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Tag: E-tailing

  • Asia is leading the global digital retail market

    Asia is leading the global digital retail market

    Retail executives looking to understand the future of retail should take a close look at Asia, where retail is booming as Asia is leading in terms of retail growth. The growth rates are twice the rate of the rest of the world, and e-retail growing at three times the rate.

    Asia is followed by Europe and the US, with China, Korea, and India at the forefront.

    In 2017, China’s online retail penetration was 20 per cent and its CAGR (13-17) was 33 per cent. In comparison, the US achieved an online retail penetration rate of 12 per cent in 2017 and a CAGR (13-17) of only 11 percent. Most dramatic is India, which had a CAGR (13-17) of 53 percent, highlighting the rapid growth seen in the market.

    Market conditions have allowed for swifter digital penetration than any other region worldwide and have led to the creation of ecosystems for retailer and consumer ease, revealed Bain & Company’s latest Asia retail report.

    According to the report, retail ecosystems comprise vast communities of consumers, retailers and partners that are rapidly reshaping the retail landscape. Alibaba and Tencentlead the best-known Asian ecosystems; however this phenomenon is not limited to China.

    Ecosystems deliver a very sticky consumer proposition by combining services like e-commerce, chat, streaming, gaming or payments in a single platform or app, which is becoming almost universally adopted by shoppers, according to the report.

    A large customer base is incredibly attractive to retailers as a channel to a critical mass of customers. But more importantly, the ecosystem also provides retailers with access to hard-to-replicate capabilities, such as last mile fulfillment, data analytics and cloud services, through their platforms. Increasingly, these ecosystems are deploying their capabilities into bricks and mortar retailers as well as online, meaning they can exert significant influence over the retail sector.

    “What we are seeing is the emergence of scale open retail ecosystem platforms across the Asia Pacific region, that offer retailers a compelling alternative to building and scaling their own capabilities,” said report author Melanie Sanders, Bain & Company partner. “The scale of these ecosystems means that we are seeing a battle emerge between ecosystem platforms in key markets, with the potential for a winner-takes-all situation.

    However, the extent and pace of ecosystem development will not be uniform across geographic markets. The report has outlined ten market factors, which has explained why ecosystems have developed so rapidly for some Asian countries, including social factors such as urban density and age structure through to retail market conditions such as the scale/maturity of physical retailers in the country.

    “The emergence of retail ecosystems is raising a new set of choices for retailers about how to participate in this new retail landscape. The emergence of these ecosystems presents huge opportunities for those playing to win in these markets, but at the same time has the potential to completely change the rules of the game and may mean a loss of control,” the report said.

    “Retailers face a confronting set of choices around how to respond the rise of retail ecosystems. At the heart of the decision will be whether the retailer has the capabilities, capital and customer franchise to compete against an ecosystem,” said Jonathan Cheng, report author and principal at Bain & Company.

    As digitisation of the retail sector continues to expand in Asian and global markets, ecosystems will continue to evolve based on the needs of both the consumers and retailers, the report added.

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  • Le Eco Auctioning Beijing Mall on Taobao for RMB2.3B

    Le Eco Auctioning Beijing Mall on Taobao for RMB2.3B

    Chinese tech firm LeEco has put a Beijing shopping centre up for auction on Chinese e-commerce platform Taobao. Experiencing financial difficulties, yet determined to uphold its online trading practices, the firm has listed the 50,000sqm Beijing Shimao Gongsan Plaza at a reserve of RMB2.3 billion (US$334 million). The move follows legal action by mortgagor China Citic Bank against LeEco for failing to meet repayment obligations.

    The auction opens on Taobao’s distressed asset channel, which saw an 88 per cent rise in listings in October against the backdrop of China’s enormous bad debt market. Under supervision of the courts, the auction will start on January 7 at 10 am and run for 24 hours.

    The property was expected to sell last year to leading Chinese developer China Vanke, but was not traded due to unmatched expectations in price.

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  • What to learn from China’s Singles’ Day?

