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Tag: China

  • South Korean, Chinese cinema giants line up to enter Indonesian market

    South Korean, Chinese cinema giants line up to enter Indonesian market

    The government’s recent decision to allow full foreign ownership in local movie businesses has attracted the interest of South Korean and Chinese cinema giants to invest in Southeast Asia’s largest market, a government official said.

    Creative Economy Agency (Bekraf) head Triawan Munaf said a number of foreign investors were currently conducting feasibility studies for expanding their operations in Indonesia, home to more than 250 million people. Among the big names on the list are South Korean’s Lotte Cinema and Megabox, as well as China’s Dalian Wanda, which is also the world’s largest cinema chain operator.

    “Hopefully they can come by the middle of 2017,” he said on Thursday on the sidelines of the DBS Asian Insights Conference 2016 in Jakarta.

    Despite being the largest economy in Southeast Asia, Indonesia has one of the least penetrated cinema markets in the world. Data gathered from various commercial cinemas shows that there are only about 1,100 film screens available in the whole of Indonesia, with 35 percent of all theaters being in Jakarta.

    With its population size, Indonesia, Triawan said, ideally should have 15,000 screens.

    BKPM estimates that the recent removal of certain sectors from the nation’s negative investment list, signed by President Joko “Jokowi” Widodo earlier this year, will help efforts to hit the investment target of Rp 594.8 trillion (US$43.6 billion) by the end of this year.

    Under new regulations, foreign investors can now fully own local cinemas, film production houses and distribution firms.

  • eHi Car Services Announces Third Quarter 2016 Results

    eHi Car Services Announces Third Quarter 2016 Results

    eHi Car Services Limited rentals and car services provider in China, today announced its unaudited financial results for the third quarter ended September 30, 2016.

    Third Quarter 2016 Highlights

    • Net revenues increased by 47.8% year-over-year to RMB582.1 million (US$87.3 million[1]) for the third quarter of 2016, from RMB393.8 million for the third quarter of 2015.

    Three months ended September 30,

    Year-Over-Year

    (RMB ‘000)

    2015

    2016

    Comparison

    Car rentals

    300,700

    464,271

    54.4%

    Car services

    93,080

    117,783

    26.5%

    Total Net

    Revenues

    393,780

    582,054

    47.8%

    Gross profit[2] increased by 83.9% year-over-year to RMB165.7 million (US$24.8 million) for the third quarter of 2016, from RMB90.1 million for the third quarter of 2015. Gross profit margin[2] increased to 28.5% for the third quarter of 2016, from 22.9% for the third quarter of 2015.

    • Net income increased by 269.5% year-over-year to RMB22.3 million (US$3.3 million) for the third quarter of 2016, from RMB6.0 million for the third quarter of 2015. Net income margin increased to 3.8% for the third quarter of 2016, from 1.5% for the third quarter of 2015.
    • Non-GAAP adjusted EBIT[3] increased by 97.4% year-over-year to RMB80.6 million (US$12.1 million) for the third quarter of 2016, from RMB40.8 million for the third quarter of 2015. Non-GAAP adjusted EBIT margin[3]increased to 13.8% for the third quarter of 2016, from 10.4% for the third quarter of 2015.
    • Non-GAAP adjusted EBITDA[4] increased by 60.0% year-over-year to RMB264.5 million (US$39.7 million) for the third quarter of 2016, from RMB165.3 million for the third quarter of 2015. Non-GAAP adjusted EBITDA margin[4]increased to 45.4% for the third quarter of 2016, from 42.0% for the third quarter of 2015.
    • Total average available fleet size[5] increased by 46.5% year-over-year to 41,742 vehicles for the third quarter of 2016, from 28,499 vehicles for the third quarter of 2015. Total fleet RevPAC[6] increased to RMB152 for the third quarter of 2016, from RMB150 for the third quarter of 2015.

    [1] The Company’s business is conducted in China and substantially all of its revenues are denominated in Renminbi (RMB). However, this earnings announcement contains translations of RMB amounts into U.S. dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.6685 to US$1.00, the effective noon buying rate as of September 30, 2016 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.

    [2] Gross profit is defined as net revenues less cost of net revenues (vehicle operating expenses).  Gross profit margin is defined as the percentage representing gross profit divided by net revenues.

    [3] Non-GAAP adjusted EBIT is defined as net income before share-based compensation, interest expenses, interest income, provision for income taxes, gains from waiver of warrants and gains from sale of cost method investment. For more information, refer to “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release. Non-GAAP adjusted EBIT margin is defined as the percentage representing Non-GAAP adjusted EBIT divided by net revenues.

    [4] Non-GAAP adjusted EBITDA is defined as net income before depreciation and amortization, share-based compensation, interest expenses, interest income, provision for income taxes, gains from waiver of warrants and gains from sale of cost method investment. For more information, refer to “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release. Non-GAAP adjusted EBITDA margin is defined as the percentage representing Non-GAAP adjusted EBITDA divided by net revenues.

    [5] “Average available fleet size” is calculated by dividing the aggregate number of days in which the Company’s fleet was in operation during a given period by the total number of days during the same period. In determining the size of the Company’s fleet in operation, eHi includes all vehicles in its car rentals and/or car services fleets except for vehicles that have been written off in accordance with its accounting policy and vehicles that have not been consistently made available for rent and that it may consider to dispose of when appropriate opportunities arise.

