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Tag: China

  • Why Alibaba bought the South China Morning Post

    Why Alibaba bought the South China Morning Post

    Alibaba Group has struck a deal to buy Hong Kong’s venerable English-language newspaper, the South China Morning Post, adding a relatively small but influential content provider as the Chinese eCommerce giant expands into online entertainment and information.

    The agreement calls for Alibaba to purchase the media assets of Hong Kong-listed SCMP Group for an undisclosed amount. In addition to the daily newspaper, Alibaba is acquiring other SCMP operations including magazines, outdoor media, recruitment, events and conferences, and education and digital media businesses. Publications involved in the deal include the Sunday Morning Post; SCMP.com and related mobile apps; Chinese websites Nanzao.com and Nanzaozhinan.com; and a portfolio of magazine titles such as Esquire, Elle, Cosmopolitan, The PEAK and Harper’s Bazaar.

    Through the acquisition, Alibaba said it will “combine the heritage and editorial excellence” of the SCMP, which was founded in Hong Kong in 1903, with Alibaba’s digital capabilities “to provide comprehensive and insightful news and analysis of the big stories” in Hong Kong and China. The company plans to use technology to create content more efficiently, and provide resources to expand the SCMP’s audience beyond Hong Kong through digital distribution.

    “The South China Morning Post is unique because it focuses on coverage of China in the English language,” said Joe Tsai, executive vice chairman of Alibaba Group, in a statement. “This is a proposition that is in high demand by readers around the world who care to understand the world’s second-largest economy.”

    With the rise of the Internet, newspapers and magazines have suffered steep declines in readership and advertising revenue while struggling to make a profitable transition from print to digital distribution. In an open letter to the SCMP’s readers, Tsai said some may ask why Alibaba is buying into traditional media “considered by some (to be) a sunset industry.”

    “The simple answer is that we don’t see it that way,” Tsai wrote, calling the acquisition “the perfect opportunity to marry our technology with the deep heritage of the SCMP to create a vision of news for the digital age.”

    To enable greater access to SCMP content on computers and mobile devices anywhere in the world, Tsai said Alibaba intended to make all digital content available for free, eliminating the newspaper’s “pay wall” that requires readers to subscribe to get access to stories posted on the Internet. This change would occur “with enough preparation time after we take over operations,” Tsai wrote.

    SCMP CEO Robin Hu said Alibaba’s “proven expertise especially in mobile Internet” placed the company “in an excellent position to leverage technology to create content more efficiently and reach a global audience”.

    “We welcome Alibaba’s commitment to invest additional resources in its editorial and business operations to make the SCMP even stronger,” Hu said in a statement.

    Alibaba has been pursuing a media strategy that builds on its extensive eCommerce assets and consumer connections – the company’s China marketplaces have 386 million annual active buyers – to bring content to China’s entertainment-hungry masses. Alibaba has rapidly expanded in this area through investments in a variety of traditional and Internet businesses, including film production (Alibaba Pictures), sports (Alibaba Sports Group) and streaming video. Last month Alibaba agreed to buy Youku Tudou, A Chinese version of YouTube, in a multibillion-dollar deal.

    Tsai’s letter to SCMP readers:

    Marrying Heritage and New Technology: a Vision for the Digital Age

    Dear Readers,

    By the time you read this, you will have heard the news that Alibaba Group is acquiring the South China Morning Post.

    With an age difference between the two companies of nearly one hundred years, this is truly a mix of the old and the new. The SCMP is resonant with the history, heritage and culture of the region, just as Alibaba has its place in the new age of digital technology.

    We at Alibaba are both humbled and excited to be the new owner.

    Our Business Case

    So, you’re probably wondering why. Why is Alibaba buying into traditional media, considered by some a sunset industry? The simple answer is that we don’t see it that way.

    The SCMP has iconic status in the region, with a strong reputation internationally for the quality and credibility of its journalism over the years, thanks to its reporters and editors who have worked hard to build this heritage.  Like many print media, however, the SCMP faces challenges amid the dramatic changes in the way news is reported and distributed. But these changes play to Alibaba’s strengths, which is why we believe the two companies complement each other well.

    We see a compelling business case for the acquisition because we believe that Alibaba is best positioned to take the SCMP to the next level. The foundation for this work must be the quality of the content. And what underpins this will be editorial excellence: a clear prerequisite to maintaining readers’ trust and, ultimately, achieving commercial success. Be assured, we get that.

    Yet, the news business is in a state of flux. It has already gone digital and is now moving from online destination to other forms of distribution, in particular social media and mobile. Media now has a global audience and the challenge is to reach it in the most efficient and reader-friendly way. With proven expertise in digital distribution, especially on mobile devices, Alibaba is in an excellent position to leverage technology to create content more efficiently and expand distribution without borders.

