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Tag: China

  • IKEA to Recall Unsafe Furniture in China

    IKEA to Recall Unsafe Furniture in China

    Swedish furniture giant IKEA will recall their unstable Malm furniture line of chests and drawers in China.

    The decision came after many vocal Chinese consumers complained that IKEA was discriminating them. The Malm line was still in Chinese stores amidst recalling over 29 million pieces of chests and drawers in Canada and the United States.

    The product recall in North America transpired two weeks ago, after being linked to the death of six children.

    When IKEA refused to recall their product from their Chinese outlets, consumers complained online and through government controlled media. Government controlled newspaper Xinhua accused IKEA of committing “blatant bullying.”

    The government-run General Administration of Quality Supervision, Inspection and Quarantine claimed that after meeting IKEA, the company decided to change their minds.

    Last Tuesday, the furniture company decided to recall about 1.7 million pieces from their stores. IKEA offered free home installation and an optional refund.

    IKEA’s spokeswoman, Xian Jiaxin, said, “IKEA is a very responsible company. Consumer protection is very important to us, which is how we came to this decision.”

    Many Chinese shoppers go to IKEA for their furniture needs. As a result, the Swedish company incurred a large amount of sales. By September 2015, total revenue totaled to $1.55 billion.

    The furniture company is determined to firm its hold in the vast Chinese retail market. Total retail sales annually is worth $4.5 trillion in China, which will soon exceed sales from the United States.

    Jeff Walters, managing director of the Boston Consulting Group said, “If you look across the world and you look where there is still significant growth in consumer spending, the answer is very much China. Of course any company is going to make sure it’s standing on the right side of regulation to have access to a market that size.”

    Many Chinese consumers are becoming more discriminating due to violation of rights in the past. Since then, government inspectors have been more stringent in regulation and inspection of goods and products.

     

     

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  • The seven reasons for Alibaba’s success ; Alibaba’s development and framework

    The seven reasons for Alibaba’s success ; Alibaba’s development and framework

    Alibaba was initially founded in Jack Ma’s apartment in Hangzhou in 1999, before Alibaba.com was launched later that same year. In 2003, as the number of Internet users in China reached 80 million,[1] Taobao.com was launched as an online market. Shortly afterwards, both Alipay and Aliwangwang (instant messenger on Taobao) were launched to complete the purchasing process in Taobao. In 2007, the number of Internet users in China rose to 210 million[2] and Alimama was launched as an advertisement transaction platform. Taobao started to monetize that same year. Tmall was launched in 2008, as Alibaba ran both B2C and C2C platforms. In 2009, Alibaba Cloud computing was founded, illustrating Alibaba’s commitment to prioritize big data as part of its strategy. In 2010, the following three platforms were launched as part of Alibaba’s increasing focus on mobile payment: Juhuasuan (a platform for C2B); AliExpress (a global consumer marketplace) and Mobile Taobao App.

    Alibaba’s framework is based on the three following targets:

    1. Chinese customers: Taobao (online shopping destination), Tmall (brands and retail platform), Juhuasuan (group buying marketplace), 1688.com (Chinese wholesale marketplace).
    2. Customers abroad: AliExpress (global consumer marketplace), Alibaba.com (global wholesale marketplace).
    3. Support platforms: Alipay (online payment service); China smart logistic (logistic information system); Alimama (online marketing services); Alibaba cloud computing (platform for internal and third-party use).

     

    Screenshot 2016-07-19 09.20.09

    The three core factors that influence Alibaba are its Business model, Profit model and Credit model. In addition, there are four subsidiary factors namely considerate service, sensitive for business chance, new transaction patterns and completed system supporting Alibaba to gain its success.

    1. Alibaba’s unique business core to provide services mainly to small enterprises and individual defines a unique business opportunity which not only emancipates the productive forces of small enterprises but also offer much more diversified consumption choices for consumers.

    Alibaba’s service offer focuses on small enterprises. Whether we talk about 1688 – a B2B eCommerce platform specifically aimed at wholesale and procurement business – Taobao (including Tmall business shopping mall) – a B2C & C2C eCommerce platform gathering numbers of individual sellers – or YiDaTong (the largest Chinese professional import and export agent) which not only subsidizes small enterprises but also helps them accumulate credit through history data, all three of Alibaba’s core businesses mainly focus on providing services to small enterprises helping them create value which could not be accomplished by any of them individually (such as cost control). Additionally, the three core businesses represent a complete eCommerce ecosystem.

    The focus on small enterprises also leads to a phenomenon whereby a large variety of goods are available to a large variety of target consumer groups (age, profession, wealth, etc.) on the platform. In 2014, the Alibaba platform as a whole experienced a total transaction volume of 2.3bn CNY (close to 330 bn EURO).