    [6] “RevPAC” refers to average daily net revenue per available car, which is calculated by dividing the net revenues during a given period by the aggregate number of days in which the Company’s fleet was in operation during the same period.

     

    Average Available

    Fleet Size

    RevPAC

    (RMB)

    2015Q3

    2016Q3

    Year-Over-Year

    Comparison

    2015Q3

    2016Q3

    Year-Over-Year

    Comparison

    Car rentals

    26,200

    39,227

    49.7%

    125

    129

    3.2%

    Car services

    2,299

    2,515

    9.4%

    440

    509

    15.7%

    Total

    28,499

    41,742

    46.5%

    150

    152

    1.3%
    • Fleet utilization rate[7] for car rentals was 71.9% for the third quarter of 2016, compared with 73.8% for the third quarter of 2015.
    • As of September 30, 2016, total period-end fleet size[8] was 48,934 vehicles.

    [7] “Fleet utilization rate” refers to the aggregate transaction days for the Company’s car rental fleet during a given period divided by the aggregate days the car rental fleet was in operation during the same period.

    [8] “Period-end fleet size” refers to the aggregate number of vehicles in the Company’s car rentals and car services fleets as of the last day of a given period which the Company holds legal title to and reflects in its balance sheet, including vehicles that are currently missing but have not been written off in accordance with its accounting policy. The period-end fleet size as of September 30, 2016 excluded 144 vehicles which the Company had written off from its balance sheet in accordance with its accounting policy.

    Mr. Ray Zhang, eHi’s Chairman and Chief Executive Officer, said, “Our business continued to thrive during the third quarter, leading to both strong top-line growth and significant improvement in profitability. As a fast-growing company, we are committed to driving ongoing operating leverage and are well-positioned to capture the growing demand from China’s rapidly rising domestic tourism and business-related travel.”

    “The recent regulations regarding online car-hailing business in China, we believe, provide us with greater potential to explore business and strategic cooperation opportunities to enhance our competitive position. Looking ahead, we remain focused on continuing to execute on our growth plan and achieving our strategic objectives,” Mr. Zhang concluded.

    Mr. Colin Sung, eHi’s Chief Financial Officer, said, “We are pleased to report strong third quarter results with net revenues increasing by 47.8% year-over-year, while recording 269.5% bottom-line growth from the prior-year period. Notably, our continued focus on operating efficiency and cost control measures contributed to broad-based margin improvement. Our gross margin and non-GAAP adjusted EBITDA margin both reached record-highs of 28.5% and 45.4%, respectively. Our financial discipline is well-established, and we remain committed to prudent expansion and a balanced approach between growth and profitability.”

    Third Quarter 2016 Financial Results

    Net revenues for the third quarter of 2016 were RMB582.1 million (US$87.3 million), up 47.8% year-over-year, attributable to increased net revenues from both car rentals and car services.

    Net revenues from car rentals for the third quarter of 2016 were RMB464.3 million (US$69.6 million), up 54.4% year-over-year, primarily driven by the growing average available fleet size for car rentals in response to customer demand.

    Net revenues from car services for the third quarter of 2016 were RMB117.8 million (US$17.7 million), up 26.5% year-over-year, primarily driven by the increased car services RevPAC as we provided services to more business clients.

    Cost of revenues (vehicle operating expenses) for the third quarter of 2016 was RMB416.4 million (US$62.4 million), up 37.1% year-over-year, primarily driven by increased depreciation and labor costs.

    In the third quarter of 2016, 486 used vehicles were disposed of, and 358 used vehicles were under sales contracts pending title transfer. The Company recognized a disposal loss of RMB0.3 million (US$0.04 million) in aggregate for these 844 vehicles. In addition, a disposal gain of RMB0.7 million (US$0.1 million), which was unrecognized in the previous quarters, was recognized in the third quarter of 2016 as a result of the completion of title transfer during such period. The disposal loss and gain were both recognized as adjustments to the vehicle-related depreciation expense as part of the cost of revenues.

    Gross profit for the third quarter of 2016 was RMB165.7 million (US$24.8 million), up 83.9% year-over-year. Gross profit margin for the third quarter of 2016 was 28.5%, compared with 22.9% for the third quarter of 2015. Gross profit margin improvement was due to certain cost controls primarily in vehicle insurance, and to a lesser extent, in vehicle repair and maintenance as well as labor costs, in connection with enhanced economies of scale and operating efficiency.

    Selling and marketing expenses for the third quarter of 2016 were RMB28.5 million (US$4.3 million), up 81.8% year-over-year, primarily due to increased channel marketing and promotion fees as the Company expanded branding and channel promotion activities during such period.

    General and administrative expenses for the third quarter of 2016 were RMB63.1 million (US$9.5 million), up 38.6% year-over-year, primarily due to increased employee-related costs including salaries and welfare expenses as a result of increased headcount, as well as a foreign exchange loss in the third quarter of 2016 compared with a foreign exchange gain in the third quarter of 2015.

    Profit from operations for the third quarter of 2016 was RMB77.0 million (US$11.5 million), up 124.2% year-over-year.