    In other words, we see the perfect opportunity to marry our technology with the deep heritage of the SCMP to create a vision of news for the digital age.

    Our Vision

    Our vision is to grow the readership globally. We believe we can do this because the SCMP, from its base in Hong Kong, is uniquely positioned to report on China with objectivity, depth and insight, a proposition that is in high demand by readers around the English-speaking world – from New York to London to its home in Hong Kong – who care to better understand the world’s second largest economy.

    To help achieve our vision, we plan to make the SCMP more readily available. In this spirit, with enough preparation time after we take over operations, the pay wall on SCMP.com will come down, and you will be able to access its content for free on the Internet and on your mobile device.

    We will also invest to strengthen the foundation of editorial excellence. Only through additional resources will the SCMP be able to stay true to its core values of quality, integrity and trust. Further, the SCMP will stay close to its roots, with a strong China focus offering distinctive and informed analysis on trade, business, economy and society while maintaining its status as the paper of record for Hong Kong.

    Editorial Independence

    Some have suggested that ownership by Alibaba will compromise the SCMP’s editorial independence. This criticism reflects a bias of its own, as if to say newspaper owners must espouse certain views, while those that hold opposing views are “unfit.”

    In fact, that is exactly why we think the world needs a plurality of views when it comes to China coverage. China’s rise as an economic power and its importance to world stability is too important for there to be a singular thesis.

    In reporting the news, the SCMP will be objective, accurate and fair. This means having the courage to go against conventional wisdom, and taking care to verify stories, check sources and seek all viewpoints. These day-to-day editorial decisions will be driven by editors in the newsroom, not in the corporate boardroom.

    It’s humbling to assume the responsibility of ownership of such a storied newspaper. We thank the Kuok family who have been tremendous stewards of your trust; we hope Alibaba will have an opportunity to earn your trust.

    Sincerely,

    Joseph C. Tsai

    Executive Vice Chairman

    Alibaba Group Holding Limited

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  • Cafe de Coral Group plans 20 new restaurants

    Cafe de Coral Group plans 20 new restaurants

    Quick Service Restaurant giant Cafe de Coral Group says it plans to open at least 20 new outlets in Hong Kong in the current financial year as it seeks to revive profit growth.

    The company this week revealed a three per cent increase in sales to HK$3.73 billion in the first half of the year, but a 14.7 per cent decline in profit to $207 million.

    “Seizing the opportunity of a softer leasing market, our Cafe de Coral and Super Super Congee & Noodles chains will be more proactive in further expanding its network,” the company said in its stock exchange filing.

    “Our team has been working on building greater network for our QSR platform with opening more than 20 shops in FY2015/16. We will also steer our current and new QSR concepts to

    further drive a bigger market share in this segment. Lifestyle cafe kiosk Just About Food and new innovative take-away concepts in key commercial hubs are tailored to target the needs of busy working crowds. These new QSR concepts have also led us to higher efficiency in the backdrop of high rental cost and persistent labour shortage.”

    Cafe de Coral Group’s QSR business in Hong Kong recorded a healthy turnover growth during the first half.

    “Performance of our fast casual and casual dining business was, however, held back by the significant investment we ploughed in to support our continual expansion in this segment. The group’s overall performance for the period has, to some extent, reflected a downturn in retail sentiments, driven by the weakening economy. Some of the group’s restaurants in the major shopping precincts saw a slow recovery in the aftermath of the community disruptions since the last quarter of 2014.”

    Despite the prevailing challenges, the group’s Hong Kong operations recorded turnover growth of four per cent to $3.12 billion. The Café de Coral chain saw its sales from comparable stores increase four per cent from the same period last year. The Super Super Congee & Noodles chain’s sales grew three per cent.

    In the fast casual and casual dining sector, Oliver’s Super Sandwiches continued to generate positive comparable store sales growth.

    “The Spaghetti House and Spaghetti 360˚, despite being affected by the temporarily weakened customer spending during the period, seized the opportunity to rejuvenate and strengthen our presence in the Italian dining sub-sector with The Spaghetti House re-launching its flagship store in Cityplaza, Hong Kong.

    “Shanghai Lao Lao and Mixian Sense, our home-grown brands that underscore the group’s diversification strategy, reported an encouraging performance. During the period of review, both chains continued their trajectories of steady growth and reinforced our solid leap into the Chinese dining sub-sector.

    Leveraging on the franchising model in our Japanese and Korean dining sub-sector, The Cup and Don Don Tei restaurants have opened in Hong Kong.