    What to learn from China’s Singles’ Day?

    Ever since the first Singles’ Day or 11.11 sale began in China in 2009, every year, there would be plenty of commentary explaining the phenomenon to an international audience. This doesn’t appear to be necessary any more.

    In its tenth edition, the event has grown into the world’s largest shopping festival where 180,000 brands participate and consumers take less than two hours to spend a phenomenal 100 billion yuan ($14.5 billion).

    It is an event in its own right. Not an imitation, but something that that consistently pushes the boundaries in terms of content, tie-ins and consumption. In 2012, sales for Singles’ Day first surpassed Cyber Monday and Black Friday in the US.

    And so effectively targeting buying power has been a focus for many international marketers. Given the volume of purchases and the willingness of Chinese consumers to embrace new technologies, it is also a true testing ground for brand owners.

    Three major changes are to take our from this year’s 11.11.

    Mini-programs take centre stage

    For brands and retailers, mini-programs have become a core marketing channel.

    Considering WeChat’s active user traffic of one billion, this comes as no surprise.

    Within WeChat’s ecosystem, mini-programs provide connectivity between social, content and payment. For example, retailers in a shopping mall can distribute free parking vouchers using mini-programs and they will be able to generate information on the arrival time and spending habits, as well as which customers own a car.

    According to official figures from WeChat, as of July 2018, it had over one million mini-programs with users opening them four times per day on average.

    A survey by China’s big data service provider QuestMobile has identified the most important functions of a mini-program: effectively combining online and offline activities; sharing customer information; serving as a standalone e-commerce platform; and the ability to combine the physical aspects of a promotional campaign with social marketing.

    Growth in short videos

    Data reveals companies using short video sharing platforms, such as TikTok and Kuaishou, received the majority of the 11.11 targeted advertising traffic.

    Community is king

    In China there are Social+ platforms that present a lucrative opportunity for both content and word-of-mouth marketing. Xiaohongshu, which is backed by Alibaba, has 150 million users consisting of the social media generation born in the 90s. They use the platform like Facebook and are highly influenced by shopping tips and insight from celebrities.

    A completely different interest group is Babytree, an online parenting platform that uses a similar vertical marketing model and presents another attractive opportunity for advertisers.

    These platforms provide an engaging forum for like-minded people and are realising the tangible benefits of teaming up with major e-commerce operators.

    All the above changes highlight how brands and consumers are moving away from purely a transactional shopping experience. Instead, it’s more collaborative and relationship-based, changing the dynamics of e-commerce. There is ample evidence of this phenomenon developing in other markets.

    Lessons from the East

    At $30.8 billion, the online sales of 11.11 surpassed this year’s figures for Black Friday ($6.22 billion) and Cyber Monday ($7.9 billion) in the US. But both these figures for the US represent a 24% and 20% respective increase on last year.

    While the results illustrate a gap in retail ecosystems between the two largest economies, there is clearly a growing preference by US consumers for digital channels rather than elbowing through crowded stores the day after their Thanksgiving dinner.

    In a poll by Periscope By McKinsey in October 2018, roughly a month before the sales, nearly half of the respondents (48%) said that they plan to shop more online while fewer (28%) said they plan to do so in-store.

    China’s highly sophisticated online shopping behaviour has leapfrogged the development of retail that has been commonplace in most Western countries. In doing so, it now sets the world standard in e-commerce.

    Any marketers who want to successfully compete in this huge and attractive market need to be digital and mobile led in their strategies. But 11.11 does not just represent an opportunity for sales in China. The trends and habits should be understood as they will provide the inspiration for other markets where online spending is also growing.

    Brands that can adapt these successful models may well be able to transfer success.

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  • India’s Shop101 in talks for funding boost

    India’s Shop101 in talks for funding boost

    Indian online marketplace Shop101 is seeking to raise $11-12 million in a Series B funding round. Talks concerning the investment are being led by Kalaari Capital and Unilever Ventures, with participation expected by current backer Stellaris Venture Partners, which invested $5 million several months ago. Investment capital is likely to assist the firm in technological development and expansion into new business categories.