    1. Alibaba’s profit model that Alibaba gets profits by charging services in marketing and technical supports rather than by charging admission fee contributes to a large and robust market share made up of loyal customers.

    Alibaba’s profits mainly come from advertisements and keyword bidding within platforms, which in total represents 57% of profits. The second most important source of profits is the variety of technical services based on big data of consumer behaviors, representing 25% of profits. One of the important reasons why Alibaba could beat eBay China can be found in their strive to cultivate the online transaction habit among Chinese customers by allowing sellers to register for free and by removing intermediate fees. EBay China, on the other hand, was in a rush to harvest the Chinese market by charging fees for all transactions completed on the platform. Taobao thus gathered a large number of sellers, thereby encouraging an even larger number of customers to purchase via the Taobao platform. Hence, Alibaba successfully developed a strong and loyal online customer base.

    Nowadays, the Alibaba platform represents more than 0.5bn registered users, among which there are more than 0.23bn active buyers and more than 8m active sellers. The Annual orders already exceed 11bn. [3]Thanks to the large number of customers on the platform, Alibaba can make use of advertisement, keyword bidding and customer’s data for profit. Advertisements on Taobao can generate thousands of clicks for a single brand; the bidding for keywords contributes to the higher ranking of brands in search results; technical services assist sellers in the management of their online store and relationship with customers through analysis of customers’ preferences and feedbacks.

    1. Alibaba’s accurate credit model, which builds a third-party payment platform as a bridge between consumers and e-stores to standardize payment process and to protect consumer’s rights, helps to develop a good and trustworthy reputation among customers.

     

    • All sellers on the eCommerce platform are requested to pass an online certification test to verify their identity information.

    Such certification ensures the supervision of sellers on the platform at all times and reduces the possibility of illegal transactions.

    • All transactions are recorded and can be traced back by both sellers and customers. Based on the records, Taobao set up a system to measure the degree of integrity of both actors.

    Such a system ensures that any fraudulent behavior is published for everybody to see and can lead to a significant loss in the number of future transactions because of the lack of the other party’s trust. The system protects the legitimacy of each transaction and helps customers chose more reliable sellers.

    • Alipay is an online payment platform, combining ease of use, safety and efficiency. Payments are first transferred to Alipay. Once the buyers have received their product and ensured they are not faulty, the payment is transferred to sellers from Alipay. If the product is faulty or does not meet the expectations of the buyer and returned, so is the payment.

    When eCommerce first appeared in China, the safety of online purchases was the most important problem that concerned customers. Alipay provides a reliable solution which has won the trust of Chinese customers. Because of its convenience, Taobao attracts more and more online shoppers. Nowadays, people can use Alipay to pay for any fees arising in their lives in general. Besides, Alipay allows customers to purchase goods on credit used in the current month and paid back the following month. Up to 2013, the number of users in Alipay approached 0.3bn while the number of transactions reached 900bn CNY (about 128bn EURO) and the active users of the Mobile terminal reached 0.1bn which exceeded the number of users on PayPal.

    • Online feedback is largely encouraged. The more comments a customer writes for products, the more discount coupons he receives.

    Word of mouth can strongly influence customer’s behavior, especially when all information concerning a particular product is more difficult to find. The large amount of comments can guide and encourage customers in their purchasing experience and help them pick out their preferred product, while reducing post-purchasing regrets.

    1. Alibaba’s considerate service offer provides a comfortable purchasing environment and a positive online customer experience leading to high user engagements.

    Based on the analysis of its large customer base, Alibaba always knows how to provide the most suited services for optimal customer satisfaction. It helps sellers to maintain positive interaction with buyers; it offers online business training for various stores; it introduced a special coding system to manage the large number of stores on the platform; it developed its own instant communication tool to improve seller-buyer communication exchange; it enables the reimbursement of any product ensuring payment return within the following seven days, and so on. Those support services help sellers grow their business while helping buyers to find their preferred products, thus generating more and more transactions.

    1. Alibaba excels at identifying and seizing unique business opportunities, thereby positioning itself as a leader and developing customer loyalty.

    In China, two festivals have a major impact on people all over the country: Spring Festival (the Chinese New Year) and ‘Double 11’ (a festival created by Taobao).

    The ‘Double 11’ festival falls on November 11th, just between Chinese National Day and Christmas when people would prefer physical in-store shopping (offline). Although most customers would typically be avoiding shopping during that period, Taobao developed a campaign encouraging consumption, so much so that the day became an actual shopping festival. On that day, various brands offer different discounts and even launch new products. Customers pick out their various preferred products and purchase them online on November 11th. In 2014, ‘Double 11’ generated over 1bn CNY in total trading volume for Tmall within the first three opening minutes. Within the first 14 minutes 2 seconds, volumes exceeded 5bn CNY. Total volume for the day reached 53bn CNY (approximately 7.6bn EURO)! In a single day, Taobao generated revenue of 1.5bn CNY and net profit of more than 0.5bn CNY (approximately 71m EURO).[4]

    The ‘Double 11’ day has successfully developed a new popular shopping event for the majority of customers in China. At such an event, the various Tmall sellers’ needs for advertisement and software services increase largely. Alibaba thus gains enormous profits from the event, while both sellers and buyers rely more on the open platform. Alibaba’s advantage in cloud computing also represents a valuable asset for the shopping festival.

