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Tag: China

  • JD increases stake in Tiki Vietnam

    JD increases stake in Tiki Vietnam

    Chinese online giant JD has become the largest shareholder in e-commerce platform Tiki Vietnam.

    JD has bought a 25.65-per-cent stake in the business, taking its shareholding past that of previous leading investor VNG Corporation, which holds 24.4-per-cent ownership in the platform. VNG has invested US$22.4 million in Tiki over the past two years.

    Tiki Vietnam has grown from an online bookstore to Vietnam’s second-largest e-commerce provider in terms of traffic, after rival Shopee.

    The firm is reportedly seeking a $100 million investment in its next funding round in order to boost its competitive edge.

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  • Fung Group sells Circle K retail network

    Fung Group sells Circle K retail network

    Fung Group has sold its Guangzhou Circle K-store network to Chinese retailer Suning for an undisclosed sum.

    Facing intense competition in the mainland convenience-store market, the network of 61 outlets has failed to make a profit since the brand’s launch there in 2002. The Guangzhou Circle K business recorded a net loss of HK$21.4 million in 2014 before then parent Convenience Retail Asia sold the business to its 41-per-cent shareholder Fung Group the following year for $48 million (US$6.12 million). Since then, Fung Group has closed at least 12 stores there.

    Suning Xiaodian, Suning.com’s convenience-store business, will take over the Guangzhou Circle K stores, broadening its footprint in the city.

    Convenience Retail Asia continues to own and operate more than 300 Circle K stores in Hong Kong, Macau, and Zhuhai.

    The president of Suning’s consumer-goods business, Bian Nong, said Circle K’s experience in merchandising, supply chain and store management will supplement Suning’s existing operations in Guangzhou.

    Suning has been rapidly expanding its brick-and-mortar store business in recent months, acquiring supermarkets from Carrefour and the Chinese business of Spanish grocer Distribuidora Internacional de Alimentacion.

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  • Huawei Battling for Chinese consumers

    Huawei Battling for Chinese consumers

    When 23-year-old Chinese student Aaron Huang started his hunt for an Android replacement for his Apple iPhone in April this year, it was clear which brand was trying hardest to win him over.

    Promotional campaigns by Huawei Technologies and from local retailers supporting the brand were everywhere, said Huang, adding he was influenced by domestic media coverage that portrayed the US as unfairly targeting the Chinese tech giant in its trade war.

    “I felt like I should choose Huawei,” he said.

    The advertising blitz and grassroots patriotism have proven to be a potent mix, amplifying the brand’s existing broad appeal in its home market – a market it is increasingly dependent on as Washington’s ban on sales of US components and software to Huawei hammers overseas demand.

    Second-quarter China smartphone shipments for Huawei surged by a nearly a third from the same period a year earlier, with its market share rocketing 10.6 percentage points to a record 38 percent, according to research firm Canalys. Shipments for domestic rivals and Apple plummeted.

    Huawei has lifted its China sales target for its consumer business group, said a company source, who was not authorised to speak on the matter and declined to be identified.

    Within Huawei, employees refer to current strategies as ‘Battle Mode’ and it has stepped up the opening of new stores including Experience Centers in the style of Apple shops, other company sources said. One Experience Center near its South China headquarters opened last month while a bigger one in Shenzhen’s tech district of Nanshan will open next month.

    Analysts say Huawei has also been transferring unsold smartphone stock from other regions to China and even offering some rare discounting in its home and overseas markets as it seeks to offset sales declines in Europe and the US.

    Huawei declined to comment on its strategies for marketing and managing inventories, or its China sales target. It reiterated an earlier statement that it was not trying to trade on patriotic fervor.

    Lotteries and bullfrogs

    Sales promotions have included interest-free installment payment plans and lotteries for its premium P30 and Mate series. Analysts add that products from its three brands – Huawei, Nova, and Honor – outnumber those from rivals in every market segment.

    Firms like Chinese electronics retailer Gome and small businesses have been eager to lend a hand, linking Huawei phones with patriotic support.

