Tag: competition

  • Taxis claim unfair competition

    Taxis claim unfair competition

    Ta Long Hy, chairman of HCM City Taxi Association, told a conference on Thursday that the taxi market has seen unfair competition between traditional firms and foreign companies with strong financial potential and state-of-the-art technologies.

    Hy said the number of licenced traditional taxis with less than nine seats in HCM was reduced from 20,000 in 2010 to 11,000 this year. The rapid development of Uber and Grab has quickly narrowed the traditional taxi market share, hurting cabs in their own playground due to decreasing number of passengers and incomes.

    Tax policies are also causing concern for traditional taxi firms, including a 10 per cent value added tax and 20 per cent corporate income tax. “The Ministry of Finance (MoF) levies 3 per cent VAT for Uber. We urge authorities to impose a common tax policy for both traditional and tech-based taxis of 5 per cent,” he said.

    Do Quoc Binh, chairman of Ha Noi Taxi Association, said taxi companies are bound by strict business conditions regarding parking areas, registration licences, logos, price lists, uniform and price registration, while Grab and Uber are not subject to any conditions.

    “The Government’s policies seem to be tightening the operation of traditional taxis while loosening management of Grab and Uber,” Binh said.

    He said Uber and Grab should be managed as regular taxi firms to create fair competition.

    Truong Dinh Quy, Vinasun Corp’s deputy general director, claimed Uber and Grab had broken the law to enjoy low tax rates, hurting the State budget.

    Figures from the General Taxation Department showed that the total tax collection from 15,000 Uber and Grab taxis in 2014-15 was VND19 billion (US$832,000), while Vinasun contributed VND692 billion from its 6,000 taxis.

    “We can see that the State budget has lost a big tax amount. This has been unfair to traditional taxi firms,” Quy added.

    Nguyen Van Thanh, chairman of the Viet Nam Automobile Association, said the association would work with the MoF’s agencies to review tax calculation and ensure their fairness.

    “We should ask legal agencies to resolve the issue. We should prevent Uber from conducting tax evasion. We will not ask to stop Uber operations in Viet Nam but require that they complete their business registration,” he added.

    In addition, he urged taxi companies to update their business systems, improve service quality and thus enhance their competitiveness.

  • Fierce competition takes heavy toll on smartphone market in Bangkok

    Fierce competition takes heavy toll on smartphone market in Bangkok

    Thailand’s increasingly crowded smartphone market has wreaked havoc on handset companies’ profit last year, with Japan’s Sharp Corp becoming the latest victim to be quietly forced out of the market.

    Chinese handset maker ZTE Corporation, meanwhile, disputed rumours that the company has decided to pull out of the Thai smartphone market due to stiff competition.

    However, industry veterans believed more intense competition is around the corner this year.

    Sharp confirmed that the company is now inactive in the Thai smartphone market without providing a reason after resuming its presence here just one month ago through Commtiva Technology, a Taiwan-based distributor of wireless communication products.

    Oran Rungsereechaitrakul, former marketing manager of Commtiva (Thailand), said the company had just been verbally informed by its parent firm Commtiva that the group stopped selling Sharp mobile phones from Dec 30 last year.

    Lorna Liang, country manager for device of ZTE Thailand, said the company remains strongly committed to the Thai market despite facing fierce competition.

    “We are continuing business as usual. We have set long-term strategic plans to expand our presence in Thailand after entering the country less than two years ago,” she said.

    ZTE will still focus on the smartphone segment priced 3,000-7,000 baht apiece, where it has a particularly strong presence in Thailand, through distribution channels with mobile operators and retail shops.

    ZTE will roll out 2-3 smartphone models by March.

    Ms Liang also threatened to take legal action against those who spread or publish rumours regarding the company’s alleged business closure before checking with the company, saying spreading false information will cause consumers to lose trust and confidence in the company.

    According to internal reports by Huawei and Oppo, Samsung is clearly dominating the local smartphone market with a 40% share, followed by Apple with an estimated share of less than 15%, with Chinese brands Oppo and Huawei having a 12% and 8% market share, respectively.

    The growth of Oppo was particularly impressive as it rose quickly to become the third largest smartphone brand in Thailand in terms of sales volume for 2016.