    1. Always keeping an eye on customers’ evolving needs, Alibaba dares to challenge the traditional transaction patterns and explores new ways to create more value for customers.

    C2B transaction model: When customers are in particular predominance for a certain transaction, Alibaba deploys the C2B transaction model to reduce costs in the traditional supply chain and shortens the time required for product turnover, thereby increasing customer satisfaction. On the one hand, Alibaba gathers a large number of scattered customers who express the similar needs to form a powerful purchase group that can buy single products at a wholesale price. On the other hand, Alibaba takes advantage of its massive online customer behavior data to develop products suited to particular customer habits. For example, the analysis may show that customers based in south regions use their dryers more frequently on account of the wet weather and therefore need more resistant machines while other customers may not like vacuum cleaners which require the user to bend down when using it. In that case, Alibaba takes charge of 12 product lines in 12 brands and exerts total control over the production schedule to ensure the production of the selected products which are predicted to be in high demand within shortened production cycles. Lastly, Alibaba integrates the product the production with front-end sales to bring instant personalized products to customers. Within the single day of May 8th 2014, Tianmao sold 180,000 sets of the 12 products which equated the sales volume for a period of 3 months on the internet.

    O2O strategy: In Alibaba’s plan, customers can purchase a product by scanning two-dimensional codes and then receive products with another code which involves the interaction of the instruction and after-sales functions. Customers can also take part in various brand-run initiatives and receive targeted advertisements by scanning corresponding codes. In order to accelerate the plan execution, Alibaba is actively developing its expansion to mobile terminal areas – “Alipay Wallet” represents one such significant trial. “Alipay Wallet” not only provides different ways for payment such as code scan and direct cash-transfer, but also partners with different banks in order to provide an assistance service to customers for managing their many bills and coupons. Along with many other purchased Apps covering other domains including taxi services, maps, weather, music and travel, “Alipay Wallet” aims to transfer the content and activities of customers’ daily lives onto the O2O service.      

    1. Rather than positioning itself as a simple eCommerce company, Alibaba focuses on providing excellent service quality to both sellers and buyers, by introducing easier ways to do business for the former and developing a positive purchasing experience for the latter.

    In order to achieve its goal in terms of positioning, Alibaba keeps expanding its core business to many different domains such as advertising services, logistic network, financial services and mobile terminal services.

    1. Alimama: Alimama is an advertising platform which operates as Alibaba’s B2B system: owners of advertisement positions such as blog owners post the positions in Alimama and advertisers purchase their favorite positions according to their own criteria. Nowadays, Alimama focuses on three dimensions: Big Data, “Taobao Ke” (cost per sale mode) and the combination of video and mobile terminals. Through these dimensions, Alimama aims to help merchants find their specific target customers and help customers achieve their preferred products easily.
    2. Big Data: Besides the massive internet flow, transactions and database that Alimama represents, Ali also integrates comprehensive data resources that cover almost every aspect of customers’ daily lives through the acquisition of software companies in many other domains such as map, weather, taxi, music and travel. The accurate and diversified data can thus help advertisers select the most appropriate website advertising channels and reach customers effectively.
    3. “Taobao Ke” is a group of people dedicated to assisting merchants in the promotion of their products who receive a commission when a transaction is completed (cost per sale billing model). CPS is useful for eCommerce since people who successfully identify customers and convince them to complete a purchase are rewarded by commission.
    4. The combination of video and mobile terminal: In April 2014, Taobao bought 16.5% shares of China’s largest video site, intending to leverage the strengths of video in both PC and mobile to enable the interaction of an advertisement between the two terminals. When the audience watch advertisements during videos, Taobao will send the related information to the mobiles of people in the audience in various forms, including games and coupons to entice clicks from the audience.
    5. Ali micro finance: Ali micro finance mainly provides micro deposits and loans. It uses the data collected directly from the Ali platform: credit data and behavioral data. It translates the online customer behavior data into businesses and categorizes individual credit ratings by small enterprises according to their eligibility to apply for small loans from Ali micro finance (eg. small amount, short-term, momentarily borrow and return), as these small structures usually experience difficulty in obtaining loans in the traditional banking channels. Meanwhile, Ali’s small loan service also attaches great importance to the use of new technologies. It relies a lot on the cloud computing technology to determine whether there is a particular match between a certain buyer and a seller, whether they speculate credits, what rate the risk possibility stands at and so on. This not only ensures the safety and efficiency of the service but also reduces operating costs. In addition, the Internet makes it possible to provide a set of financial services, 24/7, 365 days a year, to large-scale small enterprises at the same time. This meets the major demand for capital resulting from the increasing number of small enterprises being founded in China.
    6. CSN (China Smart Network) project: CSN project was launched by Ali in collaboration with the four most influential logistics companies in China. Ali hopes to achieve the goal of enabling the delivery of products to buyers within 24 hours of ordering via the platform. Different logistic networks belonging to different logistic companies are integrated into forming the single most effective network in terms of parcel turnover for customer delivery. Different logistic companies focus and provide their expertise on specific portions within the network to maximize efficiency. Meanwhile, based on data analysis, Ali selects the most suitable logistic company for different portions of the network and allocates delivery businesses according to performance. As a consequence, logistic companies need to improve service quality and reduce costs, while ensuring continuous delivery. Moreover, customers can choose their favorite types of deliveries such as ‘fastest’, ‘cheapest’, ‘safest’ and ‘best service’ since the CSN can deploy the work capacities of the logistic companies.