    Mainland China ‘flat’

    In Mainland China, Cafe de Coral’s fast food business growth was flat compared with last year and its casual dining business saw a steeper decline, “due to the rising tide of consumer reluctance to spend on higher priced meals”.

    “We made the deliberate move to slow down our growth in scale and pace in the country.

    “A balanced business portfolio with the right mix of our QSR, fast casual and casual dining and Mainland platforms will provide us with a greater room for expansion – a cornerstone of sustainable growth for the Cafe de Coral Group,” the company said.

    “Business in Mainland China has remained stagnant and consumption patterns are changing. Aware of the market deteriorations, the group has carefully gauged local consumption behavior, with a prudent approach towards operating its business there, primarily the Cafe de Coral and The Spaghetti House chains. We have deliberately adjusted our expansion pace and consolidated our operations, closing underperforming stores as well as strengthening our infrastructures, systems and teams in pursuit of a viable, future-oriented growth strategy.”

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  • Inditex Asia: the relentless push continues

    Inditex Asia: the relentless push continues

    As Spanish apparel giant Inditex continues its global expansion in earnest, the Inditex Asia business is accounting for a major share of the action.

    Inditex is committed to both multi-brand and multi-channel strategies as it builds it global dominance of the fast fashion market.

    During the first nine months of 2015 it opened 230 stores in 48 markets.

    Online, Zara extended its eCommerce presence to Taiwan, Hong Kong and Macao. Inditex also launched online operations in the southern hemisphere with the launch of Zarahome.com in Australia on December 3 – soon after the homewares brand opened online in Japan.

    Pull&Bear, Massimo Dutti, Stradivarius and Oysho all launched online in China.

    Inditex opened physical stores in all continents during the nine months to the end of October. The net number of stores across the group’s brands increased by 109 in Europe, by 47 in the Americas – and in Asia and the rest of the world, by a net 74, taking the group’s global store count to 6913.

    In Asia, these openings included new Zara stores in Osaka (Japan), Beijing, Harbin and Hong Kong (China) and in Singapore.

    Bershka opened its first store in Taiwan and a flagship store in Korea; and Stradivarius, with openings in the Chinese cities of Chengdu and Harbin.

    Oysho has opened its first store in Korea; Zara Home opened its flagship in Sydney (marking its 500th store worldwide).

    As at the end of October, Inditex had a presence in 88 markets, with online operations in 28 of these.

    Inditex said its net profit over the first nine months of the year was up 20 per cent to €2.020 billion. Net sales increased 16 per cent year on year to €14.74 billion.

  • China’s internet giants investing in offline retail for growth

    China’s internet giants investing in offline retail for growth

    Alibaba’s purchase of certain media properties has dominated recent headlines, but China’s acquisition-hungry internet giants have moved on plenty of other targets lately, including brick-and-mortar retailers as they expand their commercial ecosystems.

    The triumvirate of Baidu, Alibaba and Tencent has made US$75 billion of investments in strategic partners since 2013, according to HSBC data, and analysts say China’s internet behemoths have the cash to keep on going.

    “Mergers and acquisitions will remain a main feature of China’s internet industry in 2016. We expect Alibaba’s and Tencent’s M&A spend to remain high,” wrote Fitch analyst Kelvin Ho in a recent note.

    The internet firms aren’t just gobbling up other online players. Some US$47 billion has been spent on physical retailers and another US$797 million on logistic providers. Analysts say this reflects the broad adoption of an online-to-offline, or “O2O”, strategy.

    “O2O has become the new growth driver for internet companies, especially e-commerce companies, which have been making efforts to broaden their services and product offerings and to enhance shopping experiences for online shoppers,” HSBC analysts wrote in a report last month.

    Physical distribution capabilities have been on Alibaba’s shopping list. Its partnership with Haier Electronics Group two years ago strengthened its ability to fulfil white goods, and its August investment in Suning Commerce Group is expected do likewise for consumer electronics.

    Competitor JD.com already has delivery capabilities, so its focus is on investing to broaden its product portfolio, by partnering with local supermarkets, convenience stores and pharmaceutical chains. In August it boosted its fresh food business by taking a stake in supermarket chain Yonghui Superstores.

    The impetus for these moves comes from surging online retail sales, which grew at a 57 per cent compound annual growth rate from 2010 to 2014, easily outpacing the 13.7 per cent rate for all retail, as sales from physical outlets were cannibalised.

    “The cashed up internet companies are definitely doing a land grab, in terms of O2O and other assets,” said Chi Tsang, head of Asia internet equity research at HSBC.

