely LANCÔME beauty experience
    when the ‘Declaring Happiness’ campaign makes its stop at Haitang Bay, China in
    November and Hong Kong in December.

  • Giordano post a “quite okay” result

    Giordano post a “quite okay” result

    Third-quarter sales for apparel retailer Giordano International have been edging ahead in most markets, an exception being South Korea, a 48.5 per cent JV with an independent management team.

    While e-commerce sales jumped by 17.6 per cent in Mainland China, overall sales growth reached only 2.6 per cent, with a decrease of 2.5 per cent in directly run stores. The company closed 32 non-performing outlets.

    Comparative own-store sales grew by 8.4 per cent, with an 0.5-point decline in gross margin because of a change in channel mix as the contribution from the lower-margin e-business.

    In Hong Kong and Macau, sales for the three months to the end of September grew by 3.2 per cent.

    Gross margin fell 1.6 points as a result of sales promotions to counter an unusually hot and rainy summer and late autumn. These promotions pushed up sales volume by 13.8 per cent while reducing the average selling price by 9.2 per cent.

    Comparative-store gross profit rebounded in Taiwan, where sales and gross margin rose by 2.9 per cent and 1.1 points respectively. Giordano says the improvements are sustainable for the rest of the year. Gross margin also benefited from lower product costs on a strong local currency.

    In the rest of Asia Pacific sales increased by 5.4 per cent at constant exchange rates. The acquisition of Vietnam business in July contributed to 5.1 per cent of sales in the region.

    Unusually strong sales in Thailand last year resulted in an unfavorable year-on-year comparison for the quarter.

    Ramadan effect

    Indonesia sales rose by 3.5 per cent as a result of shop expansion. While comp-store sales fell by 4.1 per cent and gross profit eased 1.8 per cent as a result of the different timing of Ramadan, comp-store sales from June to September this year increased by 9.7 per cent against the same period last year.

    Early Ramadan also affected sales in Malaysia, which grew by 4.3 per cent. Comp-store sales rose by 2.6 per cent while gross profit eased 1.4 per cent. Comp-store sales for June to September strengthened 20.4 per cent compared with the same four-month period last year.

    Both comp-store sales and gross profit dropped in Thailand, by 4.9 and 6.3 per cent respectively, against an unusually high base in the same quarter last year.

    Sales fell 3.6 per cent in South Korea while gross margin improved by 0.7 points. The decline was mainly because of summer clearance sales and unusually hot weather in September hitting fall/winter merchandise sales.

    Overall group sales rose by 3.6 per cent to HK$1.2 billion (US$153.8 million). Group gross profit increased by 3 per cent on improved sales, partially offset by a 0.3-point decline in gross margin.

    Giordano attributes this partly to the change in channel mix and selective promotional activities. Group comparable-store sales and comparable-store gross profit for the quarter grew by 2.3 and 1.5 per cent respectively.

    At the end of September, the group’s distribution network comprised 2370 stores in more than 30 countries, about half of these being standalone stores. Most stores were in Greater China, South Korea and Southeast Asia.

  • Ford, China’s Zotye Auto invest $756 million in electric vehicle JV

    Ford, China’s Zotye Auto invest $756 million in electric vehicle JV

    Ford Motor and China’s Anhui Zotye Automobile have agreed to invest a combined $756 million to set up a 50-50 joint venture in China to build electric passenger vehicles, both companies said on Wednesday.

    The new joint venture, Zotye Ford Automobile Co. Ltd, plans to build a manufacturing plant in Zhejiang province and will sell all-electric vehicles under a new Chinese brand, tapping into a boom for such vehicles in the world’s top auto market, Ford Motor said in a statement.

    “Zotye Ford will introduce a new brand family of small all-electric vehicles,” Ford group vice president Peter Fleet said in the statement. “We will be exploring innovative vehicle connectivity and mobility service solutions for a new generation of young city-dwelling Chinese customers.”

    The JV deal was signed during U.S. President Donald Trump’s visit to China as the two countries inked commercial deals worth about $9 billion.

    In addition to the new JV, Ford and Zotye will explore offering mobility services to consumers in China as local demand for such solutions continues to grow, Ford’s statement added.

    China, struggling with alarming pollution levels in major cities, is aggressively pushing plug-in vehicles and has poured in tens of billions of yuan in investment, research funding and subsidies, drawing many new automakers to launch projects.