     

    ALI’S FUTURE DEVELOPMENT

    Globalization

    In November 2014, Ali expanded its commercial transaction worldwide for the first time. Since that date, Ali’s global ecosystem consisting of its eCommerce platform, logistic network, cloud computing and big data has been developed further and communicated on publicly. On Tianmao International’s platform, Chinese customers can purchase goods of popular retail brands abroad directly and customers from other countries including Russia, Brazil, the US and Canada can also purchase products from China directly. Due to the reduced amount of procedures required in foreign trades without importers, Ali is able to transfer the profits from the importers to the merchants and thus cut down transaction costs. The CSN network represents a global coverage of countries to increase the convenience for parcel delivery to customers. For example, CSN developed a special supply chain in Russia allowing customers to receive products within 35 days. It also increases the cooperation with banks in other countries to improve the payment system.

    Besides the globalization of its eCommerce activities, Ali is also developing its finance business abroad. Recently, Ali has cooperated with Lending Club – the biggest online loan platform. The cooperation signifies that small American enterprises which get loans from Lending Club can now look for Chinese producers and supply sources on Alibaba’s platform.

    Taobao Village

    Focusing on eCommerce development in rural areas of China is one of Ali’s most important future strategies. In the same way that it always looks for business opportunities among small enterprises and individual customers, Ali fosters the online purchase forces in thousands of villages across China. Taobao village represents the village where active online shops reach more than 10% of local households and trading volume amounts to more than 10m CNY. The high concentration of online shops in these villages makes it possible to form an eCommerce chain made up of producers, suppliers, shops and logistics, thereby facilitating development and economies of scale. Moreover, Taobao village helps to address the problem of local unemployment (Taobao village brings about more than 280,000 jobs and the average income at Taobao village is 2.19 times higher than that found in normal villages); it contributes to the transfer of the environmental advantage into an economic advantage (since the natural and original product is welcomed by customers); and it helps to diminish the purchase gap between urban and rural areas. Up to December 2014, 211 Taobao villages were developed. Ali provides support through credit and loans, talent training and promotion.

    Develop more offers suited to more fields in customers’ daily lives

    Yulebao: An investment platform for television work with approximately 7% annual return on investment. Investors have the opportunities to meet with directors of various TV projects, take part in premieres, travel to the filming locations of certain TV programs, etc. The customer’s preference is better evaluated and will truly influence the Chinese entertainment trends. Besides, it helps high quality projects which do not necessarily have the matching high budget to get investment for production. Yulebao was launched in March 2014.

    Ali future hospital: In August 2014, Ali collaborated with a renowned hospital in Shanghai, installing Alipay to allow patients to complete their own registration process, payment and report-fetching online. Most importantly, Alipay is combined with medical insurance in order to deliver a fully automated service to customers.

    [1] The data comes from  Alibaba’s prospectus: https://www.sec.gov/Archives/edgar/data/1577552/000119312514184994/d709111df1.htm

    [2] The data comes from  Alibaba’s prospectus: https://www.sec.gov/Archives/edgar/data/1577552/000119312514184994/d709111df1.htm

    [3] The data comes from  Alibaba’s prospectus: https://www.sec.gov/Archives/edgar/data/1577552/000119312514184994/d709111df1.htm

    [4] Data comes from “Le single day Chinois bat tous les records de ecommerce”:

    https://www.le-webmarketeur.com/2013/12/10/le-single-day-chinois-bat-tous-les-records-de-e-commerce/

     

    Author :

    Prof. Xavier Pavie

    Associate Academic Director, MSc in Management, ESSEC Business School

    Director of iMagination Center

     

    Yixuan Luo

    Master student at ESSEC Business School

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  • Yum China divestment on track

    Yum China divestment on track

    The Yum China divestment is expected to be completed by October 31.