    Shop101 uses Whatsapp, Facebook and Instagram functionality to support online entrepreneurs. WhatsApp and Facebook each have more than 200 million users in India. The Shop101 app has been downloaded about 1 million times and has experienced growth of 50 per cent month on month since its launch.

    A joint report by Google and KPMG last year indicated online SMEs could boost Indian economic growth by 10 per cent by 2020.

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  • Malaysia’s e-commerce on growth estimation

    Malaysia’s e-commerce on growth estimation

    The government is targeting for e-commerce to achieve an annual growth rate of 20%, from a 14.3% growth posted in 2017, via its various initiatives. Deputy International Trade and Industry Minister Dr Ong Kian Ming said e-commerce registered a continuous increase for the period of seven years to RM85.8 billion in 2017.

    He said the government, through the National E-commerce Council, will continue to chart the growth and development of e-commerce in the country through the implementation of the National E-commerce Strategic Roadmap.

    Malaysia also signed the Asean Agreement on Electronic Commerce on Nov 12, 2018, a concerted effort between 10 countries to smoothen cross border e-commerce transactions by reducing barriers and lowering entry costs.

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  • Vietnam’s e-commerce market sees many new players

    Vietnam’s e-commerce market sees many new players

    Vietnam is among the fastest growing commerce markets. E-commerce makes up 0.5 percent of value of the FMCG (fast moving consumer goods) sector in the four largest cities, while the number of online shoppers increased from 5.4 percent to 8.8 percent in urban areas within one year. The value of one online shopping cart triples the value of a traditional shopping cart.

    The recent report of Kantar Worldpanel says that Vietnam’s e-commerce activities grew by 69 percent in 2017. Meanwhile, Frost & Sullivan predicted that Vietnam’s market value would rise from $1.7 billion in 2016 to $3.7 billion in 2030, or an annual growth rate of 45 percent.

    Chinese firms

    Analysts warned that Chinese online retailers are penetrating the Vietnamese market, putting pressure on domestically made products.

    JD earlier this year announced investment in Tiki to become one of the biggest shareholder of the e-commerce firm. While JD declined to reveal the amount of capital, Tiki has said that it had raised $50 million worth of funds to expand its business.

    Prior to that, Alibaba launched in Vietnam in April 2016 after it wrapped up the takeover of Lazada in SE Asia.

    Headquartered in Singapore, Shopee is still listed among Chinese firms in Vietnam as 40 percent of Shopee shares are held by Tencent, a Chinese technology group.

    All three Chinese ecommerce markets entered the Vietnamese market through mergers and acquisitions.

    According to Google, Lazada, Shopee and Tiki are three out of four most searched e-commerce websites in Vietnam.

    Chinese not the only foreign players

    However, with investors from the US and Japan entering the field recently, the worry about the dominance of Chinese firms has been lifted.

    Most recently, Japanese Scroll acquired 26.9 percent of shares of Cat Dong, the company that owns cungmua.com, nhommua.com and Shipto.vn. This is the second time that Cat Dong transferred capital during its 8-year operation.

    Prior to that, Cat Dong received investment from ACA Investment, a Japanese ifund belonging to Sumitomo which once poured money into Bibomart and Son Kim Land.

    In early March, the e-commerce market welcomed Amazon. The US giant, instead of making investment deals, decided to join hands with the Vietnam E-commerce Association. With the cooperation, Amazon wants to help Vietnamese businesses export their products on the Amazon platform.

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  • eCommerce won’t dent Asian retail real estate demand

    eCommerce won’t dent Asian retail real estate demand

    Growing online sales will not undermine demand for Asian retail real estate, according to the last CBRE study of major international brands.

    For the seventh edition of How Active Are Retailers Globally?, the real-estate company looked at more than 150 major international brands based in Americas, Asia Pacific and EMEA (Europe, the Middle East and Africa) countries.