    Interest expense for the third quarter of 2016 was RMB55.7 million (US$8.3 million), up 79.5% year-over-year, primarily attributable to the interest expense associated with the Company’s senior unsecured notes of US$200 million due 2018.

    Net income for the third quarter of 2016 was RMB22.3 million (US$3.3 million), up 269.5% from RMB6.0 millionfor the third quarter of 2015. Net income margin for the third quarter of 2016 was 3.8%, compared with 1.5% for the third quarter of 2015.

    Basic and diluted earnings per ADS for the third quarter of 2016 were RMB0.32 (US$0.05) each, compared with basic and diluted earnings per ADS of RMB0.09 (US$0.01) each for the third quarter of 2015.

    Non-GAAP adjusted EBIT for the third quarter of 2016 was RMB80.6 million (US$12.1 million), up 97.4% year-over-year. Non-GAAP adjusted EBIT margin for the third quarter of 2016 was 13.8%, compared with 10.4% for the third quarter of 2015.

    Non-GAAP adjusted EBITDA for the third quarter of 2016 was RMB264.5 million (US$39.7 million), up 60.0% year-over-year. Non-GAAP adjusted EBITDA margin for the third quarter of 2016 was 45.4%, compared with 42.0% for the third quarter of 2015.

    As of September 30, 2016, the Company’s cash, cash equivalents and restricted cash balance was RMB1.5 billion (US$223.7 million).

    Recent Development

    On August 30, 2016, the Company entered into a US$150 million syndicated loan facility agreement. This loan facility agreement includes an initial facility of US$110 million and a greenshoe facility of US$40 million. The loan facilities have a three-year term and will be repaid in installments. The interest margin is priced at 350 basis points per annum over LIBOR. Deutsche Bank AG, Singapore Branch is acting as the original mandated lead arranger of the loan facilities. The Company had fully drawn down the US$150 million facility as of September 27, 2016, and used part of the proceeds for repaying certain existing indebtedness with high interest rates. The remaining proceeds will be used for funding capital expenditures and other general corporate purposes of the Company.

    Outlook

    The Company estimates that net revenues for the full year of 2016 will range from RMB2.1 billion to RMB2.2 billion, and total period-end fleet size will reach approximately 57,000 vehicles as of December 31, 2016. This outlook reflects the Company’s current and preliminary view, which is subject to change.

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  • Volkswagen aims to sell 400,000 new energy vehicles a year in China by 2020

    Volkswagen aims to sell 400,000 new energy vehicles a year in China by 2020

    Volkswagen aims to boost new energy vehicle sales in China to 400,000 units a year by 2020, the automaker’s China chief Jochem Heizmann said, as Beijing pushes automakers to sell low-emissions cars via incentives and friendly regulations.

    It aims to eventually sell 1.5 million new energy vehicles (NEVs) annually by 2025, Heizmann told reporters ahead of the Guangzhou auto show, which opens on Friday.

    “We have to do more in the NEV area. The government is pushing, the general environment in China is pushing that,” Heizmann said.

    Overall sales of NEVs in China more than quadrupled last year with rapid growth continuing in 2016.

    Volkswagen will deliver its first locally produced NEVs, as battery electric and plug-in hybrid cars are referred to in China, under its Audi brand this year.

    Audi AG manufactures the vehicles in a joint venture with China FAW Group.

    Volkswagen also has a JV with SAIC Motor (600104.SS), and the two companies have plans to sell plug-in hybrid cars in China in the future.

    Global auto brands are only allowed to manufacture cars domestically in China through ventures with local partners, with automakers typically limited to two JV partners.

    Volkswagen said in September that it had signed a preliminary deal to explore making electric vehicles in a new joint venture with China’s Anhui Jianghuai Automobile.

    The deal is not final and is subject to approvals.

    “We are making good progress in our feasibility study with JAC,” Heizmann said.

    He said he was hopeful the government would allow what would be Volkswagen’s third JV in China, with the government pushing for less-polluting vehicles.

    “Normally the legal framework is you are only allowed to have two joint ventures. There is a special chance to have this additional joint venture just on pure battery cars,” Heizmann said.

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  • The rise and rise of property management firms in China

    The rise and rise of property management firms in China

    Virginia Huang has amassed nearly 20 years of top-level commercial real estate industry knowledge, and is the longest serving member of the CBRE team in Beijing.

    After joining the firm in 1997, she is now the firm’s managing director, and head of advisory and transaction services for Greater China

    A specialist, particularly, in the office leasing market, Huang has been involved in some of the Chinese capital’s highest profile transactions, dealing with top-tier Chinese and international developers.

    She shares her thoughts on the sea changes that have happened in China’s commercial real estate landscape, the recent rise in the amount of retail space being converted into offices, and the emergence of Beijing’s decentralised markets.

    What major changes have you seen during your 20 years in the commercial real estate sector?

    When I first entered the industry in the late 1990s, Chinese companies basically wouldn’t use our services. Our customers were primarily foreign corporations whose own corporate real estate teams were small and much more used to outsourcing.