    The US fast food giant released the target date along with second quarter figures showing solid sales growth across most Asian markets, especially within the KFC division.

    CEO Greg Creed said he was particularly pleased with “the continued sales momentum at KFC China,” which delivered better-than-expected same-store sales growth of 3 per cent.

    “Yum! Brands delivered second-quarter (global) core operating profit growth of 7 per cent and earnings-per-share growth, excluding special items, of 9 per cent. Given our strong first-half results and current trends in China, I’m pleased to raise our full-year core operating profit growth forecast to at least 14 per cent.”

    Creed said the China result represented its fourth-consecutive quarter of positive same-store sales growth at KFC China.

    “Importantly, our China Division is off to a good start in the third quarter for both KFC and Pizza Hut Casual Dining, including a return to positive same-store sales at Pizza Hut in recent weeks.”

    Outside of China, challenging industry conditions in the US contributed to soft sales results.

    The separation of the China business would create “two powerful, independent, focused growth companies,” said Creed.

    “Our capital structure is fully in place and we plan to return a significant amount of capital to shareholders both prior to and after the spin.”

    Creed promised further information at an investor briefing on October 11.

    Yum China same-store sales were even, with an increase of 3 per cent at KFC, offset by a decline of 11 per cent at Pizza Hut. The China division opened 72 new stores during the quarter, taking its network there to 7246

    Meanwhile, in developing Asian markets – including Malaysia, Indonesia and the Philippines – which account for 7 per cent of KFC’s global turnover, sales rose 11 per cent in the quarter and are running 10 per cent ahead of last year for the first half.

    In Thailand, which accounts for 3 per cent of KFC’s global turnover, sales rose 17 per cent in both the second quarter and the first half.

    And in developed Asian markets – such as Japan, Korea and Taiwan – which accounts for 9 per cent of turnover, sales rose 6 per cent by quarter and half.

    Pizza Hut sales in developing Asian markets rose 5 per cent in the second quarter and 3 per cent in the first half. In developed Asian markets, sales fell 7 per cent this year.

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  • First Superdry China stores set to open

    First Superdry China stores set to open

    The first Superdry China stores are set to open in what a commentator describes as a core future market for parent SuperGroup.

    Nivindya Sharma, a senior analyst at Verdict Retail, says the brand’s international expansion strategy will now focus on “two key, but notoriously difficult, markets – the US and China” in the current financial year.

    “Superdry will open its first trial stores in China in 2016 and five in the US as it experiments with different store formats. Its relatively cautious approach to store rollout, and focus on eCommerce as a route to developing brand awareness and understanding local customer behaviour should serve it well,” said Sharma.

    News of its summer debut in China came amid an impressive full-year result: SuperGroup sales rose 21.3 per cent to £590.1 million, aided by its collaboration with British Hollywood star Idris Elba. Underlying pre-tax profit rose 16.3 per cent to £73.5 million.

    “Against a bleak background of stalling sales from major high street players such as Next and Primark, SuperGroup posted a stellar set of full-year results with strong growth across both its retail and wholesale divisions,” said Sharma.

    “No doubt, the net 24 stores the retailer opened during the year were major contributors to its FY results, but robust like-for-like growth indicates consumer demand remains strong for Superdry’s distinctive product.”

    Womenswear was the strongest growing category for the year, reflecting the push Superdry has made to broaden womenswear ranges and merchandise them more prominently in-store and online.

    “The brand is focused on developing its presence in womenswear, especially as it experiments with new concept stores in the UK that give more space to women’s ranges, and focus on enhancing the shopping experience using knowledge from its customer insight program,” said Sharma.

    “However, to truly make a mark in the UK’s highly competitive womenswear market, Superdry will have to consider how best it can soften and translate its male-centric brand image to appeal to female consumers.”

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  • Bidding disappoints McDonald’s Corporation

    Bidding disappoints McDonald’s Corporation

    McDonald’s Corporation says it is struggling to attract the calibre of bidders it envisioned when it put its China and Hong Kong franchise up for tender.

    The restaurant group is offering a 20-year master franchisees for its markets in China, Hong Kong and South Korea. Bidding has gone into its second round and predictions are the deal could be worth US$2 billion to $3 billion.

    Conditions include McDonald’s keeping management intact for two years, with a limitation on taking the franchise public. Other restrictions have reportedly discouraged many private-equity firms from participating in the bidding.

    Global buyout firms such as Bain Capital, Carlyle Group and TPG Capital have put up their hands with the aim of teaming up with some of the Chinese strategic bidders.

    Bidders asked to submit for the second round of the tender include dairy company Beijing Sanyuan Foods, Beijing Tourism Group, ChemChina, state-owned China Cinda Asset Management and Sanpower.