    Fang Xia, a 38-year-old restaurant owner in Shanghai, said she was motivated by recent coverage of Huawei’s dispute with the US to offer her customers a special deal.

    “Tables that have four or more people with Huawei smartphones will get one free plate of Emperor Bullfrog,” proclaims an advertisement for her restaurant’s signature 88 yuan ($12.50) deep-fried frog dish.

    Huawei’s overseas smartphone sales tumbled 28 percent in the second quarter from the previous quarter, Canalys data showed, but the full impact of the ban is not yet known.

    Warning that Huawei products could be a vehicle for Chinese espionage, the Trump administration now requires that US corporations which conduct business with Huawei gain a special license to do so. US government responses to requests for those licenses could come this week, US Commerce Secretary Wilbur Ross said last Tuesday.

    In other measures to counter the ban which could strip its access to Google’s Android, Huawei is accelerating efforts to develop its own operating system called Hongmeng. It is looking to roll out a low-end smartphone equipped with Hongmeng in the fourth quarter, state-media outlet Global Times reported on Sunday.

    Huawei declined to comment. It has previously said Hongmeng is designed for internet-of-things products and it prefers Android for its smartphones.

    Even before the US ban, Huawei had been making big strides in China, moving upmarket into the $500-800 price range and luring customers away from the likes of Apple with improved camera quality.

    “In any segment, it has several options for consumers, that is more than any other brand has to offer,” said Canalys analyst Mo Jia, describing Huawei’s strategy as one of “bombardment”.

    Rivals are hurting. Xiaomi saw its second-quarter China shipments tumble 20 per cent from the same period a year earlier, Vivo’s slid 19 per cent while Oppo’s dropped 18 per cent. Apple’s shipments fell 14 per cent, and analysts and Chinese consumers say the US firm could be hit further amid an intensifying US-China trade war.

    Xiaomi, Apple, Oppo and Vivo declined to comment.

    While Huawei has managed a huge boost in its home market, analysts said China sales may not always stay unscathed as it could struggle to replace US components and software.

    “Without the original supply chain, we may see its speed of development start to slow down,” said James Yan, research director at Counterpoint Research.

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  • Nomura Shares China Brokerage JV Strategy

    Nomura Shares China Brokerage JV Strategy

    Following the relaxation of foreign ownership limits in China, Nomura will seek to launch its joint venture operation in China within 2019 and shares its strategy and view on the market.

    According to Nomura Securities, its new 51 percent-owned joint venture will initially focus on the wealth management business before gradually expanding into other areas such as IPO underwriting, equity and fixed income, M&A and asset management.

    Although we start with wealth management first, that is not our goal. Our goal is to provide wider financial services, said Iiyama Toshiyasu, executive vice-president of Nomura Securities and chairman of its China committee, in a recent report.

    We understand that one business model is not sustainable. We have to combine different areas of business.

    We will start everything from the scratch, Iiyama said, referencing the recent loosening of ownership caps in domestic financial institutions. «China’s opening of the financial sector makes us more confident about what we can do in China and what we can contribute to this market.»

    Iiyama reiterates the importance for foreign financial institutions to focus on importing their unique strengths. In addition to the brokerage JV, Nomura has also gained license as a wholly foreign-owned private fund manager to raise onshore funds and invest in A-shares.

    I believe many international banks will follow suit, Iiyama said. They have their own strength and they will bring that into the Chinese market, which will further broaden and deepen the Chinese market and benefit the Chinese investors and corporations.

  • Levi Strauss ‘deliberate’ in moving production away from China

    Levi Strauss ‘deliberate’ in moving production away from China

    Levi Strauss & Co has been “deliberate and diligent” in moving production out of China because of uncertainty hanging over tariffs on goods imported from China, CEO Chip Bergh has told Reuters in an interview.

    Just 1 percent or 2 percent of Levi’s product sold in the US are manufactured in China, Bergh said, compared to 16 percent two years ago. Bergh was speaking one day before President Donald Trump said he would impose tariffs on another US$300 billion of Chinese goods, including apparel.