    China is the top target market in the Asia Pacific (APAC) and fourth-ranked globally, with 27 per cent of retailers looking to expand there. Hong Kong follows in sixth position (24 per cent), Japan in seventh (22 per cent) and Singapore in ninth (21 per cent). The top three globally were Germany (35 per cent), France (33 per cent) and the UK (29 per cent).

    China and Hong Kong maintained their placings, while Japan, Singapore and Australia (11th) all rose higher in the ranking, up from 13th, 18th and 15th positions respectively.

    “Hong Kong will remain a desirable market for retailers, particularly as it continues to serve as a popular shopping destination for mainland Chinese tourists,” says CBRE Hong Kong executive director for retail services Joe Lin.

    “The main difference is a shift from luxury to mid-range brands. This is forcing luxury retailers to consolidate their footprint, leading to a drop in rental cost in prime locations and therefore opportunities for non-luxury retail brands.”

    Most APAC markets saw increased interest for this year, with the exception of China and South Korea. Malaysia (10 per cent), Indonesia (9 per cent), Thailand, Vietnam and The Philippines (all 8 per cent) received more than double the interest they saw last year, when all markets secured between 1 and 3 per cent.

    Asked about the risk factors for the coming year, brands indicated that real-estate cost escalation (56 per cent) and unclear economic prospects (42 per cent) continue to be at the forefront of their minds.

    “We’re seeing more of a challenging economic environment, and concerns such as high operating costs and a lack of quality space means retailers are somewhat more wary this year,” says CBRE head of Asia Pacific research Dr Henry Chin. “However, even as markets such as China and Hong Kong are experiencing a slowdown, we see increasing numbers of opportunistic retailers looking to enter markets like Hong Kong, supported by strong underlying consumer demand.

    “Japan and Australia remain attractive, while Southeast Asia showed strong growth because of opportunities for retailers around an expanding middle class and stronger economic growth.” CBRE senior director and head of retailer representation for Asia Joel Stephen says there are still opportunities for retailers to grow their business in Asia, underscored by the region having four of the 10 most popular destinations. “The goal now for all brick-and-mortar retailers is to build an engaging offer that encourages people to stay longer and spend more.”

    The survey shows that 83 per cent of brands suggest their physical store expansion plans for this year will not be affected by the growth of eCommerce. From a retailer perspective, only 22 per cent of the brands see stiff competition from online retailing as a threat to their business.

    At the same time, retailers are cautiously optimistic on physical expansion. Of those canvassed, 17 per cent have large-scale ambitions, many of them looking to open more than 40 stores this year (up from 9 per cent last year), while 67 per cent plan to open up to 20 stores.

    “A physical store presence in key locations is still critical to the strength of a brand’s image,” says Stephen. “Customers still feel a need to go into stores, to physically touch a product and enjoy the feel-good factor associated with a particular brand experience. The store is integral to the shopping journey and can be used in different ways, such as to click and collect, research of the product or brand, or to test the product. It isn’t solely about the transactional side.”

    A new trend is brands looking to expand into travel hubs, such as airports and train stations, giving them access to high footfall in busy locations. But for APAC retailers, shopping malls are still the preferred destination by far, at close to 90 per cent.

    While globally the key concern for brands in negotiations for premises is lease length, APAC retailers are most concerned with turnover rent clauses (GP). They are also particularly concerned about changing consumer behaviour (40 per cent), which is higher than the global average (31 per cent).

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  • Losses force Esprit to downsize

    Losses force Esprit to downsize

    Following a first half loss of HK$238 million (US$30.6 million), fashion retailer Esprit plans to prune unprofitable outlets while improving productivity.

    “In the very short term, we will continue to see the closure of unprofitable spaces from our retail store network and our wholesale partners’ points of sale,” the company says in its interim results announcement. It expects these actions will help group turnover remain stable although it may be reduced.