    But despite the growth of online retail, it contributed just 11 per cent of all retail sales in 2014. And although it’s expected to grow at a CAGR of 27 per cent up to 2018, according to iResearch, HSBC figures show year-on-year growth is actually decelerating, from 49 per cent in 2014 to 39 per cent in the first half of this year.

    In this context, analysts say it’s critical for the online and offline sides of an O2O partnership to see mutual benefit.

    “By tying up with internet companies, offline retailers can benefit from getting access to their partners’ large online user base, and can better utilise their retail infrastructure (logistics supply chain and store network) by helping online retailers to provide an omni-channel shopping experience to their customers,” HSBC analysts wrote.

    “Conversely, internet companies can further enlarge their market shares by digitalising offline partner’s product offerings and providing just-in-time services to users by utilising offline partners’ retail infrastructure.”

    As an example, Alibaba’s deal with department store operator Intime Retail Group has spawned the Girlfriend Circle programme, which promotes social spending among more than 100,000 members, and the Miao Jie app, which has boosted conversion rates by channelling department store activity for over half a million users.

    “I think of O2O as tapping into the other 90 per cent of retail sales that is not served via online shopping. Nine hundred million people have computers – smartphones – in their pockets so they are already enabled. Just need to supply them with services and payment options,” Tsang said.

    Some O2O strategies don’t involve physical infrastructure or retail premises. Baidu is focused on mobile marketing and services transactions, having invested in online travel agency Ctrip and transport provider Uber. It also targets high-frequency consumer transactions like food takeout and movie ticketing.

    Other players, like consumer electronics giant Gome and grocery retailer Sun Art, are taking a solo approach to combining physical retail and e-commerce. Future partnerships with those firms are possible, although smaller operators like Golden Eagle Retail Group, Wumart Stores or Lianhua Supermarket Holdings could be easier for the big three to swallow.

    “The pure O2O land grab is nearly over, with Meituan.com, Didi and even 58 Home spoken for. But might there might be more retailers or hypermarkets interested in cooperating,” Tsang said.

  • China’s growing upper middle class to drive consumption by 2020

    China’s growing upper middle class to drive consumption by 2020

    The dramatic rise of China’s upper middle class and affluent families is expected to become a major driver for domestic consumption, which will grow fast despite the nation’s sluggish economy.

    A report released by consulting firm BCG and AliResearch, the research arm of China’s largest e-commerce company Alibaba Group, said the combined number of upper-middle class households, whose annual disposable income ranges from US$24,000 to US$46,000, and affluent households, with disposable income over US$46,000, would double to 100 million by 2020.

    By then, they will account for 30 per cent of urban households, up from 17 per cent today and only 7 per cent five years ago.

    “During the past few decades, China’s consumer economy has been powered by the ascent of hundreds of millions of people from poverty to an emerging middle class,” said Kuo Youchi, a principal with BCG Greater China who helped draft the report.

    “But China is entering a new era. The real driver for the future will be upper-middle class and affluent shoppers.”

    The report projects that affluent and upper-middle class consumers will account for 55 per cent of China’s urban consumption and 81 per cent of its incremental growth by 2020.

    Compared to tier-one cities like Beijing, Shanghai and Guangzhou, smaller mainland cities would see faster growth in the number of well-off shoppers. Half of the upper middle class and affluent households to emerge during the coming five years were likely to be in fourth-tier or even smaller cities, it said.

    China’s economy has been undergoing a structural transformation while its gross domestic product growth has cooled in recent years. The government hopes domestic consumption willoffset the sluggish export and investment sectors.

    The report is bullish about China’s consumption market, predicting it to grow 9 per cent annually to US$6.5 trillion by 2020, outpacing GDP growth which is expected to remain at around 6.5 per cent over the next five years.

    In addition to an increase in wealthier consumers, another force to boost consumption is from the younger generation of shoppers who were born in 1980s and 1990s.

    A separate BCG survey found that 42 per cent of Chinese aged 18 to 25 disagreed with the statement, “I feel I have enough things and feel less need to buy new ones”. That compared to 36 per cent in the US and European Union and 32 per cent in Japan.

    Meanwhile, e-commerce, as a more important retail channel in China, will also help stimulate demand and is expected to account for 42 per cent of growth in private consumption.

    Alibaba recently announced plans to buy the South China Morning Post and all other media assets owned by the SCMP Group.

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  • Lessons of e-commerce explosion in China

    Lessons of e-commerce explosion in China

    The second World Internet Conference (WIC), also known as the Wuzhen Summit, will take place Dec 16 -18, in Wuzhen, Zhejiang. Chinese President Xi Jinping will attend the conference and address the opening ceremony. It takes place amid dramatic expansion of Chinese e-commerce, thanks to great market potential and the government’s supportive policies.