    McDonald’s share price has surged more than 23 per cent since CEO Steve Easterbrook launched a turnaround effort. The plan for Asia comprises one or more local partners taking over the China and Hong Kong franchise of 2800 stores for 20 years while paying royalties to the corporation.

    However, many investors are anxious following the food scandal that hit McDonald’s sales in 2014, reports BFN.

    Meanwhile, McDonald’s last year announced plans to sell its business in Taiwan plus a substantial ownership stake in Japan, but as yet investors have yet to be secured. “We are making solid progress as we look for long-term strategic partners with local relevance who have complementary skills and expertise,” says a company spokesperson.

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  • Alibaba Group opening VR shop

    Alibaba Group opening VR shop

    Chinese eCommerce giant Alibaba Group Holding plans to open a virtual-reality technology (VR) demonstration shop this month, with the technology to roll out by the end of the year.

    Its VR product is designed for online shopping. Alibaba’s 400 million customers will have their buying experience enhanced by wearing a VR helmet or glasses designed to simulate being in a physical store.

    At a media briefing in Shanghai, an Alibaba representative wearing a Vive VR helmet from HTC Corp of Taiwan showed how a shopper could tour a three-dimensional digital store.

    The demonstration showed a robotic store associate talking to the visitor and recommending new products.

    Shoppers can rotate products they see in the virtual store by moving a controller connected to the helmet, and even ask for a model to show how the product works or is worn. Users can also use the controller to click the buy button.

    “VR is a great way to demonstrate products or services, especially for such categories as furniture and travel products,” says Alibaba senior director of mobile Zhuang Zhuoran.

    Alibaba set up its Gnome Magic Lab in March to develop software to enable merchants to build virtual stores. While costs are high to convert a real product to its digital, three-dimensional equivalent (about $50), the company hopes to be able to reduce this to about $1.

    VR gear ranges in price from $20 to $1000, and consumers buy 300,000 VR units on Alibaba’s Chinese online marketplaces each month, says the group.

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  • Sriwijaya Air to open Manado-China flight route

    Sriwijaya Air to open Manado-China flight route

    Sriwijaya Air is planning to open the Manado-China direct flight route at the end of this year to cater to the increasing number of Chinese tourists traveling to North Sulawesi.

    Sriwijaya Air’s move is aimed at benefiting from the opportunity as it will have a positive impact on the regional economy, its district manager for Manado, Achmad Trenggono, said here on Friday.

    The plan to open more flight routes from and to the North Sulawesi provincial capital of Manado will have a multiplier effect, he added.

    “We are ready to support the North Sulawesi provincial governments efforts by encouraging the tourism sector,” he stressed.

    He believed that if the tourism sector is developed properly, it will have a massive impact on other sectors in the province.

    The general manager of the state airport operator of Sam Ratulangi (Samrat) international airport, Halendra Waworuntu, pointed out that his side is prepared to help the airline company open new flight routes from Manado to destinations across the world.

    “Only chartered planes have served international flights from Manado so far,” he informed.

    He underlined that the plan to open the Manado-China flight route will have a bright prospect because the province has a large potential to develop its economy.

  • Adidas football flagship opens in Guangzhou

    Adidas football flagship opens in Guangzhou

    In a world first, an Adidas football flagship has opened in southern China’s Guangzhou Teemall.

    Adidas Group Greater China MD Colin Currie describes it as an important milestone for both Adidas and Chinese football.

    “At the same time, it emphasises the group’s determination and commitment to promote the development of Chinese football.”

    On the first floor of the northern square of Teemall, the store provides the equipment of such Adidas-sponsored clubs as Associazione Calcio Milan, Bayern Munich, Chelsea, Juventus, Manchester United and Real Madrid, as well as exclusive products of superstar players like Bale, Messi and Pogba.

    Customised name-printing on jerseys is also offered.

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  • Welcoming Australian FreakShakes in Asia

    Welcoming Australian FreakShakes in Asia

    Milkshake treats known as FreakShakes, devised by suburban cafe in the Australian capital of Canberra, have started making inroads to Asia.

    Patissez became a social-media sensation last year when it introduced its signature milkshakes piled with cookies, pretzels and even slabs of cake. Also known for its cakes and desserts, the family-owned patisserie was besieged by queues, so a second store was opened in the centre of the city.

    Now its first store outside Australia has been attracting crowds since opening in Kuala Lumpur last month.
    “We’re thrilled. The team in Kuala Lumpur is excellent,” says owner Anna Petridis. “The store is on Jalan Talawi, Bangsar Village, and it’s beautiful – everything a Patissez store should be. I plan to use that store as the model for all future outlets.”

    Patissez has also just opened in Singapore, in the new Raffles Holland Village. “It’s totally different to Kuala Lumpur but has its own flavour, which definitely suits the area and local market,” says Petridis.