    During the six months, the company posted a 13 per cent dip in sales to HK$9.31 billion. It says the losses are partly the result of the unfavourable impact of the euro depreciating against the Hong Kong dollar.
    With a loss per share of 12 cents, the directors did not declare an interim dividend.

    Meanwhile, the company has seen positive retail sales growth through both online and offline channels, particularly in Europe. Its challenges lie in its wholesale business, currency risks and lower performance in Asia.
    It says the underperformance in the Asia-Pacific region was partly attributable to a combination of volatility in the financial markets, the economic slowdown in China and the devaluation of the yuan, which significantly dampened consumer sentiment.

    Esprit’s largest geographic market, Germany, had HK$4.44 billion turnover, representing year-on-year growth of 1.5 per cent. For the rest of Europe the turnover of $3.38 billion was down from $3.92 billion of the previous year’s second half. Turnover in Asia Pacific amounted to $1.42 billion, a year-on-year drop of 6 per cent.
    Esprit says it faces challenges ahead with volatility in the financial markets and economic uncertainty that could further dampen consumer sentiment, especially in Asia. And if the euro continues to be weak, it would put pressure on the group’s gross profit margin.

    Meanwhile, the group is expecting an estimated net gain of about $725 million from the sale of six wholly owned property subsidiaries in Hong Kong, a deal finalised in December. Once the sales is settled, the group plans to lease back most of the properties.

    Also the group has introduced efficiencies in its product development and supply chain processes, as well as developing a “more ambitious” commercial strategy using an omnichannel model. It has been using an intensive brand-marketing campaign since September to strengthen and rejuvenate its image.

    Already it has seen positive sales performances, plus increased customer loyalty and better online and mobile sales.

    “Driving these productivity gains further remains our top priority in the near term,” says the company, noting an increase to 49 per cent of eCommerce sales by mobile devices and a 92 per cent growth in smartphone sales.

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  • Logistics operators intensify e-commerce focus in Thailand and China

    Logistics operators intensify e-commerce focus in Thailand and China

    Global logistics companies continue to pile into the Asia e-commerce market, with Damco launching a China solution and DHL expanding its growing presence in the region deeper into Thailand.

    DHL is building a 32,000 square foot, central distribution center in Bangkok and a network of over 20 depots located throughout Thailand to provide full coverage across the country. To meet increasing business demands, the integrator plans to more than double the number of depots in Thailand by 2017 and expand its fleet primarily in two-wheel vehicles that can operate more efficiently in the traffic situations in Thailand’s major cities.

    “The Thai e-commerce market is expected to more than triple in size to $3.93 billion between now and 2020 and with this investment, we are well positioned to support the growth of e-commerce businesses in Thailand,”  said Thomas Kipp, CEO, DHL eCommerce.

    Only 1.7 percent of total sales in Thailand were obtained from e-commerce, compared to more than 10 percent in China, said Malcolm Monteiro, CEO, Asia Pacific, DHL eCommerce.

    “We see major strategic opportunities for e-commerce growth in Thailand, particularly with the Asean Economic Community which is expected to increase the movement of goods within the region,” Monteiro said.

    “Despite e-commerce already being a billion-dollar sector with extremely rapid adoption, Thailand’s e-commerce share of the retail market is still relatively low compared to other high-growth economies.”

    Damco has focused its latest service offering in China where it is launching an end-to-end e-commerce solution, from inbound goods management and consumer order receipt to final delivery.

    Damon Gu, Damco’s head of supply chain management for Asia, said the large and rapidly growing Chinese market for online shopping was a magnet for both importers and domestic producers.

    “Online shopping events such as China Singles Day are already creating world-beating levels of activity for e-retailers locally in China, as well as globally,” he said. “Discerning Chinese consumers in this highly competitive marketplace expect the highest standards of fulfilment. This new program helps companies to guarantee that level of service.”

    Using its 1,500 local staff and 26 locations in China, Damco will arrange delivery to end-consumers in more than 1,600 Chinese cities.