    In early spring, the State Council, China’s cabinet, announced it will boost e-commerce by cutting red tape and liberalizing investment regulation in the sector. Meanwhile, Premier Li Keqiang said that with the “Internet Plus” strategy China would back e-commerce development and guide the Chinese internet companies’ international expansion.

    In the mainland, e-commerce and other internet-based industries are supporting and accelerating the rebalancing of the Chinese economy toward consumption and innovation.

    In early November, transactions on the Singles Day — the Chinese version of the Valentine’s Day — morphed into a huge shopping extravaganza as the mainland consumers’ buying spree caused sales to soar almost 60 percent from last year. Although Alibaba, the e-commerce giant, started the online festival only seven years ago, its total sales alone climbed to 92 billion yuan (US$14.3 billion).

    To put the figure into an international perspective, it is more than quadruple the US earnings last year from its Black Friday and Cyber Monday sales events combined. Not surprisingly, Alibaba’s founder Jack Ma believes that Singles Day will go global.

    “In the next five years, I believe it may be in Tokyo, Paris or New York,” the e-commerce entrepreneur said.

    Chinese e-commerce is driven by heavy online buyers, younger demographics, and consumers in the relatively wealthier first-tier cities – although relative growth is even faster in many lower-tier cities and rural areas.

    These internet-based industries fuel the government’s 13th five-year plan that was officially outlined a month ago. Until recently, Chinese growth relied on investment and net exports, but that era ended with the global financial crisis. The new objective is to rebalance the Chinese economy toward consumption.

    Threat to traditional retailers

    Not everybody has benefited from Chinese e-commerce explosion, however. As the record sales on Single’s Day showed, online retailing poses an increasing threat to those brick-and-mortar retailers that continue to stay mainly offline.

    For the leading department store operators in China, online retailing remains limited and sales growth is weak. While Intime Retail may be best positioned to benefit from online retailing – not least because of its strategic cooperation with Alibaba – several other companies, including Golden Eagle Retail, Parkson Retail and Maoye International Holdings are only getting into the game.

    Golden Eagle and Maoye have collaborated with Tencent through the WeChat social platform, whereas Parkson has introduced an online shopping site.

    The explosion of Chinese e-commerce has caught off guard not just domestic retail leaders but international industry giants. Initially, these Western giants attributed their losses to China’s growth slowdown and the pullback by shoppers, which presumably accounted for their shrinking profit margins.

    However, the rapid explosion of e-commerce and the rising share of consumption in the Chinese economy cast doubt over such interpretations. Most importantly, a closer look at retailing trends in China suggests that it is not Chinese consumers or Chinese economy that accounts for the losses of these international industry giants – but competition.

    The famed Unilever, for instance, saw its sales fall off the cliff because it failed to go online fast enough. In June, Swiss food giant Nestle acknowledged that it failed to understand how retail was changing in China. The failure to move quickly and broadly into online retailing proved costly: the company had to burn instant coffee it could not sell in stores.

    The same goes for Colgate-Palmolive and Germany’s Beiersdorf, which have been suffering from offline overstocking, even as new online retailers have reaped enormous earnings.

    Intriguingly, some of these international giants have missed much of the Chinese e-commerce explosion, even though many have experienced two decades of e-commerce growth in the US, Europe and Japan. In these advanced economies, the e-commerce explosion took place differently, however.

    In the prosperous West, the Internet revolution initially relied on fixed-line personal computers and notebooks. In the emerging and developing East, such technologies remain relatively expensive. In these nations, the initial penetration has been fueled by mobile devices, particularly smartphones. In China, mobile drives retail sales growth and currently accounts for half of all e-commerce sales.

    The lessons are clear. First, business models that succeed in advanced economies may not work in emerging and developing economies. Second, advanced-economy lessons are vital but they must be adjusted to the Chinese business environment. Third, simple imitation of Western strategies does not ensure success in China. Only innovation can produce the desired results.

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  • Japanese e-retail leader Rakuten doubles its online sales in China

    Japanese e-retail leader Rakuten doubles its online sales in China

    Rakuten’s Q3 growth from China jumps 101%. The Tokyo-based company plans to open a store soon on Chinese marketplace JD.com. The falling value of the Japanese yen and China’s relaxed cross-border e-commerce policies have helped Rakuten Inc., Japan’s dominant online marketplace operator, double its web sales in China in the third quarter.

    Founded in 2007, Rakuten says it now sells about 150 million products from over 41,000 merchants on its Japanese online marketplace, Rakuten.jp.