  • Mitsubishi Motors swings to operating profit in second quarter

    Mitsubishi Motors swings to operating profit in second quarter

    Mitsubishi Motors Corp said on Tuesday it swung to an operating profit for the second quarter, beating expectations as it rebounded from a mileage-cheating scandal a year earlier helped by cost cuts and favorable exchange rates.

    Healthy demand in Southeast Asia, Mitsubishi’s top market also lifted earnings with the automaker saying it was seeing strong orders for its new Xpander seven-seater multipurpose vehicles in Indonesia.

    Operating profit came in at 23.6 billion yen ($207.3 million) for the quarter, compared with a loss of 36.2 billion yen a year earlier when it was forced to stop sales of some domestic models due to the scandal.

    That exceeded forecasts for 20.14 billion yen from four analysts polled by Thomson Reuters I/B/E/S.

    During the first-half, retail vehicle sales at home climbed 48 percent while those in southeast Asia rose 15 percent.

    Mitsubishi kept its forecast for operating profit to surge 14-fold to 70.0 billion yen in the year to March. That reflects the rebound from the scandal as well as expectations of further growth in Asia and cost savings from its alliance with Nissan Motor Co (7201.T).

    The car maker has set ambitious goals for growth in Southeast Asia, China and the United States as well as for a comeback in Japan. Last month, it said it planned to boost global sales by 30 percent over three years.

    Under its new three-year strategy plan – Mitsubishi’s first since Nissan bought a controlling stake in 2016 following the scandal – the Japanese automaker will also ramp up R&D investment and capital spending.

    The company has reorganized the engineering division involved in the mileage manipulation scandal and has improved testing processes and compliance procedures.

    It expects the yen to trade around 105 yen to the U.S. dollar in the year to March.

  • More luxe image for Burberry marketing

    More luxe image for Burberry marketing

    Trumpeting solid growth in China sales in the first half year, Burberry has revealed plans to head more upmarket and cull its store network.

    Burberry marketing, retailing and communication will be refocused to meet the changing demands of today’s luxury customers, explained CEO Marco Gobbetti.

    The British-headquartered company, which achieves about 90 per cent of its own-retail sales in Asia-Pacific, reported China sales growth in the mid-teen percentages, with a “broadly consistent performance across both quarters”.

    “Hong Kong continued to improve, returning to growth in the second quarter,” the company announced, further evidence that the city’s retail sales decline is finally over.

    But the region’s overall growth was a more muted “mid-single digit”, largely due to a continuing decline in South Korea, thanks to falling Chinese tourist numbers.

    “I am pleased with our performance in the half with strong double-digit underlying profit growth,” said Gobbetti. “Consumers responded positively to fashion and newness, particularly in rainwear and leather goods. Digital revenue grew in all regions, led by mobile, while growth was strongest in our own stores in Asia Pacific.”

    Global sales for the six months to September rose 4 per cent to £1.263 billion with adjusted operating profit up 14.6 per cent to £185 million.

    New direction

    But the solid performance was overshadowed by Gobbetti’s announcement on the brand’s future. He prefaced it by saying the luxury market has changed and today’s luxury consumer demands innovation, curation and excitement from brands and creativity at every turn.

    “To win with this consumer, we must sharpen our brand positioning.  This will require us to change our approach to product, communication and customer experience.

    “We will reshape our offer, increasing and invigorating the fashion content.  We will create compelling luxury leather goods and accessories to attract new customers.  We will build on the strength of our apparel and re-energise it.  We will build our offer to provide a complete look for our customers, while continuing to simplify our ranges.”

    He said Burberry will put product “at the centre of our communication”.

    “We will leverage our extensive digital reach to convey new energy.  We will be bold in the way we engage luxury consumers, reinventing our editorial content and experiences.”

    One of the first steps will be rationalising the brand’s non-luxury wholesale and retail doors, with an initial emphasis on the US and EMEIA.

    The company has earmarked about £200 million to “transform our in-store experience” by refurbishing stores and enhancing its luxury service.

    “We will continue to lead innovation in digital, delivering personalised experiences and true omnichannel services. Our actions will be underpinned by continued focus on productivity, simplification and financial discipline.  We will engage and motivate our teams, reinforcing our culture and values.  We will continue to be an industry leader in responsibility,” said Gobbetti.