    Consumers in this massive market are rapidly being won over by Chinese and household brands that incorporate much of the functionality of an Apple iPhone or Samsung Galaxy, but at a fraction of the price.

    Handset makers are also facing an undeniable shift in consumption trends in the digital lifestyle age.

    Samsung stayed on top of Thailand’s smartphone market last year, despite being battered by the Galaxy Note7 recall and increased competition from China.

    The Korean company recalled the Note7 in September last year after reports of overheating lithium-ion batteries. Replacement phones also ran into similar problems, leading the company to halt production of the smartphone in October.

    Samsung will continue facing stiff competition from Apple in the high-end smartphone market, while simultaneously facing pressure at the lower-end from Chinese makers.

    Overall, the Thai handset market grew by only 2% to 22 million units in 2016 — the smartphone industry’s slowest growth rate for a year.

    Chinese brands Oppo, Huawei and Vivo posted strong growth rates in sales even as Samsung and Apple saw their volumes drop. Other smaller players and newcomers like Asustek, Motorola, Lenovo, ZTE and France’s Wiko will pose competition to the giants this year, which would need to take measures to survive in the market.

    Taiwan’s HTC has already been forced out of the Thai smartphone market, while Sony and LG announced they will sell selective models here.

    Pairoj Thavornsapanant, assistant managing director of TG Cellular World, a leading mobile distributor, said product design and quality as well as strong sales and distribution networks are becoming critical for smartphone companies to succeed and survive in the country’s mature market.

    “Consumer acceptance of a smartphone brand is another vital factor in business success,” he said, adding that consumer acceptance is expected to take 3-5 years.

    Leo Zhao, sales director of Oppo (Thailand), said the local smartphone market has already reached a mature stage as the smartphone has become a must-have device in the digital era.

    Thailand’s smartphone market is expected to grow at the same pace as last year’s 2-3% to reach 25 million units in 2017, he said.

    Mr Zhao said the handset replacement cycle will be faster with Thais expected to replace their mobile phones every 10 months this year, compared with 12-15 months in 2016, because consumers take advantage more quickly of smartphone advances.

    The middle to high-end markets will continue growing faster than the entry smartphone market because consumers prefer superior user experience, faster connection and high-end specifications.

    High-end smartphones priced over 15,000 baht accounted for 6% of total sales in 2016, up from 3.5% in 2015.

    Entry level smartphones priced below 4,000 baht made up 40% of total sales last year, down from 50% in 2015.

    “Thailand’s smartphone industry will see more consolidation over the next few years and there will be less than 10 survivors in the local market,” said Mr Zhao.

  • Australians benefit from telco sector competition

    Australians benefit from telco sector competition

    Australian consumers are reaping the benefits of competition in the telecommunications sector in the form of increased data allowances, new services, and lower prices, according to a report from competition regulator ACCC.

    “Consistent with the trend in recent years, consumer demand for data is continuing to increase and is affecting both fixed and mobile networks. On fixed networks, data consumption grew by 40% to 1.3 million terabytes (TB) of data. On mobile networks, data consumption increased by 35% to 110,000 TB,” ACCC Chairman Rod Sims said.

    “The increase in demand for data is largely due to the popularity of audio-visual streaming services, including the introduction of subscription video on demand (SVOD) services such as Netflix, Presto, and Stan.

    Industry members have responded to the increase in demand by investing in their fixed and mobile networks to make sure that they have sufficient capacity to meet the data traffic.

    Service providers have also responded by increasing data allowances. During 2014-15, data allowances increased by over 70% for DSL internet services and more than doubled for post-paid mobile services.

    At the same time, overall prices fell by 0.5% in real terms from 2014 to 2015.

    “While a smaller reduction than in the previous eight years, which has seen a 3.3% fall each year on average, this indicates that competition on factors other than price has been a feature of the market,” Sims said.

    “Given this, the ACCC will continue to take a particular interest in ensuring consumers receive accurate information about network performance.”

  • Eight steps for riding out the economic storm

    Eight steps for riding out the economic storm

    In a few days it will be one year since the implementation of the Goods and Services Tax. Although the GST has been widely unpopular, many economists consider GST as the most efficient way of widening Malaysia’s tax base. Currently, almost everyone pay taxes.