    Rakuten operates localized sites in 13 countries, including Japan, the United States, the United Kingdom, Spain, Brazil, Germany, France, Austria, Singapore, Thailand, Malaysia, Indonesia and Taiwan. CEO Hiroshi Mikitani has pursued a global strategy that has included several e-retail acquisitions, such as of Buy.com in the U.S. and PriceMinister in France.

    Rakuten also operates the Rakuten Global Market, an online marketplace offering 1.2 million Japanese products from 10,000 merchants to consumers outside of Japan. China represents the fastest-growing country in terms of purchases on the Rakuten Global Market, the Rakuten spokesman says. “Our Q3 total cross-border trading showed 50% growth year on year,” he says. “Our Q3 growth from China showed a significant increase of 101%.”

    Japanese products have become much cheaper to Chinese consumers as the Japanese yen has depreciate about 30% over the last few year.

    In addition, China has relaxed its policies on online imports, making it easier for Chinese consumers to buy from foreign e-commerce sites. For example, the duty charged on small online purchases from abroad is lower than the tax charged on domestic purchases in China, and China has created free-trade zones in nine cities where parcels from overseas move through customs faster than before.

    Rakuten says Chinese consumers are particularly interested in unique and high-quality Japanese-made goods. “We will also continue to explore new avenues to empower Rakuten merchants in expanding their businesses in China.” the spokesman says.

    This week, Rakuten announced it will open an online store to sell Japanese products on the e-commerce site of Chinese e-retailer and marketplace operator JD.com, No. 1 in the Internet Retailer 2015 China 500.

    This is not the first time Rakuten has entered China. In 2010, Rakuten and Chinese search engine company Baidu created a joint venture to operate Rakuten.cn, aiming to sell products in China to Chinese consumers. After only 18 months, the site was closed by Rakuten in 2012, reflecting the fierce e-commerce competition in China.

    In April 2015, Rakuten also announced it had invested in a Chinese cash-back shopping site, Fanli.com, but did not disclose the investment amount.

    Rakuten is No. 20 in the Internet Retailer Asia 500. JD.com is No.1 in the Internet Retailer 2015 China 500. Rakuten is the leading online retail site in Japan, accounting for about 20% of web sales in 2014, according to Euromonitor International.

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  • DJI Opens Flagship Retail Store in Shenzhen

    DJI Opens Flagship Retail Store in Shenzhen

    DJI, the world leader in unmanned aerial vehicle technology opened its first flagship store today at OCT Harbour in Shenzhen. The 800-square-meter store will feature a full range of DJI’s consumer products and aims to let consumers see, touch and learn firsthand about the company’s innovative and creative platforms.

    “The DJI flagship experience is an important touchpoint to connect people with our cutting-edge technology and get a sneak peek into the future,” said Frank Wang, DJI Founder and CEO. “Whether you are curious to learn how to fly or a professional looking for the latest aerial imaging technology to create your next big idea, the flagship store will provide you with the opportunity to really experience the DJI brand up close and in person. More importantly, it will allow us to engage our customers in a deeper and more meaningful way.”

    On display and for sale will be DJI’s Phantom 3 series, the Inspire 1 and Spreading Wings series, Matrice 100, Guidance, the Ronin handheld three-axis camera gimbal line, as well as the company’s latest integrated stabilized 4K handheld camera, the Osmo.

    The flagship’s interior architecture is based on the concept of yuan, the Chinese word for “circular.” It is symbolic of DJI’s drone propellers, which form a circular shape when in motion. This concept can be seen in various places around the store, including the “SkyPixel Around the World” interactive installation, which is featured on a cylinder-shaped map in the shop’s center. The flagship store also features a theater, flight area, lounge area and repair counter.

    The OCT Harbour store features a stunning waterfront view and is surrounded by a vibrant culture of tourism, ecology and commerce.

    Highlights of the flagship store include:

    The DJI flagship store is located at the Shenzhen Tourist Information Center, OCT Harbour, East No.8, Baishi Road, Nanshan District, Shenzhen, China. Openings hours are Sun-Thu 10:00 – 22:00 and Fri-Sat 10:00 – 22:30.

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  • Apple Pay coming to China in 2016

    Apple Pay coming to China in 2016

    Apple and China UnionPay Thursday announced a partnership to bring Apple Pay to China in 2016. UnionPay cardholders will be able to add their bank cards to Apple Pay on iPhone, Apple Watch and iPad, according to a press release.

    Apple Pay will roll out to UnionPay cardholders as soon as early 2016 following relevant tests and certification required by Chinese regulators, with the service itself in compliance with the applicable national mobile payment and financial industry standards in China, according to the announcement.