    Late last month, Burberry announced the departure of its president and chief creative officer Christopher Bailey after 17 years with the brand. His phased exit will commence in March, before he designs the Spring/Summer 2018 collection before leaving the company in December next year.

  • Suning Holdings next move is smart retailing

    Suning Holdings next move is smart retailing

    China’s commercial conglomerate Suning Holdings Group is partnering with Hon Hai Technology Group in an “extensive retail co-operation” worth at least RMB50 billion (US$8 billion).

    Suning has also signed an RMB20 billion investment agreement with Evergrande Real Estate Group. Both moves are aimed at online/offline integration and expanding Suning’s smart-retail strategy.

    The property developer will help Suning develop its brick-and-mortar stores for personalised shopping experiences, and also help with its planned expansion of 5000 stores in the short term.

    The two companies will also explore smart home design, property management and other priorities.

    With Hon Hai, said to be the world’s largest contract electronics manufacturer, the co-operation focuses on the sharing of big-data analytics to optimise strategies and products for customised services. Hon Hai chairman Terry Gou says cross-industry co-operation should start from manufacturing to better satisfy customers’ needs.

    “By partnering with Evergrande, Suning’s advantages in innovative O2O physical stores will be strengthened more efficiently, and by working with Hon Hai we can create curated experiences through an open business model,” says Suning chairman Zhang Jindong.

    Suning ventured into e-commerce in 2010. By the third quarter this year it had 3748 stores in China and overseas. Revenue from its stores with online connections jumped by 35.27 per cent in the first three-quarters year on year. In the same period, its total transaction volume online reached RMB81 billion, a year-on-year rise of 55.64 per cent.

  • Blue Bottle Coffee heading for Korea

    Blue Bottle Coffee heading for Korea

    US brand Blue Bottle Coffee is expected to open in South Korea soon, followed by other Asian countries including China, Hong Kong and Taiwan.

    “We’re developing our contact here,” CEO Bryan Meehan said while attending the World Coffee Leaders Forum at the Seoul Cafe Show.

    He said Blue Bottle was researching the market and looking for a GM in Korea, with no specific set yet for a launch.

    Meehan said the company headquarters would directly manage its stores in Korea, as it does in other countries.

    “Actually, we had a lot of pressure for a joint venture in Japan. A lot of companies wanted licensed approaches,” he said. “We are very passionate about controlling the quality of Blue Bottle, so we like to do things ourselves. We have never franchised.”

    While local coffee chains in Korea have been hit by losses over the past few years, Starbucks Coffee has alone seen rapid growth, reports The Korea Times.

    “Blue Bottle has grown along with Starbucks in the US. We think we can survive side-by-side,” said Meehan.

    Known for its innovation, Blue Bottle has 44 stores in the US and Japan. Nestle acquired the chain for US$425 million in September.

    “Nestle CEO Mark Schneider has a wonderful vision of where specialty coffee should be in five years’ time, and he sees the value of Blue Bottle,” said Meehan. “Nestle is allowing Blue Bottle to remain a standalone company. I don’t report to anybody at Nestle.”

    Founded in Oakland, California, by musician James Freeman in 2002, Blue Bottle has expanded around San Francisco. Because of Freeman’s interest in Japan, the chain has expanded there and will open its eighth outlet next year in Kyoto.

  • China signs $37 billion deal to buy 300 Boeing planes

    China signs $37 billion deal to buy 300 Boeing planes

    China signed an agreement Thursday to buy 300 airplanes from U.S. aerospace giant Boeing valued over $37 billion, as part of a multi-billion dollar raft of deals announced during President Donald Trump’s visit to Beijing.

    The agreement for China Aviation Suppliers Holding Co (CASC) to buy the single-aisle and twin-aisle aircraft was among the more than $250 billion in agreements announced at a ceremony attended by Trump and Chinese leader Xi Jinping.

    A Boeing statement said the agreement includes “orders and commitments” to buy the aircraft, but it did not give a further breakdown.

    In September 2015, Boeing had already received an order from CASC for 300 aircraft valued at a record $38 billion at list prices.

    Boeing and European rival Airbus are competing heavily in China, the world’s second aircraft market, with the U.S. company forecasting that the Asian giant needs over 7,200 commercial aircraft in the next 20 years.

    China, meanwhile, has developed its own medium-haul C919 in a bid to challenge the Airbus-Boeing duopoly.

  • China online spending is already 50 per cent of retail sales

    China online spending is already 50 per cent of retail sales

    China online spending is set to account for almost 50 per cent of the country’s total retail market this year.