    The Malaysia Consumers Movements commend the Ministry of Domestic Trade, Cooperatives and Consumerism and the Royal Customs Department, who have worked extremely hard in curbing profiteering activity and ensuring that price increases were not excessive. Enforcement officers have acted promptly on complaints lodged against unethical businesses for unfairly increasing prices, while prosecuting a few for related offences.

    The Customs Department has reportedly collected RM51 billion since April last year, as compared to only RM37.2 billion before the GST.

    It is therefore clear that the GST has indeed provided a lifeline to the government but this has come at an expense. Consumers today are grappling with high cost of living issues while business complain of high cost of operating, forcing consumers to tighten their belt and businesses to retrench staff.

    It is important to note that the amount of taxes collected through GST will be highly dependent on the strength of domestic private consumption, which is influenced by consumer confidence in the economy.

    According to industry report compiled by the Retail Group Malaysia, Malaysian retailers are not too optimistic on the growth for the sector in the first quarter of 2016 and expect a negative year-on-year growth of 0.4%. Consumers are fearful of high prices and are increasingly reluctant to spend.

    Bank Negara in its report has projected 4.0-4.5% growth rate in 2016, compared with 5% last year. The Statistics Department indicated that the consumer price index in February rose to a seven-year high at 4.2% from a year earlier. The inflation rate is highest since December 2008 when it hit 4.4%. This rise was attributed to higher costs for food and consumer goods.

    These not very convincing statistics calls for us to review, rethink and refine solutions for riding the projected storm ahead.

    1. Stop the Bickering

    Negative news will have an impact on consumer and investor confidence. What we say and do backfires on us in negatively portraying our country’s image. We must collectively demonstrate political stability, a key factor for investors and consumers. Malaysia practices parliamentary democracy where leaders are elected every 5 years. It therefore ignites sheer concerns when attempts are made to dislodge sitting elected government by force. Street demonstration is not our culture, and it shouldn’t be!

    2. Corruption is Detrimental

    The government must demonstrate political and administrative will when implementing austerity measures and fighting corruption. There is a big time need to plug leakages and tackle corruption. The recent report of misappropriation totalling RM107 million by a senior government official surely sends a wrong message to consumers. Questions surface if there are more of such cases?

    3. Promote Healthy Competition

    It is important for the government to promote competition and speed up further liberalisation of key economic sectors. Monopolies are detrimental and must be dismantled as it harms consumers. There is a need to reassess the approved permit policy. Improve business efficiency by eliminating bureaucratic red tape which significantly increases cost of doing business.

    4. Transparency in Action

    Implementation of policies must be openly deliberated. Stakeholders at all levels must be consulted and their expectations adequately managed. Unilateral decisions must be stopped immediately. The era of government knows best is over. The point being, whenever there is any price revision announcement, it distorts cost elements throughout the supply chain, and more often than not, negatively impacting consumers.

    5. Halt Price Increments

    The government and businesses must pledge not announce any more price increases. Consumers are still grappling to deal with what was announced in 2015 and any new increases will definitely not be of any help.

    6. Ethical Trade Practices

    Businesses must demonstrate integrity in action across the value chain. Profit should not be derived at the expense of consumer suffering. Business leaders must uphold high standards of social responsibility which must go beyond mere CSR or brand-building gimmicks. There is only so much that the government can do to audit. Businesses must own up!

    7. Prudent Consumption Patterns

    Consumers should re-examine our consumption patterns and make adjustments. The era of cheap goods and services is over. Malaysia practices a competitive open market economy and it is therefore unfair to completely shift blame on the government for failing to reduce prices.

    We must avoid wastage and over-consumption, where we purchase things.

    8. Ramp Up Enforcement

    It is commendable that the ministry has done very well in monitoring, tracking and acting against errant businesses which unfairly raise prices. But why only expect the regulators to do the auditing. In the era of social media, we are all empowered to highlight real time issues and ensure they are addressed in a timely manner.

    Name and shame those manipulating the system, why must we keep silent?

    It is time to close ranks and face the storm together as one team. We hold the trump card, in charting the destiny of our nation.