    The traditional perception about CBRE as a company was that we were classy but aloof, dealing only with foreign clients. But we set out to convince people that was not the case, that we were straight forward, humble and down to earth, and that we had and in-depth understanding of Chinese companies and the Chinese market.

    Our domestic client base, as a result, has grown rapidly in the past few years, very much in line with the rise in size and number of many Chinese companies. There has also been a change in mindset, that they increasingly recognise the value of a professional international firm, as many are looking overseas for business.

    How can companies ensure their real estate requirements match their overall growth strategy?

    Many Chinese companies, especially technology firms, have grown so fast that often their property planning procedures has failed to keep pace, even if they do have procedures in place. But the same is often true in many mature multinationals, who might not have clear procedures in place to make these types of decision. It’s a universal problem.

    Chinese firms in this aspect do face a gap, especially when it comes to decision making: who, at what stage should they be involved? Often that is unclear. That fits their early-stage nature. But when start-ups grow larger and larger, as some now do, they will naturally shift to see leasing more as a means to attract and retain talent and improve working efficiency. In that way they would be less likely to compromise quality simply for cost.

    Workplace management should be aligned more with other departments from the start, especially with the top management and the overall strategy of the company. In terms of leasehold or freehold, there is no fixed solution. Each company has to make its workplace strategy in line with its overall strategy.

    A lot of companies have reported that finding good office space in Beijing’s central business district(CBD) is becoming increasingly difficult, and expensive – but many are unwilling to locate to less popular and cheaper sites away from the city centre. How can the problem be solved?

    Contrary to popular perception, there is plenty of supply in Beijing CBD, a lot more in fact than in the city’s Financial Street or Zhongguancun, where an office can be really hard to find.

    Also contrary to perception is that emerging markets, such as Wangjing area, have a high vacancy ratio. The vacancy ratio in Wangjing is low, and rents are not low any more.

    The problem some of these areas have in filling their space is to do with infrastructure

    Office workers in Wangjing, particularly, complain it’s hard to get to by public transport. Services and amenities, such as convenience stores, restaurants and hotels are rare.

    These types of out-of-town areas used to attract tenants with cheap rents and favourable policies. But office owners are becoming increasingly aware they cannot attract firms just by offering generous discounts. They have to do more complete the surrounding amenities, the soft environment of their markets, and more will be willing to move into them.

    With an oversupply of retail space in China, many underperforming malls are being converted into offices. Is there a danger of that too becoming oversupplied if the trend continues?

    There are two types of retail space being converted into offices: complementary retail space in bigger complexes, and whole retail buildings that are underperforming due to their poor location or poor management.

    On the first type, often their small size and flaws in design make them difficult to attract tenants. Ideally owners should be converting the second, third and fourth floors into offices, especially if higher floors are already offices.

    Whole underperforming retail buildings can be more be difficult to convert, because of their design, the position of their escalators, windows and so on. It can also be hard for there types of building to attract traditional tenants such as financial and law firms.

    I don’t think there’s an oversupply issue for now, because the trend is exclusively robust in Beijing. There is an acute supply issue in the capital, because it is nearly impossible to find new office projects in the downtown area because of policy regulations. Demand for offices here continues, unabated.

    If retail property owners invest in converting the lower levels of their buildings into office space, they will be able to earn much higher rents, than if for instance the site was leased as a restaurant. So there is a strong incentives to do so.

  • Chinese Ride-Hailing Company Ucar Partners with BitTiger

    Chinese Ride-Hailing Company Ucar Partners with BitTiger

    Ucar, a major player in the Chinese ride-hailing and car rental market, has joined the global race to develop a road ready self-driving car. To compete for the best international talent, Ucar has opened a research outpost in Silicon Valley and partnered with online education platform BitTiger to host a deep-learning coding class and competition that offers winners cash prizes and a chance to interview with the company.

    Ucar (神州专车) booked approximately 15%1 of car chauffeur services in China in 2015, and are backed by Alibaba. They are based in Beijing, China and began aggressively expanding their research center in Silicon Valley last year by hiring experienced engineers from major Bay Area tech companies. The research center is part of a larger trend among Chinese companies, including tech giant Baidu, that are creating research outposts in Silicon Valley to gain a competitive talent advantage over domestic rivals.

    Ucar is responding to the huge market opportunity for self-driving cars in China where crippling traffic jams can keep city streets gridlocked for days2. Principal engineer of the Ucar Silicon Valley based research center, Zhong Hua, explains that Ucar’s self-driving car technology aims to “minimize traffic related deaths, reduce commute times, and make better use of cars left idly parked most of the day,” all goals that would have a big impact in China’s mega-cities.

    BitTiger is a US-based online learning platform for Chinese engineers that gained experience at elite tech companies to share their knowledge with Mandarin-speaking students around the world. These students are eager to gain access to a top education taught by industry experts not otherwise available to those outside of the best university programs.

    The course being launched by Ucar and BitTiger will provide candidates with fundamental knowledge of image recognition and deep learning techniques. Upon completion of the course, students will be challenged to accurately identify pedestrians, cars, and bicycles among images collected by Ucar’s test vehicles. The top three teams that most accurately and consistently identify these target objects will receive cash prizes and an opportunity to interview for a position at the Ucar Silicon Valley research center.