    According to fresh data from Mintel, this year’s figure will be 45.7 per cent of “total per capita retail spend”. In many categories, already more is spent on goods online than in physical stores in the world’s largest digital economy.

    “China is experiencing a fundamental shift in the way consumers shop, and in how the shopping experience fits into the wider environment of customer service, delivered both online and in-store,” said Matthew Crabbe, research director, APAC, with Mintel.

    The research shows China’s online retail market has reached a critical mass. Business-to-consumer (B2C) online retail is expected to reach more than 60 per cent of total e-commerce sales this year, with mobile online retail expected to make up more than 80 per cent of the B2C retail category.

    However, while Mintel estimates per capita online retail spend will reach 45.7 per cent of total per capita retail spend by the end of this year it predicts that share will hold steady between until the end of 2019.

    Crabbe said there are several reasons for the projected peak.

    “One issue is that consumers are increasingly buying experiences and services online, rather than products. The other issue is that consumers are already adapting to ‘new retail’; they are embracing greater integration between online and in-store shopping. This will mean much tougher competition between retailers. It will also likely mean more pressure for further consolidation in the market, resulting in more mergers, acquisitions and strategic partnerships,” he said.

    China’s ‘new retail’ experience has consumers purchasing different products from different channels. Mintel research shows that 72 per cent of in-home food shoppers prefer to shop in-store, compared with 60 per cent of consumers who prefer to shop online for toys, games, clothing, and accessories. Apart from alcoholic drinks (61 per cent shop in-store) and pharmaceuticals and healthcare products (57 per cent shop in-store), in all other sectors the combined total of those who shop online via a mobile device or lap/desktop is greater than the proportion who shop in-store.

    While in-store grocery shopping still dominates, 66 per cent of consumers buy in-home food and drinks in-store, the average number of consumers who shop online (mobile or desk/laptop) for in-home food and drinks grew three percentage points since 2016, with 49 per cent buying in-home food online using a mobile device.

    “The growth in mobile online shopping across all sectors this year illustrates how mobile is driving the convergence of online and offline shopping into ‘new retail’,” said Crabbe. “Meanwhile, online shopping penetration is high across most sectors. There may be room to expand fresh and luxury food product sales online, thus increasing the number of high-income consumers who shop online, but the room for expansion of share of pocket among China’s consumers is running out.”

    Arise the ‘grocernauts’

    In fact, urban Chinese consumers are keen to get the immediate experience that only shopping in-store can offer. Mintel research reveals that 62 per cent of urban Chinese consumers say the ability to try, see, and experience products in-person before buying encourages them to shop in-store; the same proportion (62 per cent) shop in-store to ensure the freshness of produce, and 55 per cent say in-store shopping means they can get what they want faster.

    “Supermarkets and hypermarkets are moving away from just selling in-home foods towards  providing catering services (so called ‘groceraunts’), as well as offering online food ordering and in-store pick up services. And convenience stores are morphing into unmanned, checkout-free, cashless, elaborate vending machines. We’ve also seen shopping malls evolve away from retail spots into theme park-like leisure developments. This is all leading to a very diverse potential retail environment that includes retail as part of a wider range of consumer services. Store functions will increasingly incorporate online-enabled, front-of-store consumer touch points for selling goods and providing other customer services – even ones not related to the retailer’s core business,” Crabbe added.

    Probably the main driver of online retail’s success, 65 per cent of urban Chinese consumers say they find products cheaper online, while 63 per cent say that online offers more choice. More than half (52 per cent) of consumers say they find what they were looking for faster when shopping online.

    “Despite the instant sensual and entertainment experiences that consumers enjoy when shopping in-store, low cost, high convenience and more choices are the key ingredients that drive consumers to do more of their shopping online. As online retail platforms invest in and collaborate with physical retailers, who in turn look to increase their online exposure, these new business models will create the ideal ‘new retail’ experience for shoppers. However, companies and brands will be challenged to find their own, unique combination of online and in-store features in order to create their own bespoke experience,” concluded Crabbe.

    Total B2C and consumer-to-consumer (C2C) online retail sales in China are expected to reach RMB 6.4 trillion by year-end, having grown at a compound annual growth rate of 37.9 per cent since 2012 – that represents nearly fivefold value growth in just five years.