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  • Alibaba Beats Profit, Sales Estimates on Rural China Push

    Alibaba Beats Profit, Sales Estimates on Rural China Push

    Alibaba Group Holding Ltd. beat analysts’ estimates for revenue and profit after an online-sales extravaganza and expansion into rural China helped the nation’s biggest e-commerce operator defy a slowing economy.

    Sales rose 32 percent to 34.5 billion yuan ($5.2 billion) in the three months ended December, the company said Thursday, compared with the 33.2 billion-yuan average of estimates compiled by Bloomberg. Net income more than doubled to 12.5 billion yuan, topping estimates of 10.3 billion. Shares rose more than 5 percent in premarket trading in the U.S.

    Record revenue during November’s annual “Singles’ Day” promotion drove transaction growth as Alibaba captured more sales from mobile e-commerce, which is replacing shopping from computers. Billionaire Chairman Jack Ma is trying to tap the spending power of the countryside with the Internet expected to blanket all of rural China by 2020, according to the China Academy for Rural Development at Zhejiang University.

    “Alibaba continues to grow as urbanization and an ever more ambitious middle class continues to drive up China’s cost of living and consumption,” said New York-based Brian Buchwald, chief executive officer of Bomoda, a consumer intelligence company with a focus on the Chinese market. “At the heart of it, is continued investment in mobile and simplifying payments for virtual and actual purchases.”

    Mobile Monetization

    Longer-term, Ma is investing in video content, media, on-demand services and cloud computing to generate new sources of income as he takes the e-commerce company global. Shares of Alibaba closed Wednesday at $69.54 in New York. The stock has declined 14 percent this year after a 22 percent slump in 2015.

    Gross merchandise volume in its China retail marketplaces rose 23 percent to 964 billion yuan in the quarter, while mobile GMV almost doubled to 651 billion yuan.

    More than half the purchases through Alibaba’s e-commerce platforms were done from mobile devices. While it’s crucial that Alibaba serve the growing ranks of consumers acquiring a taste for shopping through smartphones and tablet computers, smaller mobile screens typically generate less advertising revenue.

    “Alibaba is on track to gain more shoppers in rural areas and smaller cities in China,” said Li Yujie, an analyst at RHB Research Institute Sdn in Hong Kong. “The sales promotion in November also gave the company a boost.”

    The Nov. 11 Singles’ Day promotion logged a record 91.2 billion yuan in sales, a 60 percent increase from the year earlier. A third of buyers made purchases from merchants and brands outside of China during the one-day event.

    Overseas Push

    Ma has set a goal of getting 50 percent of the company’s revenue from beyond China with Michael Evans, a former Goldman Sachs Group Inc. partner, named president in August to lead the global push.

    Cloud computing revenue rose 126 percent to 819 million yuan, Alibaba said. Its AliCloud unit is staking $1 billion on the belief that demand for processing and storage from governments and companies will boost growth during the next decade as its tries to compete with Amazon.com Inc. in computing services. It plans to work with Nvidia Corp. on services and artificial intelligence, recently opened a second U.S. data center and plans its first in Europe this year.

    Alibaba is also expanding in the online-to-offline services market. Tencent, Alibaba and Baidu Inc. are competing for supremacy in a local-services industry primed for growth as more people turn to their smartphones or the Web to order food, schedule beauty treatments or hire domestic helpers. Users of those services could rise 29 percent to 400 million by next year, with sales expected to reach 7.28 trillion yuan by 2017.

    Last year, the company backed the merger of Didi and Kuaidi to create China’s biggest ride-hailing application.

    Investors have highlighted escalating scrutiny about the sale of counterfeits on its websites, such as Taobao Marketplace, as a key risk for 2016. Though the company has said it’s committed to combating fakes, cleaning up its image next year is crucial to Alibaba’s goal of winning the trust of merchants and shoppers overseas.

    In December, the U.S. Office of the Trade Representative warned the company it had to do better to stay off the “Notorious Markets” blacklist it escaped only in 2012. The federal agency issued a stern warning that Alibaba’s efforts to fight piracy and respond to complaints would be monitored in the coming year.