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  • CASBAA confab debuts in Macau

    CASBAA confab debuts in Macau

    The CASBAA Convention annual conference debuted in its new venue, Studio City, Macau, marking the 25th anniversary of CASBAA which is dedicated to representing key players from the cable and satellite broadcasting industry under the motto ‘represent, inform, connect’.

    Irwin Gotlieb, the Global Chairman for GroupM, was first to take to that stage to discuss the changing nature, and measurement of viewing behaviors. He also touched upon how the way to reach audiences via the marketing funnel is the same but a granularity of data can now inform decisions for each stage of the funnel. He underscored how media will continue to play a role becoming more targetable, addressable and eventually part of the transaction process.

    Also on the subject of measurement, Ben Reneker of S&P Global Market Intelligence highlighted how machine-driven predictive measurement models are now able to inform strategic decisions on marketing and investment.

    Oliver Wilkinson, managing director for PricewaterhouseCoopers, provided statistics to illustrate that pay TV is not dead, despite what the headlines say, and that it remains a primary form of entertainment.

    Doing deals in China was the topic for Bennett Pozil, EVP of East West Bank, who discussed the migration of content both ways as well as some of the pros and cons of doing business in China.

    Reaching a vast audience through tailored video and gaming content was the topic for Chad Gutstein, CEO of Machinima who highlighted that their most valued content was when viewers felt they had a connection to the creation of it. On a video note, Ricky Ow from Turner International predicted that Machinima’s e-Sports will be as successful as the English Premier League.

    James Schwab, co-president of VICE announced the opening of the company’s first full-service office in Jakarta, Indonesia.  He discussed how their local content policy over digital channels has helped the company grow exponentially over the last few years. The recent move into TV has been important for VICE as it gives them the ability to invest more in content.

    On the second day, Dave Downey, CEO of INVIDI Technologies, illustrated how “addressable” advertising could be used to predict viewing behaviors. Basil Chua, CEO from AsiaMX, talked about the need to understand viewer habits, flagging that they are watching content not devices. Both believed that the advertising formats would result in big wins for operators.

    Intrinsically linked to the advertising discussion is the subject of measurement and Craig Johnson, Nielsen’s media managing director for South East Asia, Pacific and India, highlighted some of the current challenges OTT has presented with measurement, suggesting that viewership on other devices could represent an additional 15% to 20% of media usage that is not accurately measured yet. The introduction of smart-meters could help more accurately chart multi-device viewership and content sources.

    Content from Japan took the spotlight with Eriya Kawachi, director of sales and promotions at Club TV Japan, showcasing some platforms that have been winning in popularity outside of Japan with Club TV. Richard Woo, consultant for WAKUWAKU JAPAN, discussed how Japanese content is well known for its creativity, uniqueness and a certain wackiness.

    Korean content also featured on the agenda with Miles Ki Young Choi, founder and CEO of Bethel Group Media Contents, talking about how interactive content was key to the future, flagging interactive drama as something they were championing. Byeong-Joon Song, CEO Group 8, saw simultaneous distribution as important for Korean content, highlighting difficulties with penetrating the Chinese market and Tom Taehyun Kim, CEO and executive producer at K Production, confirmed that superb storytelling was of course essential for content to have wider appeal.

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  • Thai AirAsia has plans to expand its fleet in China

    Thai AirAsia has plans to expand its fleet in China

    Low-cost carrier (LCC) Thai AirAsia has plans to expand its fleet in China, revealing that it is planning to add five to six aircraft per year over the next few years.

    Thai AirAsia CEO Tassapon Bijleveld told that half of the additional aircrafts would be allocated to China, its largest international market.

    China has accounted for 26 percent of the carrier’s total international capacity to date. Thai AirAsia currently, has 38,880 weekly seats across 14 routes in the Thailand-China market.

    CAPA–Center For Aviation stated that China accounts for 13 of the combined 35 international destinations to which Thai AirAsia/Thai AirAsia X flies.

    Thai AirAsia currently serves 11 destinations in mainland China. Its sister medium/long haul LCC Thai AirAsia X serves another two Chinese destinations.

    The airline, a joint venture between the Malaysia’s AirAsia and Thailand’s Asia Aviation, is keen to grow its base at U-Tapao near the city of Pattaya, which opened in September 2015 and is linked to Macau.

    The expansion on the U-Tapao/Pattaya base would enable new routes to China.

    The low-cost airline has two A320s based at U-Tapao operating three domestic and four international routes – including the two mainland Chinese routes, Macau and Singapore.

    According to Bijleveld, all the U-Tapao routes “are doing very well”, and the Pattaya market is promising.

    The carrier is also considering launching routes from Hat Yai to Hong Kong, Macau and Singapore.

    Through the first three quarters of 2016, Thai AirAsia’s passenger numbers increased by 19 percent to 12.86 million.

    Thai AirAsia plans to add five A320 neos aircraft in 2017. Under its current five-year fleet plan it envisages a fleet of 71 aircraft by the end of 2020.

    Further, Thai AirAsia is also expanding in India, which it referred to as a logical growth market for Thailand.

  • Lawson China launching rewards points

    Lawson China launching rewards points

    From next month, Japan’s Lawson China convenience store group will offer rewards points to shoppers at its outlets.