  • China’s singles day VS black friday

    China’s singles day VS black friday

    For the past few years, Black Friday has become a focal point for many US and UK retailers – and for media outlets hungry for images of shoppers bursting into stores in pursuit of posh televisions. The event, supposedly named after the moment when retailers move into profit for the year, has quickly escalated into a four-day shopping festival. But it is not the only game in town – or even the biggest.

    Black Friday falls the day after Thanksgiving in the US (November 23 this year) and is followed up by a long-weekend extravaganza which culminates in the online-focused “Cyber Monday”. It has recalibrated, and brought forward, many consumers’ pre-Christmas shopping plans.

    However, unlike Black Friday, China’s November 11 “Singles Day” is still predominately focused on local consumers and completely dominated by one online retailer – Alibaba. The economic impact of Black Friday is dwarfed by this online one-day retail festival from China. Singles Day has gone under the radar for most of the general public in the West, but in 2016, Chinese shoppers spent an incredible US$17.8 billion in 24 hours on the Alibaba online platform – China’s Amazon equivalent.

    This online sales bonanza shifts more goods than the Black Friday and Cyber Monday sales days in the US combined. Black Friday in the US saw online sales hit a record of just over US$3 billion in 2016.

    Origins

    Singles Day started as an obscure “anti-Valentine’s” celebration for single people in China back in the 1990s. The popular story is that it was started by students at Nanjing University who celebrated their singledom by treating themselves. It takes place on November 11 every year and is sometimes known as “bare sticks holiday”, after the way the date is written (11/11).

    The event is also known as “Bachelors’ Day”, and it’s not hard to see why. China has a surplus of males caused by years of the government’s “one child” policy. By 2020, sociologists expect the gender imbalance to have widened to 35m and by 2030, it is estimated that one in four Chinese men in their late 30s will never have married. That is a big market.

    Black Friday was, of course, initially driven and then “exported” to the UK and other markets by major US retailers, specifically Walmart and Amazon. In China, it was the e-commerce giant Alibaba which adopted Singles Day in 2009, just as online shopping started to explode.

    It has now become a day when everyone, regardless of their relationship status, buys themselves gifts. Alibaba spotted this as a chance for retailers to generate interest and excitement and to boost sales in the lull between China’s Golden Week national holiday in October and the peak Christmas season.

    Like much of the global growth in online sales, Singles Day has been driven by mobile. Nowhere is this more stark than in China where, with 1.3 billion smartphone users, mobile shopping is huge. Around 37 per cent of Chinese shoppers buy products using their phones, compared to the global average of 13 per cent.

    We’ve seen that Alibaba’s sales numbers for Singles Day are astonishing. And the growth has been too. The chart below shows how Singles Day sales for Alibaba have risen over the past seven years. Last year alone, sales were up 32 per cent on the previous year.

    Alibaba/BBC, Author provided

    According to Alibaba, during the event on 2016 they processed more than a billion payment transactions in total, with 120,000 transactions per second at peak and their distribution system processed more than 657m delivery orders.

    Analysts have predicted this year’s event could see Alibaba rack up sales of US$20 billion despite a slowdown in China’s economy, partly due to it having a broader audience.

    Copy cats

    Of course those kinds of numbers attract the interest of Western retailers too and the 2016 event saw 37 per cent of total buyers purchasing products from international brands or merchants. Companies like US retailers Costco and Macys as well as Britain’s Top Shop and House of Fraser have marketplaces on Alibaba’s Tmall site have already got involved.

    And, for the first time, Alibaba’s 2017 Singles Day festival will bring more than 100 Chinese brands to overseas buyers, offering special promotions targeting over 100m overseas Chinese consumers in Asia and around the world.

    There is one rather sensitive obstacle to the adoption of Singles Day in the UK, however. The eleventh day of the eleventh month is Armistice Day when Britain marks the end of World War I and the nation remembers all those who have died in military service. There will be many who think it distasteful to run a shopping event on that day. However, as David McCorquodale, head of retail at KPMG, pointed out: “Singles Day in China is the biggest promotions day in the world. [The date] will stall its entry to the UK, but not forever.”

    Given the rapid globalisation of most retail trends and the way online retail now allows immediate access to millions of products from thousands of manufacturers, it is indeed impossible to envisage that Singles Day won’t extend it’s reach, in some form, to Western consumers very quickly.