    Now the company is planning more store locations in Kuala Lumpur and Singapore, plus expansion into Bangkok, Beijing and Shanghai. As part of this growth, it is setting up the “Patissez Exchange” which will enable staff members at any level to have the chance to work in the international stores.

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  • Apple Ups China Game with $1 Million Donation for Flood Relief

    Apple Ups China Game with $1 Million Donation for Flood Relief

    Apple donated ¥7 million ($1 million) this week to the China Foundation for Poverty Alleviation(CFPA), a non-governmental relief agency. The money is intended to help relief efforts in south China, which has been racked with flooding on the Yangtze.

    Apple didn’t announce the donation, but the CFPA did, as reported. Apple CEO Tim Cook posted a statement of support on Weibo, saying, “Our thoughts are with all those devastated by the flooding along the Yangtze River.”

    The newspaper also noted that Apple donated some $8 million dollars for victims of the 2008 Wenchuan Earthquake in China’s Sichuan region.

    Apple has stepped up its philanthropic efforts under CEO Tim Cook, but most of what we hear about are efforts here in the U.S. Apple’s active involvement in China is part of a broader effort for the company to integrate itself with the insular country. It’s also the first donation from a U.S. company reported by the CFPA.

    Other recent activity by Apple in China includes a $1 billion investment in Didi, a Chinese ride-sharing firm. Apple has also opened numerous Apple Store retail locations in China. In May, Apple launched Chinese loops and instruments for Logic Pro X and GarageBand.

    Chinese Headwinds

    These moves come while China conducts an on-again, off-again campaign against Apple in state-owned media. The Chinese government also shut down iBooks and movie sales in iTunes in China, while new regulations could require Apple (and every other company) to become part of the Chinese surveillance machine. In Chinese courts, Apple has endured trademark and patent losses covering its iconic iPhone.

    But Apple clearly isn’t giving up on this market. Tim Cook has said on multiple occasions that China is important to Apple. Earning its place in the Chinese economy will require continued investment, significant lobbying, and substantial marketing efforts.

    This donation to the CFPA is not only the right thing for Apple to do, it’s smart business. And I don’t mean that cynically at all. I suspect Tim Cook would have authorized the donation whether or not it was smart business. To that end, I was unaware of the 2008 donation to earthquake victims, and it’s not like Apple advertised its gift to the CFPA.

    But it does remain smart business. The key to knocking down Apple’s barriers in China is to become more and more of a Chinese company. This donation is another small step in doing so.

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  • YNAP pins hopes on expansion

    YNAP pins hopes on expansion

    Italian online fashion retailer Yoox Net-A-Porter (YNAP) aims to double sales and boost profits by 2020 as it expands in new markets, including Asia, but says it is still committed to Britain despite the vote to leave the European Union.

    The group says it is expanding its London headquarters and hiring several hundred new staff members despite Brexit. About a sixth of its total revenue comes from Britain.

    “We believe in this market. We believe in London and we continue to grow here,” says chief executive Federico Marchetti. “We have a very resilient business model thanks to our geographies being global.”

    YNAP says it plans to more than double revenues to around 4 billion euros (US$4.4 billion) by 2020. Its growth plans include further expansion in China and the rest of Asia.

    It also plans to offer jewellery and watches – Swiss watchmaker Richemont is a major shareholder – targeting sales of 100 million euros by 2020. This is part of a strategy to focus more on premium customers and fast-growing brands, as well as investing heavily in mobile. It says three-quarters of sales are set to come from mobile devices by 2020, from 41 per cent now.

    YNAP, a merger of Italy’s Yoox with upmarket rival Net-A-Porter, has its own multi-brand shopping websites but also runs online stores for luxury brands including Armani and Valentino. It added Prada this week.

    Finance chief Enrico Cavatorta says he expects synergies from the merger to take full effect from 2018, improving margins, and says the group should be cash positive from 2018.

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  • Binding offers sought for McDonald’s China

    Binding offers sought for McDonald’s China

    Selected bidders for McDonald’s China and Hong Kong, including China Cinda Asset Management and dairy producer Beijing Sanyuan Foods, have been asked to make binding offers.

    Also invited earlier to submit a second-round bid are Sanpower Group, which owns UK department store House of Fraser, and GreenTree Hospitality.

    McDonald’s is selling 20-year mass franchise rights in China and Hong Kong, which could fetch $2 billion.

    Illinois-based McDonald’s has hired Morgan Stanley to run the sale of about 2800 restaurants in China, Hong Kong and South Korea along with 20-year franchise rights. The South Korean McDonald’s business is also being sold, with local cinema and cafe operator CJ Group reportedly the front-runner at this stage.