    Trump has used tariffs as a tool to negotiate better trade terms, saying bad deals cost millions of US jobs. Along with apparel, the new tariffs hit consumer goods such as electronics and toys and come in addition to those already imposed on $250 billion of other goods imported from China.

    The on-again, off-again nature of the US tariffs on Chinese goods had created uncertainty for many US retailers, Bergh said.

    “Every day is a new day,” he said. “Sometimes it looks like it’s definitely going to happen and then other days you think it’s off, it’s not going to happen.”

    San Francisco-based Levi’s, which returned to the public markets in March, is part of a wave of retailers that have been shifting supply chains out of China to countries such as Vietnam and Bangladesh. The trend was initially in response to higher Chinese wages but the exodus is expected to be accelerated by the new tariffs, which Trump said will go into effect September 1.

    They are expected to increase consumers’ costs and have an impact across the entire retail industry.

    Apparel retailers like Gap Inc, shoes and accessories brand Steve Madden and department store Macy’s have also acted to move production out of China.

    However, China still is a big supplier to the industry with 42 percent of apparel and 69 percent of footwear sold in the US made in China, according to the American Apparel and Footwear Association.

    Following the latest tariff news, several large retail trade groups warned the levied tariffs will hurt consumer purchases, raise prices and limit hiring.

    Levi’s has two of its own factories in Poland and South Africa but mostly uses third-party vendors or suppliers spread across 22 different countries, said Bergh, who joined the company in September 2011.

    “We’ve narrowed down our supplier base during the time that I’ve been here to really develop deeper, more strategic relationships with many of our suppliers,” he said.

    Many of Levi’s suppliers in China are publicly traded companies that have multi-country footprints, said Bergh, that have diversified risk by building factories in places like Vietnam and Cambodia.

    Levi’s also has put contingency plans in place “not just for China but also for Mexico in the event that NAFTA gets ripped up in a moment of rage or something,” Bergh said.

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  • Singapore supermarket operator Sheng Siong reports profit boost

    Singapore supermarket operator Sheng Siong reports profit boost

    Singapore supermarket operator Sheng Siong boosted its net profit by 7.4 percent in the June quarter, to S$18.42 million.

    Sales rose 11.8 percent to $238.16 million on the back of 13 new store openings.

    However, the company has warned investors that competition in the Singapore supermarket sector is tough, from both online retailers and rival supermarket chains. Worse, consumer spending may be impacted by a soft economic outlook.

    In the half-year to date, Sheng Siong recorded a 6.6 percent increase in net profit to $37.78 million, on sales up 11 percent to $489.59 million.

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  • New Dunhill store opens in Hong Kong

    New Dunhill store opens in Hong Kong

    A new Hong Kong Dunhill store has opened at Lee Gardens as a further step in the brand’s global expansion strategy in Asia.

    The store’s designers have engineered a bright and contemporary space with marble and walnut wood in counterpoint with glass and metal details, used as recognisable codes of the house.

    The use of grey marble takes inspiration from the facade of Dunhill’s 1950s South Rodeo Drive store, while walnut burl cabinets, housing men’s accessories, are inspired by the original furniture from London’s Duke Street and Paris’ Rue de la Paix stores. Fluted glass and metal details together with brown wood panelling recall the textures and finishes of classic Rollagas lighters.

    Featuring a curated selection of luxury pieces by creative director Mark Weston, the Hong Kong Dunhill store is showcasing ready-to-wear garments alongside leather goods and accessories.

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  • Starbucks China sales and transaction volume grows

    Starbucks China sales and transaction volume grows

    Starbucks China sales growth out-paced the rest of Asia in the third quarter, up 6 per cent on a same-store basis and 2 per cent by transaction volume.

    But the coffee giant appears to be getting the most traction from its home market, where sales grew 7 per cent in the 13 weeks to June 30, the average ticket price was up by 4 per cent and the number of transactions rose 3 per cent.