    “China UnionPay is dedicated to promoting payment innovations and providing secure, convenient mobile payment experiences for its hundreds of millions of cardholders, aligning multiple parties in the industry,” said Chai Hongfeng, executive vice president of China UnionPay. “We’re very excited to offer Apple Pay among a diverse set of innovative payment options that work with China UnionPay QuickPass.”

    “Apple Pay has revolutionized the way millions of people pay every day with their iPhone, Apple Watch and iPad,” said Eddy Cue, Apple’s senior vice president of Internet software and services. “China is an extremely important market for Apple and with China UnionPay and support from 15 of China’s leading banks, users will soon have a convenient, private and secure payment experience.

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  • Vitality Air offers packaged fresh-air to China

    Vitality Air offers packaged fresh-air to China

    Fresh air reaches at a price for individuals in China. People are buying fresh air from North American manufacturer since air-pullution is major issue in the Chinese capital.

    Beijing has been warned as the city has encountered the worst smog of the year. Exploiting this situation, Vitality Air, a Canadian firm, is transporting packaged fresh air in canisters to China.

    Moses Lam, the co-founder of Vitality Air, set up a bottle for sale on an e-commerce site, eBay around two months ago as a prank. Presently, that prank has turned into a lucrative business as the organization is offering a container of air at an expense as high as 20 dollars for every 7.7 litre jar of Rocky Mountain fresh air, which is 50 times more costlier than packaged mineral water in China.

    Some facts on Chinese air pollution includes:

    1.One in each five deaths in China is because of air pollution.

    1. Industrial pollution affects 1.6 million lives across China, especially around Beijing, every year.
    2. On December 8, the smog level inclined beyond 300 AQI (Air Quality Index), which is considered as ‘extremely horrible’.
    3. The Chinese government declared red-alert on December 10 as the pollution level is recorded 500 AQI, which is termed as “hazardous” as per the US Embassy.
    4. Around 2000 kilometre of East China, encompassing cities such as Beijing, Zhengzhou, Nanjing, Changchun and Xian was covered with a blanket of heavy smog.
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  • Costa Coffee unveils new concept

    Costa Coffee unveils new concept

    The UK’s largest coffee chain Costa Coffee has opened a new concept, Costa Fresco.

    A food-centric store, the first outlet has opened in central London, selling porridge, pastries, salads, quiches and cakes, as well as coffee.

    Costa says if the concept is a success it will open more across the UK.

    “We really want to bring something different to the food market in London,” said Carol Welch, Costa’s global director of brand & innovation.

    “The store will be similar to the traditional Costa stores, but will have much more of a food focus. All pastries, cakes and bread will be baked on site – our customers are telling us they want more, good quality food.”

    Costa, part of Whitbred for the last 20 years, has 1582 stores in the UK and more in overseas locations, including Asia.

    The move into food is in part an attempt to stand out from rival coffee chains like Starbucks, adding a point of difference to attract customers.

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  • M&S opens new store in China

    M&S opens new store in China

    Marks and Spencer has opened its first store in Beijing. In 2014 the high street stalwart earmarked China, Russia, India, the Middle East and Western Europe for international expansion. Chief Exec Marc Bolland cited plans to open 250 new stores overseas in three years. The aim was to boost international sales by a quarter and increase profit up by 40%.

    Patrick Bousquet-Chavanne, M&S’s Executive Director of Marketing & International, told Reuters the company was still committed to both Russia and China but that those overseas targets were now unattainable. The plans changed.

    “We’re looking at places which are very much ‘tier 1’… where you have an upper middle class consumer base… where we will do well even in the context of a slowdown in the economy,” Bousquet-Chavanne said in September.

    The new store in Beijing follows a change in company policy which outlines the closure of stores in ‘secondary cities’ across China, and a focus on flagship stores in major cities instead.

    The 1,500 sq m store opened at The Place shopping centre, and will sell selected food and drink as well as M&S clothing.

    Although this will be its first venture into Beijing, M&S has 10 stores in the Shanghai region and 20 in Hong Kong. Its empire covers over 1,300 stores, 852 of which are in the UK.

  • Lululemon needs “to work harder”

    Lululemon needs “to work harder”

    Lululemon’s third quarter sales performance – measured on a total basis – was solid with total company revenues up by 14 per cent.

    This was mostly driven by the addition of 52 new stores, with the extra 142,000 sqft of selling space making a good contribution to the top line numbers.

    However, more worryingly the growth contribution from existing physical stores was nonexistent, and while the contribution from direct sales looks reasonable the growth rate is somewhat down on previous quarters.