    McDonald’s announced in March that it was reorganising in Asia by bringing in partners to own restaurants within the franchise business. Competitor Yum Brands, which has the KFC and Pizza Hut chains, is also restructuring in China.

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  • Banila Co moves into Malaysia

    Banila Co moves into Malaysia

    South Korean cosmetic manufacturer Banila Co has launched outlets in Malaysia, its fourth overseas market following China, Taiwan and the Philippines.

    Banila says its first cosmetics store in Malaysia opened in Mid Valley Mega Mall, the largest shopping complex in Kuala Lumpur, with its second store opening in Sunway Pyramid, also in the capital.

    Its first foray overseas was into China in 2009, where it now has about 160 shops. It also has a flagship store in Taiwan’s capital, Taipei.

    Celebrating its 10th anniversary last year, the brand aims to establish consumer awareness through outlets at shopping malls.

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  • China’s large retailers report slower growth in 2015

    China’s large retailers report slower growth in 2015

    China’s large retailers registered slower growth last year, with brick-and-mortar stores under continuous pressure due to booming e-commerce, a report showed Thursday.

    The sales volume of the country’s top 100 retailers topped 4.13 trillion yuan ($613.6 billion) in 2015, up 22.4 percent year on year, down by 3.8 percentage points compared with 2014, according to a report released by China General Chamber of Commerce, a retail industrial guild and retail market data provider.

    Among them, brick-and-mortar stores posted a continuous slowdown in growth, with sales only rising 3.2 percent year on year.

    Chinese Internet giant Alibaba’s T-mall e-commerce platform was the top seller last year, followed by JD.com and Suning.com.

    The report pointed out that foreign retailers saw their market share in China decrease further last year, with fewer foreign players making it into the top 100, and slower sales growth.

  • Troubles may mount for Indian smartphone vendors and you can blame China

    Troubles may mount for Indian smartphone vendors and you can blame China

    It’s going to be a lot tougher to buy smartphones in India around the festive season beginning October, a time when Indians buy the maximum, fancy gadgets included.

    The reason is really very simple, plain economics-a demand-supply mismatch. There is, as of now a glaring shortage of mobile components in China, the country which sells the maximum number of smartphones in India, through companies like Xiaomi, LeEco, Huawei, Oppo, etc.

    Many Chinese manufacturing units in China have shut shops due to new technology, which requires more investment and hiring labour at higher rates.

    The display panel shortage comes as some of the panel makers, especially for the LCD displays which are largely used in the low-end smartphones and make up for majority of the smartphones sold in India, have shut shop recently, while others have not had significant increase in capacity.

    This is further aggravated by the fact that consumers are moving towards larger screens, 5″+ and especially at 5.5″, so there are fewer glass panels are coming out from the same capacity.

    Even though top Chinese handset and component makers mulled over investing around $3 billion in India, the country is still dependent on the Dragon nation.

    Some of the key components such as screen displays, 3G SOCs and flash memory will be short in supply, hitting the production plans of many vendors in the Indian market.

    “This is likely to impact local Indian vendors, the small ones as well as the heavy weights, more than it will impact the global vendors such as Samsung or Apple, who have a more secure supply chain, and Chinese vendors such as OPPO, vivo, Lenovo, Xiaomi and Huawei, who are able to secure better deals due to the large volumes they can commit,” said Kiranjeet Kaur, Research Manager Mobile Phones IDC Asia/Pacific.

    “The local country vendors have a disadvantage in this case. This shortage could also possibly lead to longer time to market and increased costs, and some of the costs may eventually get passed on to the consumers,” she added.

    It is noteworthy that Chinese companies such as Techno, Gionee, Coolpad, Holitech, Wingtech, Camera King, Galaxy Core, Poxiao, Vivo and Sprocomm, which took part in ‘China-India Mobile Phone & Component Manufacturing Summit’, explored avenues to tap the existing and emerging opportunities.

    “Going by the encouraging response of Chinese companies and definitive joint collaboration talks between the Indian and Chinese mobile and handset manufacturers, Chinese investment of $2-$3 billion (roughly Rs. 13,360 crores – Rs. 20,040 crores) over the next two years looks like a real possibility along with employment for one-two lakh people” Pankaj Mohindroo, national president, Indian Cellular Association (ICA), had said.

    However, IDC expects the Indian smartphone market to still pick up in Q2 of this year, with further gains coming in Q3.

    Jaipal Singh, Market Analyst Mobile Phones IDC India, said, “China-based vendors have extended their retail presence in the larger part of India and getting the shelf space along with the Indian vendors. Even as some of the eTailers are focusing more on profitability, which could mean lesser discounts this season, we believe the China-based vendors with presence in retail and push from the eTailers will drive the market this year.”

    The China-based vendors had 24% share in the Indian smartphone market in 2016 Q1, up from 12% a year ago. Almost two-thirds of their sales takes place through the online channels.