    “Starbucks continues to be focused and disciplined in the execution of our three key strategic priorities that we established last year: accelerating growth in the US and China, expanding the global reach of the Starbucks brand through our Global Coffee Alliance with Nestle, and increasing shareholder returns,” said Kevin Johnson, president and CEO, referring to the Growth at Scale program.

    The company opened 442 net new stores in the quarter, with nearly one third of those in China and 48 per cent in other international markets outside the US. It ended the period with 30,626 stores worldwide, 7 per cent more than a year earlier.

    Johnson said Starbucks delivered strong operating performance demonstrating the success of the Growth at Scale agenda.

    “Our two targeted long-term growth markets, the US and China, performed extremely well across a number of measures as a result of our focus on enhancing the customer experience, driving new beverage innovation and accelerating the expansion of our digital customer relationships. Given the strong momentum across our business, we are raising our full-year financial outlook.

    “With our efforts to streamline the company and elevate the Starbucks brand, we are positioning the company to deliver predictable and sustainable operating results while building an enduring company that creates meaningful long-term value for Starbucks shareholders,” he concluded.

    Global comparable store sales increased 6 per cent, driven by a 3 per cent increase in average ticket and a 3 per cent increase in comparable transactions.

  • Tory Burch opens store on Tmall Luxury Pavilion

    Tory Burch opens store on Tmall Luxury Pavilion

    American fashion brand Tory Burch has opened a flagship store on Tmall Luxury Pavilion, Alibaba Group’s dedicated channel for luxury and premium goods.

    Chinese consumers can now find Tory Burch’s clothing, shoes, bags, accessories and watch collections on the Pavilion – the label’s first third-party e-commerce store in the country, it said in a statement.

    To mark the opening, the brand exclusively debuted seven items on the platform, including its Katya Tunic Dress, Ella Printed Logo Tote and Poppy Canvas Espadrille, as well as products from its Chinese Valentine’s Day capsule collection. The capsule includes four handbags, a card case and the brand’s signature ballet flats in pink and red.

    Tory Burch also released an interactive tool for consumers to share their sentiments with one another on the romantic holiday, which falls on August 7 this year. Using the augmented reality-powered “AR Buy+” function on Mobile Taobao, consumers can scan any heart-shape in their surroundings to access a special page that allows them to send personalized letters to their loved ones. Meanwhile, from July 26 to August 9, the fashion brand will launch a Chinese Valentine’s Day-themed pop-up installation in China’s northern Harbin city.

    “To have an iconic brand like Tory Burch join Tmall is a testament to the platform’s ability to attract and engage with the 700 million-plus consumers on our platforms for premium fashion and lifestyle brands from around the world,” said Jessica Liu, GM of Tmall Fashion and Luxury. “We look forward to partnering with them closely to bring special products and creative activations to Chinese consumers.”

    The flagship opening comes as Tory Burch expands its retail footprint across the country. The brand now operates 34 stores in China, including five new boutiques launched this year, including in Guangzhou, Hangzhou, Nanning and Chengdu.

    Launched in 2017, Tmall Luxury Pavilion now offers more than 115 brands, ranging from apparel and beauty items to watches and luxury cars, including Chanel, Bottega Veneta, Valentino, Alexander McQueen, Burberry, Tod’s, Versace, Stella McCartney, Marni, Moschino, Gentle Monster, Michael Kors, MCM, Breitling, Maserati, LVMH-owned Rimowa, Guerlain, Givenchy, Tag Heuer and Zenith. Tmall said it wants to double that number by next March.

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  • Jack Ma’s Online Bank Changes China’s SME Lending Space

    Jack Ma’s Online Bank Changes China’s SME Lending Space

    Unlike traditional banks which could take days to approve loan applications, Jack Ma’s online bank usually takes a few minutes. At Jack Ma’s MYbank operating in China, borrowers only need a few taps on their smartphones to receive cash almost instantly, if they are approved. The whole process takes three minutes and involves zero human bankers. Using real-time payments data and a risk-management system, Ma’s four-year-old MYbank has dished out 2 trillion yuan (S$398 billion) in loans to nearly 16 million small companies.