    Points will be administered through the brand’s smartphone app, which already provides product information and discount coupons.

    Each yuan spent is expected to earn shoppers 10 reward points, exchangeable for store credit, likely at the rate of 1000 points for 1 yuan (US15 cents).

    Lawson has invested around $900,000 in Yoren, the Hong Kong-based developer of its app. As well as the points system, the duo has teamed up to analyse users’ purchases so the retailer can design sales campaigns and develop products.

    Lawson is considering similar efforts in other foreign markets. The group’s overseas network exceeds 1000 stores, including locations in Beijing, Dalian, Shanghai and Wuhan, and is rapidly expanding in China via franchise deals, particularly in Shanghai where there are more than 300,000 registered users of its app.

    Lawson will work with trading house Mitsubishi Corporation, which plans to become the retailer’s parent in January, to pursue a goal of having between 3000 and 5000 overseas stores by 2020.

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  • Retail decline in China, says Fitch report

    China’s traditional retail industry is continuing to decline with demand likely to “remain muted” into next year, according to a new Fitch report.

    The credit rating agency’s report covers shops and and department stores.

    “Not only are shopping preferences changing, but declining consumer sentiment affected retail sales in several categories this year,” analysts Yee Man Chin and Cathy Chao say in the report. “We think the rapid change in shopping formats will increase competition, and therefore expect persistent weak sales for traditional retailers as consumer preferences evolve.”

    In the first nine months of this year, the top 50 domestic retailers saw sales fall 1.9 per cent, representing a slowdown in growth of 2.6 per cent compared to the same period last year, according to the China National Business Information Centre.

    Despite the country’s middle class expanding, sentiment has been dampened by a devalued renminbi and the economic slowdown, says Chin and Chao. Shoppers are now increasingly favouring eCommerce, which makes up 20 per cent of the country’s retail sector, and shopping malls over traditional channels such as department stores and street-level stores.

    This is reducing profitability for retailers who run their own stores with a fixed cost base for rent and staff, the analysts say.

    While the retail sector expanded 10.4 per cent in the first-three quarters of the year, the growth was largely from online sales, which surged 26.1 per cent year-on-year to 3.5 trillion yuan (US$513.8 billion), according to data from the National Bureau of Statistics (NBS).

    Same-store sales for Parkson Retail Group fell 9.7 per cent in the first half, while for the Golden Eagle Retail Group the drop was 8.7 per cent. Chinese shopping centre group Intime Retail, which is backed by Alibaba, had a 3.7 per cent fall in sales in the first nine months of the year.

    More competitive

    Weakness in the industry is making the retail environment increasingly competitive, say Chin and Chao. “Retailers can gain an edge by improving their product mixes, because certain industry segments such as sporting goods are continuing to grow.”

    Sports companies went through consolidation in 2012, and with consumers becoming more health-conscious, suppliers like 361 Degrees International “should benefit accordingly from sales growth,” says the Fitch report. A Chinese athletics brand, 361 Degrees has seen same-store sales growth rebound by more than 5 per cent since 2013.

    Traditional retailers are also resorting to new tactics to attract customers. These include “experimental shopping” whereby outlets increase their F&B, lifestyle and entertainment options, as well as linking online-to-offline shopping capabilities, the analysts say.

    Through “gimmicks” and technology adoption, retailers can draw millennial and middle-class shoppers by offering digital and personalised shopping, says Colliers International (Hong Kong) associate director of research Joanne Lee.

    “We believe technology will come into the market, and artificial intelligence or virtual reality will enhance the shopping experience,” she says.
    Her colleague director Daniel Shih says social media will be a focal point for the future, for both retailers and shopping centres.

    These strategies have been evident in the roll-out of the annual Singles Day shopping event hosted by Alibaba, reports the South China Morning Post.

    While retailers can take steps to reduce costs, such as reducing inventory or closing stores, Fitch says the structural challenges facing the retail sector are likely to persist.

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  • Chinese shoppers lead way in digital commerce

    Chinese shoppers lead way in digital commerce

    While digital commerce is strong in the world’s two largest economies, Chinese shoppers use smartphones and tablets more than shoppers in the US.

    This is shown in a new study from IAB (Interactive Advertising Bureau) and IAB China, Understanding Digital Commerce in the US and China. Conducted by consulting firm Hypothesis Group, the research shows that both China and the US have achieved near-full adoption of digital commerce, with 89 per cent of Chinese digital users aged from 18 years upward and 84 per cent of US digital users in the same age bracket saying they had bought a product or service digitally over the previous 12 months.

    When it comes to mobile commerce, China leads the way in several areas:

    • 67 per cent of Chinese digital users had made a mobile purchase over the previous 12 months vs 34 per cent of US digital users.
    • 24 per cent of Chinese mobile shoppers purchase via mobile every day vs 15 per cent of US mobile shoppers.
    • 89 per cent of Chinese mobile shoppers are interested in making a mobile purchase over the next month vs 78 per cent of U.S. mobile shoppers.
    • 59 per cent of all monthly purchases in China are digital compared to 42 per cent in the US. Of those purchases, 48 per cent are made via mobile in China, while mobile commerce accounts for 26 per cent in the US.