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  • Korea’s Hotping fashion mall goes global

    Korea’s Hotping fashion mall goes global

    Korean women’s clothing mall Hotping entered the global market just six months ago – and already cross-border sales account for 10 per cent of its turnover.

    Monthly sales to customers outside Korea have now surpassed the 100 million won (US$84,000) mark.

    “We believed that winning new markets quickly would secure future competitiveness after we started up in 2014 and we launched the English, Chinese, and Japanese versions of our online mall through the global eCommerce platform of cafe24,” explained CEO Kim Yeo-jin.

    “We received orders from international customers even when we had the Korean site only, which also quickened our entry into the global market.”

    Established in 2014, Hotping is a Korean women’s clothing specialty mall that carries trendy products popular in the world of fashion. Like its name suggests, Hotping is a ‘portmanteau’ word mixing hot trend and lovely pink. Another notable characteristic is that Hotping satisfies customers of various body types since it carries sizes from 44 (equivalent to XS in the US) to 105 (equivalent to XXL) for most of its products.

    As a result of the company’s continued sponsorship of the wardrobes used by Korean costume dramas, Hotping has been enjoying great brand awareness, particularly in countries swept by the Hallyu, or ‘Korean Wave’, notably the US, China, and Japan. In addition, as it carries a number of elegant and exclusive clothing lines, news anchors have also been inquiring about sponsorship.

    Hotping is also winning immense popularity with its line of highly elastic Magic Pants, whcih are proving popular globally thanks to a fun marketing campaign that sees dancers posing in a number of positions that highlight their extreme elasticity.

    Kim adds: “We will continue to make efforts to win new markets and will also continue offering beautiful clothes to our customers at reasonable prices like we do now.”

  • WeChat use by retail investors poses headache for regulators

    WeChat use by retail investors poses headache for regulators

    The growing popularity of messaging and social media app WeChat among China’s stock market investors is posing a problem to regulators, who now find it harder to monitor trades and spot illegal activity, Reuters reports, citing traders and investors.

    While using apps for trading is not unlawful in China, regulations require reliable monitoring and recording of trades to prevent activities such as insider trading or market manipulation, and to keep regulators on top of threats to market stability such as excessive margin trading.

    The China Securities Regulatory Commission has been clamping down on breaches, including fining four brokerages in September for failing to collect information about the identities of clients who traded stocks through external systems. 

    It also shut down third-party trading software used by brokers that helped traders skirt regulations by dividing one account into many sub-accounts without the need to register a name, the news agency said, citing local media reports.

    Even so, using apps to buy and sell stocks over mobile phones is common in a country where retail investors account for 80 percent of share market volume.

    Despite closer scrutiny from China’s regulators, brokerages including large firms like China Galaxy Securities (06881.HK) and smaller entities such as Great Wall Securities, started offering WeChat share trading account services last year in a bid to access the growing pool of retail traders.

    Overall account openings swelled to around 46 million in the first half of 2015, from around two million over the same period in 2014, according to official data.

    For brokers, the advantages of using WeChat are obvious, since it is the preferred means of communication for many of its 600 million users.

    But a case in Hong Kong last month highlights regulators’ concerns with the trend.

    The regulator there suspended a trader for receiving a buy order on WhatsApp, a messaging app owned by Facebook Inc., in breach of the internal communication policies of the firm he then worked for, BTIG, noting that the company had no control over the recording and retention of such messages.

    While the Hong Kong Securities and Futures Commission code of conduct does not prohibit the use of social messaging apps, it encourages the strict recording and time stamping of all communications and says the use of mobile phones for orders is “strongly discouraged”.

    Some of China’s institutional investors are also using WeChat to instruct their brokers.

    “In practice lots of people don’t care about compliance and take orders on WeChat,” said a Hong Kong-based institutional sales trader specializing in China.

    Such concerns are not limited to China.