    Small and medium enterprises are really the boiler room of the economy, said Keith Pogson, a senior executive in charge of banking and capital markets at Ernst & Young LLP in Hong Kong. It used to be a segment that banks thought was too difficult and too risky. But now they run their model and work out what the risks are so they feel more comfortable, said Pogson.

    MYbank and its peers are getting more comfortable with smaller borrowers previously shunned by traditional banks because of their ability to analyze stacks of data from payment systems, social media, and other sources. The default rate at MYbank is only about one percent.

    One unique source of information for lenders in China – the government-administered social credit system. It is being tested in cities across the country as a way to reward good borrowers and punish misbehaving ones.

    Another big advantage that lenders have in China, is the relaxed stance towards privacy versus other jurisdictions; lenders or app developers can get data of borrowers much more easily. Hence, big payments provider such as the one operated by Ma’s Ant Financial, the biggest shareholder of MYbank, can get their hands on huge reams of personal data.

    Once authorizations from borrowers are obtained, MYbank analyses real-time transactions to gain insights into creditworthiness. For example, a drop in customer payments at a retailer’s flagship store might be an early indicator that the company’s prospects are deteriorating.

    As a result, the loan approval rate at MYbank is four times higher than at traditional lenders, which typically reject 80 percent of small-business loan requests and take at least 30 days to process applications, according to MYbank president Jin Xiaolong. The Hangzhou-based firm’s operating cost per loan is about three yuan, versus 2,000 yuan at traditional rivals.

    MYbank, which earned 670 million yuan last year, is far from the only lender using technology to boost small-business lending. Units of Tencent Holdings and Ping An Insurance Group both have similar offerings, while state-owned China Construction Bank Corp is dramatically ramping up its presence in the space.

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  • Yum China speeding up expansion plans

    Yum China speeding up expansion plans

    Yum China plans to invest up to US$525 million opening between 800 and 850 new stores in the current financial year.

    Most of the new stores will be KFC outlets and of its new cafe chain Coffii & Joy.

    The protections were included in the company’s second-quarter results released overnight, which showed total system sales up 10 percent year on year to US$2.12 billion, with KFC leading the way at 12 percent. Sales at Pizza Hut rose by 4 percent.

    While sales were up, much of the growth was driven by network expansion. Same-store sales grew 4 percent, with a 5-per-cent increase at KFC and a 1-per-cent increase at Pizza Hut.

    Restaurant margin slipped from 15.1 percent to 14.7 percent, however, operating profit rose 6 percent from $193 million to $204 million.

    Net Income increased 24 percent from $143 million to $178 million, primarily due to the increased operating profit and a gain from the company’s equity investment in Meituan Dianping.

    During the quarter, Yum China opened 178 new restaurants taking its store count to 8751 across more than 1300 cities.

    “We continued to capitalise on market opportunities across China with aggressive, KFC-led store expansion,” said Yum China CFO Jacky Lo. “With a strong cash payback period for new KFC stores and many untapped opportunities, we intend to continue to rapidly expand our store footprint in the second half of the year.

    “Looking forward, we expect overall sales growth to moderate as KFC begins to lap several key sales drivers, including successful value campaigns that we initiated in the second half of last year. However, we remain confident that our strong foundation and commitment to innovation throughout our business will power continued growth for Yum China. We will continue to create new and exciting menu items, and leverage our leadership in digital, data and delivery to meet the evolving needs of our consumers.”

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  • JD takes stake in Beijing Digital Telecom

    JD takes stake in Beijing Digital Telecom

    Chinese online retail platform JD is acquiring 9 percent of Beijing Digital Telecom.

    The consumer electronics retailer, which operates from around 3000 physical stores throughout China selling predominantly phones and computers, will expand JD’s offline presence within the market, including lower-tier cities.

    The transaction value has not been disclosed, as it falls below the amount that requires public notification under US Securities and Exchanges Commission regulations.