    Plentiful cross-channel opportunities are available in both markets, says the report, with a similar percentage of Chinese and US digital shoppers using both digital and offline channels when deciding on a purchase (31 per cent in China vs 29 per cent in the US).

    Digital research

    Chinese shoppers are more likely to research and compare prices digitally while within a physical store, with 38 per cent saying they do so all the time or most of the time, while 23 per cent of US shoppers do the same. They are also more likely to use more than one digital device over the course of the purchase process (67 per cent China vs 43 per cent US).

    Americans tend to favour multi-product retailers when buying digitally, with 72 per cent of US digital shoppers buying from one of these outlets compared to 61 per cent of Chinese shoppers. Meanwhile, Chinese digital shoppers are more likely to buy from sites or apps that highlight discounts (63 per cent China vs 37 per cent US) or that let them compare prices from different sites or apps (51 per cent China vs 29 per cent US).

    Chinese shoppers are also more likely to make a purchase via a messaging app (29 per cent China vs 16 per cent US), while US shoppers are more likely to buy via auction sites (33 per cent US vs 25 per cent China).

    When it comes to making a purchase, American shoppers are much more likely to use a credit or debit card (63 per cent US vs 34 per cent China on computer; 37 per cent US vs 6 per cent China on mobile). In China, payment is much more likely to be through a digital payment service like PayPal or WePay (47 per cent China vs 15 per cent US on computer; 36 per cent China vs 17 per cent US on mobile) or a mobile wallet service like Apple Pay (21 per cent China vs 2 per cent  US).

    Security concerns

    While these numbers indicate strong adoption of digital shopping, obstacles still remain, says the report. The main concern is security, with only 13 per cent of Chinese digital shoppers and 30 per cent of US digital shoppers feeling completely safe shopping digitally. While American shoppers are mainly concerned about information safety and privacy, Chinese shoppers fear digital fraud and scams.

    The top benefits of digital shopping are listed as including convenience, ease of use, price and selection.

    “This study confirms that mobile is a crucial and growing part of the eCommerce experience,” says IAB senior VP/GM mobile and video, Anna Bager. “While China has always been a mobile-first culture, as its initial adoption of the internet was driven by mobile devices, we are now seeing tremendous year-over-year upticks in terms of mobile growth in the US. We expect to see that trend extend to US mobile commerce going forward.”

    IAB China head Chen Yong, who is also secretary-general of the Interactive Internet Advertising Committee of China (IIACC), says it is vital to note how much commerce happens on small screens.

    “Marketers who want to reach Chinese shoppers need to follow their lead by investing in mobile advertising so they can bring their messages to the right people at the right time and right location.”

    The IAB comprises more than 650 media and technology companies responsible for selling, delivering and optimising digital advertising or marketing campaigns.

  • Aldi in Asia launch

    Aldi in Asia launch

    German discount supermarket Aldi is set to enter China, and broader Asia, using Australia as a springboard.

    Aldi in Asia will initially sell groceries and wine online to China in the first half of next year, with stores expected to open later, reports the Sydney Morning Herald.

    The site will sell shelf-stable groceries and wine, with most products sourced from the group’s Australian suppliers, says a spokeswoman.

    German retail blog Lebensmittel Zeitung, however, says Aldi intends to create “a truly local assortment” with German products as a “topping”.

    In Australia, the spokeswoman says there is a strong demand among Chinese consumers for Australian-made products.

    “Aldi has been active in the China market for several years undertaking detailed feasibility studies regarding potential market-entry options. This work has resulted in the decision to start retail operations in the China market initially with an eCommerce offering.”

    She says Aldi will start selling a “carefully selected” range of everyday grocery items to Chinese consumers via an online retailing platform, with products delivered to their homes.

    With a presence already throughout Europe as well as Australia, Britain and the US, Aldi is turning to Asia to maintain growth.

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  • Taiwan’s TBC rolls out new digitized TV platform

    Taiwan’s TBC rolls out new digitized TV platform

    Taiwan Broadband Communications (TBC), a multi-system cable operator in Taiwan, has rolled out a newly digitized platform powered by OpenTV 5.

    NAGRA has been a key partner in TBC’s ongoing digitization efforts providing the operator with both OpenTV 5 advanced set-top box software and system integration services required to support a rapid transition to an all-digital platform and the fulfillment of regulatory requirements.

    As part of this effort, TBC shipped close to one million set-top boxes powered by the OpenTV 5 operating system, marking the largest deployment of OpenTV 5 in Asia.

    “We look forward to continued growth and maximizing customer satisfaction by delivering a new generation of high-quality services to our subscribers,” said Jimmy Chen, TBC’s CEO.

    “We congratulate TBC on their successful transition to an all-digital platform and for reaching a significant milestone in the delivery of advanced digital TV services in Taiwan,” said Jean-Luc Jezouin, SVP for sales in Asia Pacific at NAGRA. “We look forward to supporting TBC as they continue to grow in a very dynamic market.”

    TBC deployed OpenTV 5 with minimal configuration and customization enabling the operator to transition existing services onto a new hybrid TV platform blending both linear and Internet TV services.