  • Competition that hit Alibaba down

    Competition that hit Alibaba down

    Alibaba appears to be facing increasingly stiff competition from rival JD.com, which like Alibaba has worked to boost sales from foreign retail companies in China. While Alibaba has talked in recent months of the potential of reaching consumers in rural China, JD.com has focused on reaching the more affluent shoppers in urban areas.

    While it’s true that e-commerce is increasingly important in more remote areas of China, income there remains low, as does spending, and China’s recent economic turmoil is likely slowing down growth.

    In addition to its focus in more rural areas, Alibaba continues to face problems over sales of counterfeit items, more so than JD.com, an issue of increasing important not just to retailers abroad and the U.S. government, but also to wealthier Chinese shoppers.

    And JD.com enjoys a positive, Amazon-like reputation for fulfillment.

    “[JD] have faster shipping speeds, and the quality is more trustworthy,” Zoe Li, who works at a tech start-up in Beijing.

  • Wesfarmers says independent, specialty retailers will lose more market share

    Wesfarmers says independent, specialty retailers will lose more market share

    “For some but not all, lower interest costs, and then, in Sydney and Melbourne particularly, there’s the wealth effect of higher house prices. And [share]markets have generally been OK so people’s superannuation balances are probably looking OK.”

    Mr Goyder said the main threat to the resurgence in sentiment was unemployment.

    “The thing that we always worry about is unemployment because we think that’s the thing that can knock consumer confidence. That’s the one thing I’d be watchful of,” he said.

    “But at the moment, you know, I think these numbers in some way belie a sense of negativity on the Australian economy.”

    Excluding new store openings, Wesfarmers on Wednesday posted 3.8 per cent growth in Coles  food and liquor sales in the three months to March 31, 2015. This was its weakest growth rate for a year, as deflation took a toll across its 775 supermarkets, with food and liquor prices falling 1 per cent.

    Including new stores, total food and liquor sales posted 5.4 per cent year-on-year quarterly growth to $7.1 billion.

    Wesfarmers says its “strongest set of numbers for some time” demonstrate the health of the Australian economy, but unemployment remains the biggest risk to consumer confidence.

    Wesfarmers, Australia’s largest private sector employer, on Wednesday reported a 3.3 per cent increase in retail sales to $13.12 billion for the March quarter compared with the same quarter last year.

    The result was boosted by stellar sales at its Bunnings hardware chain and market-share gains by supermarket chain Coles, but dampened by weakness in liquor and at its discount department store Target.

    “I think consumers right now have got the benefit of lower fuel prices, probably lower energy prices,” managing director  Richard Goyder said.

    Meanwhile, Bunnings exceeded expectations with quarterly same-store growth of 9.4 per cent, and discount department stores Kmart and Target reported disparate results: Target same-store fell by 1.9 per cent, while Kmart’s rose by 6.3 per cent.

    Bruce Smith, portfolio manager at Alphinity Investment Management, said the results were pretty much in line with expectations. “Bunnings is a brilliant business and going strongly, the Kmart recovery continues and Target’s still pretty ordinary,” he said.

    Deutsche Bank analyst Michael Simotas said the third-quarter results were solid, with all divisions stronger than expected except Target. “We expect this result to be well received by the market but it is too early to judge the impact of Woolworths’ planned price investment,” he said, referring to supermarket rival Woolworths’ announcement in February that it would spend at least $500 million on cutting its prices and improving its stores.

    Mr Goyder said Wesfarmers “changed nothing based on what any competitor has done in the past few months”.

    And finance director Terry Bowen said Coles had plenty of opportunity to steal market share in fresh food, such as meat, from independent and specialty retailers. “In broad terms, independents have lost market share [over the past five years] and if you look … more holistically at the market, Aldi and Costco … have gained market share and Coles and Woolworths have basically maintained and moved their market share around a bit.

    “But the big movements have been Aldi and Costco growing – bearing in mind they are the largest retailers in the world, multinationals. And the independents have lost market share.”

    Wesfarmers estimated Coles had about 25 per cent of the Australian food market, about 20 per cent of liquor and less than 20 per cent of the home improvement and office supply markets.

    Shares in Wesfarmers defied a 1.85 per cent fall in the broader market to close down 15¢, to $43.