  • Boom predicted for China Singles’ Day

    Boom predicted for China Singles’ Day

    Three days out from China Singles’ Day, retail experts are predicting Alibaba’s annual e-commerce sales event will continue to set records.

    With the Chinese online giant expanding it to a 24-day shopping and entertainment bonanza, the global marketing hype is likely translate to record cross-border e-commerce demand, according to marketing research company eMarketer Retail.

    Global payments processor Worldpay has released new data showing that last year’s event grew by 39 per cent globally. When sales peaked, Worldpay was processing 44,505 payments a minute.
    Meanwhile, more and more international brands have been opting to participate in this year’s 11.11 shopping festival.

    Worldpay’s transaction data supports findings from the Global eCommerce Leaders Forum (GELF), which revealed the rise in consumer spending power in China is translating into growing sales on international e-commerce sites as growing numbers of shoppers seek genuine products from trusted global brands.

    Fastest growth

    Retailers in Australia and Hong Kong are seeing the fastest growth, with sales rising by 105 and 71 per cent year on year respectively, says Worldpay. While the volume of sales has plateaued in Mainland China, the average spend per purchase continues to rise at a rate of 9 per cent.

    “Since its inception as a local celebration of singledom, Singles’ Day has risen to become the world’s top grossing-online shopping holiday, and the event knows no boundaries,” says Worldpay Asia Pacific GM Phil Pomford.

    “For international businesses looking to break into the huge Chinese e-commerce market, November 11 should be an important landmark in the calendar year.

    eMarketer Retail analyst and editor-at-large Andria Cheng agrees. “For international brands this event will continue to mark Alibaba’s biggest pitch and showcase for them to get on board its platform and test the waters regarding Chinese consumer demand and promise,” she says

    “The fact more than two-fifths of this year’s 140,000 brands at the shopping extravaganza come from outside of China speaks to the continued international hope and bet that Chinese consumers will pick up the slack left by the slowing domestic growth for many brands.”

    Threefold increase

    According to marketing technology company Criteo, sales on Singles’ Day have increased threefold, with shoppers browsing online up to four days earlier.

    “This makes it the main sales peak of the season, impacting most retail categories, and is a major opportunity for both shoppers and retailers,” says Criteo GM Alban Villani, who covers Southeast Asia, Hong Kong and Taiwan.

    Analysing more than 5.1 million online transactions in Southeast Asia between October 1 and December 31 last year, it found that retail sales spiked by 254 per cent on November 11.

    Between November 9 and 12 there had been a rise of 28 per cent in average online traffic on key retail companies’ websites, and shoppers had started buying as early as November 7.

    Shoppers are increasingly buying via apps, accounting for nearly half of all transactions and 73 per cent of mobile transactions.

    Meantime, a forecast from eMarketer Retail shows that retail e-commerce sales in China will grow by 33.1 per cent this year to reach $1.13 trillion, representing 23.1 per cent of total retail sales.

    Retail m-commerce, which includes products and services ordered via mobile devices, will increase by almost 42 per cent in China this year, reaching $881.96 billion, and accounting for nearly three-quarters of all retail e-commerce sales, says eMarketer Retail.

    Close competition

    Alibaba says $18.2 billion worth of products were sold on its platforms during Singles’ Day last year, up 32 per cent from the previous year. By comparison, says eMarketer Retail, JD.com’s 618 Festival, which involved 18 days of discounts from June 1 to 18, was reported to have brought in $17.6 billion this year.

    Worldwide e-commerce sales are expected to reach $2 trillion this year. Almost half of these sales will be generated by consumers in China. eMarketer Retail says retail e-commerce sales worldwide will increase at four times the rate of retail sales this year, jumping 23.2 per cent to $2.2 trillion.

    Also, Alibaba has overtaken Google this year to be the second company to Facebook for display ad revenue, with a spend of $14.62 billion.

    Meanwhile, Worldpay has advice for retailers opting in to the Alibaba festival… “To turn browsers into buyers, it is essential to tailor the online shopping experience to local tastes. For Chinese consumers, this means focusing on your mobile proposition. Shoppers expect to use their preferred payment option – increasingly e-wallets like Alipay and WeChat Pay.”

    For Singles’ Day last year, Worldpay processed a total of 14.9 billion transactions altogether worth £451.1 billion (US$594.1 billion).

    Worldpay provides payment technology and services to about 400,000 customers. It can process payments across 146 countries and 126 currencies, helping its clients accept more than 300 different types of payment.