    OpenTV 5 is part of NAGRA’s MediaLive Suite, a set of innovative digital television solutions that provides secure, engaging and intuitive user experiences via a back-end that supports an all-screen connected home scenario. TBC selected NAGRA’s OpenTV 5 operating system in 2015.

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  • Arvato opens bonded warehouse in China

    Arvato opens bonded warehouse in China

    Arvato SCM Solutions is expanding its presence in China with a new bonded warehouse that will serve clients in the high-tech and entertainment and consumer products industries. The new 2,000 m² facility is located in the Shanghai Waigaoqiao Free Trade Zone.

    “The launch of our third distribution center in China is necessary as we meet an increasing demand for logistics services in the region,” said Raoul Kuetemeier, Head of Arvato SCM Solutions Asia.

    The Shanghai Waigaoqiao Free Trade Zone is unique for its government incentives and preferential tax policies; a strategic location for the distribution of goods into mainland China and trade between Asia and rest of the world. “This new bonded warehouse enhances our logistics network in the Chinese market and underscores our commitment to provide the most flexible and competitive supply chain solutions for our clients.” said Kuetemeier. Arvato is already represented by five distribution centers across Asia.

    Arvato will provide end-to-end logistics services in the new multi-user facility. This includes the processing of imports and exports as well as warehousing, multi-channel distribution, returns management, and other value-added services. The access-controlled location is also equipped with a monitoring system and has more than five loading bays. In the licensed bonded warehouse, goods can be stored duty-free indefinitely.

    The new logistics center in Shanghai’s Pudong district offers outstanding structural conditions for efficient distribution. It is within close proximity to the Waigaoqiao harbor and Yangshan deep-water port. The airport, central highways and container freight station within Shanghai are also easily accessible.

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  • ‘World’s saddest bear’ reflects sorry state of China malls sector

    ‘World’s saddest bear’ reflects sorry state of China malls sector

    Pizza, a polar bear notorious in China as being the “world’s saddest”, has been removed from his cramped enclosure and placed in an animal reserve after months of controversy that have highlighted the sorry state of Chinese shopping malls.

    Pizza’s plight was the result of a trend for using animals, entertainment and children’s playgrounds to pull customers into China’s giant shopping centres and department stores, which have been built in their thousands despite the nation’s growing preference for buying online.

    Bricks-and-mortar stores are grappling not just with ever-greater competition from online retailers such as Alibaba and JD.com, they must also contend with an underlying slowdown in the retail sector. Sales growth, which in 2008 reached an annual rate well above 20 per cent, has been falling steadily in recent years and hit 10 per cent in October, according to National Bureau of Statistics data released on Monday.

    Pizza became an internet celebrity in July when a shopper uploaded a photo of the three-year-old bear in an enclosure at the Grandview Mall in the southern city of Guangzhou. The country’s nascent animal rights community launched a rescue campaign and cheered when the Grandview said over the weekend that it would “temporarily” return him to the ocean park in northern China where he was born.

    Other Chinese netizens have outed an elephant used to attract mobile phone buyers to a Suning electronics outlet in Beijing and a “sad tortoise” housed alongside reptiles in grimy tanks in a mall in the northwestern city of Xi’an.

    The use of animals and other attractions comes as malls combat overcapacity, a problem immediately apparent to anyone who has turned up at a dusty, half-vacant shopping centre in China’s provincial cities. The country has an estimated 4,000 malls, more than the US, and plans to reach 7,000 by 2025, according to Mall China, an industry organisation.

    “Foot traffic is dropping dramatically,” said Shaun Rein, founder of Shanghai-based China Market Research Group, describing “a lot of panic” as e-commerce decimates mall sales. “Shops are becoming more choosy. Before, they said: ‘Who cares which mall?’ Now they are looking at the mall’s business and its other attractions.”

    “Malls are starting to bring in a lot more entertainment and a lot more food,” he added. “There is also a big focus on children — playgrounds, learning centres, even museums.”

    Last year 83 shopping malls gave up the fight and closed, according to a blue book on the commercial sector by the Chinese Academy of Social Sciences. They will be joined this year by Marks and Spencer, which announced last week it would close several stores in China in an effort to boost its flagging fortunes.

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  • China retail sales grow 10% on-year in October

    China retail sales grow 10% on-year in October

    China’s retail sales growth rose to 10.0 per cent on-year in October, missing analysts’ forecasts of 10.7 per cent growth — the rate sales grew at the previous month. Thus there was a slowdown in retail sales despite the growth.

    Industrial output rose 6.1 per cent in October from a year earlier, the National Bureau of Statistics said, again below analysts’ estimates of 6.2 per cent.

    The world’s second largest economy has been facing slowing growth of late.

    China is predominantly an export-led economy but with global demand falling, the country needs to re-work its growth strategy. The country has been trying to move towards consumption-led growth but the transition has been bumpy.

    Recent data points to the fact that China’s growth is increasingly dependent on government spending and ballooning debt as private investment hovers around record lows.

    Last week, Alibaba’s Singles’ Day festival posted record sales of $17.73 billion.

    While sales were good, the day-long shopping gala saw slow growth as Chinese shoppers searched for heavier discounts and lower price tags.

    China’s fixed asset investment rose by 8.3 per cent in the first ten months of the year, slightly higher than market expectations.

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