    As with other retailers, the strong dollar is partly to blame for this lacklustre outcome; indeed, on a constant dollar basis total comparable sales were up by six per cent, with same store physical growth also up by six per cent. That noted, even with exchange rate fluctuations removed, growth is noticeably slower which, points to a much wider set of issues.

    Foremost among these is the rise in competition from both specialist and generalist players. While Lululemon has a following of dedicated fans it also relies on more occasional purchases from those who are somewhat less loyal to the brand, and it is here that the company has lost traction over the course of this quarter. Although arguably Lululemon still has a distinct and well positioned brand, there is no doubt that a more crowded playing field has made growth much harder to come by.

    The impact of the more competitive arena is further exacerbated by the company’s own push into direct selling. While this has been a great success, with online now accounting for 18.6 per cent of all revenue, it has also cannibalised some trade from stores and, with higher fulfilment costs, has been slightly margin dilutive.

    The problem with all of these dynamics is evident in the bottom line performance. Notably, Lululemon’s net income for the quarter fell by a fairly sharp 12.1 per cent and operating income was down by a shade under 16 per cent. Understandably, some of this can be attributed to the higher investment costs as new space opens, but most of it is down to the deterioration in the productivity of the existing operation.

    One of the solutions to the current squeeze is arguably greater product innovation which would stimulate customers into buying new product and allow Lululemon to ease up prices. However, while some movement on this front is apparent, Lululemon has lost much of its edge, and in comparison to a player like Under Armour its product development looks positively glacial.

    In light of the relative lack of innovation it is discouraging to see the recent attempt to hike some prices, which is something the market will not likely bear given current competitive conditions. It also had the effect of upsetting loyal customers who saw little justification for the increases and therefore viewed them as being unreasonable. Given the current struggle for growth, alienating core consumers is arguably the last thing that Lululemon should be doing.

    Despite the challenges, the one area of opportunity is the push into more embryonic areas like mens and teens. However, while Lululemon has made some good progress, the brand still has a somewhat limited appeal to many of these constituencies, mainly because it is strongly associated with its heritage of female fitness. Certainly, it is proving much more difficult for Lululemon to move into mens than it is for Under Armour to move into womens.

    Despite the challenges, the tailwinds provided by continued interest in athletics and fitness – which shows no signs of slowing down – will likely to help cushion Lululemon’s problems. However, the company now needs to work much harder if it is to keep in good shape in what is now a much more competitive market.

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  • Le Saunda sales slip

    Le Saunda sales slip

    Footwear retailer Le Saunda says same store sales in its own stores slipped eight per cent in the third quarter.

    But the company’s online turnover soared 26.7 per cent reflecting rising popularity of online shopping across Greater China.

    Total sales declined 6.1 per cent year on year.

    As at the end of November Le Saunda had 897 retail outlets in Mainland China, Hong

    Kong and Macau – 13 more than at the same time last year. These included 789 self-owned outlets in Mainland China, Hong Kong and Macau and 108 franchised outlets in Mainland China.

    Le Saunda has only released unaudited operational data for its retail business at this stage, not detailed financial data.

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  • Retail Sales Surge in China: Analysts Believe Domestic Demand Supporting Growth

    Retail Sales Surge in China: Analysts Believe Domestic Demand Supporting Growth

    In some positive news for the Chinese economy, it was reported today that retail sales in China rose unexpectedly last month. According to a report released by the National Bureau of Statistics of China, it was reported today that Chinese retail sales rose to an annual rate of 11.2 percent as compared to a reading of 11.0 percent in the preceding month. Analysts on the street had expected Chinese retail sales to rise to 11.1 percent last month. Retail sales are a closely watched gauge as it provides an insight into the inherent domestic demand.

    In other economic reports, it was reported industrial production in China rose unexpectedly last month. According to a report released by the National Bureau of Statistics of China, it was stated that Industrial Production rose to 6.2 percent as compared to a reading of 5.6 percent in the preceding month. Analysts on the street had expected the Chinese Industrial Production to come in unchanged at 5.6 percent last month. The sharp fall in commodity prices and plunge in global demand has meant that the industrial production in the world’s second largest economy continues to remain weak at the current moment.

    The report comes on the back of a report which showed that China’s urban fixed asset investment remained unchanged unexpectedly last month. According to a report released by the National Bureau of Statistics of China, it was reported that Chinese Fixed Asset Investment remained unchanged at a seasonally adjusted 10.2 percent as compared to a reading of 10.2 percent in the previous month. Analysts on the street had expected Chinese Fixed Asset investment to fall to 10.1 percent last month. Many analysts believe that the report is a clear indication that growth in the Chinese economy continues to remain subdued which is a huge cause for concern for economists and investors.