    At the same time, Beijing Digital Telecom is entering a joint venture with a network-technologies developer and provider Suqian Jiashi, which is wholly owned by JD. The firm is investing RMB191 million (US$28.5 million) for a 49 percent stake, while Suqian Jiashi is putting in RMB 204 million ($29.6 million).

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  • Lagardere travel business post strong growth driven by China

    Lagardere travel business post strong growth driven by China

    French-headquartered Lagardere says its travel retail business achieved a 15.8-per-cent increase in consolidated sales in the first half-year.

    Like-for-like sales were up 6.5 percent, the difference attributable to a €134 million positive impact resulting from the acquisition of HBF and of Smullers in the Netherlands, and to a €26 million positive foreign exchange impact.

    Earnings before interest and tax for the travel retail division rose 12 percent to €46 million.

    In the Asia-Pacific region, sales grew 6.5 percent, largely driven by organic growth in China.

    Consolidated group revenue, incorporating the company’ publishing, sports and entertainment business activities, grew by 6.7 per cent on a like-for-like basis, to €3.612 billion.

    Group recurring earnings before tax and interest came in at €153 million for first-half, up from €139 million a year earlier, owing mainly to business growth at Lagardere Travel Retail and a busy sporting calendar for Lagardere Sports and Entertainment.

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  • Alibaba targets 30 million US SMEs

    Alibaba targets 30 million US SMEs

    Alibaba has opened its platform to enable US businesses to sell their products to millions of Alibaba.com buyers in the US and around the globe.

    The nearly 30 million small and medium-sized businesses in the US – especially manufacturers, wholesalers, and distributors – can now better access the US$23.9 trillion global B2B e-commerce market, an opportunity that is six times larger than the global B2C e-commerce market.

    Alibaba is also co-producing a series of “Build Up” workshops and webinars with local chambers of commerce and B2B organizations across the country – including Score, one of the nation’s largest non-profit networks of volunteer, expert business mentors.

    “Alibaba aims to empower entrepreneurs and help them succeed on their own terms,” said Alibaba Group’s head of North America B2B John Caplan. “With 10 million active business buyers in over 190 countries and regions, we are reshaping B2B commerce by providing the tools and services needed for US SMB companies to compete and succeed in today’s global marketplace.”

    “Alibaba’s announcement to welcome US sellers onto its B2B marketplace shows the Chinese retail giant’s desire to diversify its product offering,” said Emarketer principal analyst Jillian Ryan.

    “Currently, about 90 percent of the goods sold on the marketplace are from factories in China that are often manufacturing custom goods-to-order for buyers across the globe. Buyers on the platform are from developed nations like the US, Canada, India, Australia, Brazil, and the UK, and these buyers want to be able to source goods from the US.”

    As part of its extended services, Alibaba has streamlined the ability to build and manage a single digital store on the global Alibaba.com platform; added valuable transaction capabilities, including online payment; built CRM and communications tools to facilitate the direct ownership of customer relationships; enhanced digital marketing tools to target any appropriate B2B demand; and provided an option to work with Alibaba.com’s US-based Seller Success team.

  • Popeyes China planning over 1500 restaurants openings

    Popeyes China planning over 1500 restaurants openings

    Popeyes Louisiana Kitchen is set to develop and open more than 1500 Popeyes restaurants in Mainland China over the next 10 years.

    Popeyes China will be the last of Restaurant Brands International’s three major brands to enter the Chinese market. Burger King has operated in the territory since 2005, and it now has more than 1000 locations in China.

    “We’re very excited to grow the Popeyes brand in the Chinese market,” said Restaurant Brands International COO Josh Kobza. “We look forward to bringing our great tasting chicken, biscuits, sides and beautiful new restaurants to our guests in China with our partner, TFI TAB Food Investments.”

    Popeyes operates more than 3100 locations in more than 25 countries worldwide, including the United States and Canada. The commencement of Popeyes China operations is subject to regulatory clearances.