    Clara Shih, chief executive and founder of Hearsay Social, a San Francisco-based social media compliance company, said messaging apps are also a potential gap in the compliance systems that US financial services firms have spent years building.

    US brokerages must monitor and store copies of employees’ electronic communications for three years and have a duty to protect clients’ personal information and confidentiality, tasks made more complicated by the proliferation of social media platforms.

    Technology has evolved in recent years to make it easier for companies to monitor employees’ activity on traditional social media platforms such as Facebook and Twitter. But WhatsApp and WeChat are not compatible with that technology, Shih said.

    Using social media for business is a growing trend but also a growing risk for compliance, said Craig Brauff, chief executive of Erado, a social media compliance company in Renton, Washington.

    “Regulations are designed to keep honest people honest. If someone really wants to be dishonest, there are lots of ways around it,” he said.

     

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  • India’s direct selling industry likely to reach Rs 645 bn by 2025

    India’s direct selling industry likely to reach Rs 645 bn by 2025

    A report titled, ‘Direct 2015 – Direct selling: Mapping the industry across Indian states’ by FICCI-KPMG says that direct selling, the oldest and traditional forms of selling, is today a successful industry operating in over 100 countries, with a market size of $180 billion.

    In India, the market is estimated at Rs 75 billion (2013-14), and accounts for 0.4 per cent of the total retail sales in the country. The direct selling industry in the country has the potential to reach Rs 645 billion by 2025.

    As per the report, North India is the largest region by market size accounting for direct sales worth Rs 22 billion in 2013-14; South India holds the second highest share of the direct selling market is worth Rs 19 billion in 2013-14. While the north east is the smallest market, it has recorded the highest growth rate of 14 per cent in India with revenues of Rs 9 billion.

    The growth in direct selling has primarily been driven by rising income levels, high rate of urbanisation and growing consumerism in the states. The report claims that despite witnessing growth, direct selling industry faces multiple changes, one of the biggest being the lack of regulatory clarity.

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  • Koreans Embrace Mobile Shopping

    Koreans Embrace Mobile Shopping

    The total value of purchases made through mobile phones hit a record in November 2015.

    According data from Statistics Korea on Monday, the amount of mobile transactions surged 52.3 percent on year to W2.44 trillion (US$1=W1,190).

    That is almost half of the total online purchases in November, which also hit a record of W4.97 trillion, up 19.5 percent compared to the same month of 2014.

    Online purchases accounted for 15.4 percent of total retail sales.

    By product, purchases of office supplies and stationery surged 132.7 percent and 138 percent, respectively, perhaps ironically using new-generation technology to pay for the products it is gradually replacing.

    Sales of cosmetics and groceries also surged 38.2 percent and 35.4 percent.

    By retail sector, sales at convenience stores rose 33.8 percent compared to the average 4.2-percent rise in overall retail sales, while sales at supermarkets and department stores more or less stagnated.

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  • How China’s online retail appetite is eating our lunch

    How China’s online retail appetite is eating our lunch

    Commerce Minister Gao Hucheng (pictured) boasts online sales will reach four trillion yuan (US$16 billion) this year.

    China has attained the key targets (outlined in the 12th Five-Year Plan) by the end of 2015 to become a genuine giant trader, Gao said at a national meeting on commerce. As a result it has outpaced its global competitors.

    chinese commerce minister

    China is now home to over 80,000 trade markets and total retail sales of consumer goods would each 30 trillion yuan this year with consumption contributing to about 60 percent of total GDP growth, he added.

    In the past five years, China’s exports of goods grew at an annual average of 6.5%, with its share in the global market rising from 10.4% in 2010 to about 13.2% in 2015, faring much better than major global economies. Service trade grew over 13.6% each year,marking the world’s second largest service trader.

    China’s actual use of foreign capital during the 20102015 period is expected to reach $620billion with the tertiary sector taking over 60% of total foreign capital. Outbound direct investment grew at 14.2 % annually.

    China is expected to receive foreign direct investment worth $135 billion both in financial and non-financial sectors in 2015, according to Gao.

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