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Tag: ecommerce

  • Singapore ponders Paym-style payments platform

    Singapore ponders Paym-style payments platform

    Singapore is looking into the creation of a payments system similar to the UK’s Paym that would let someone send money using only the recipient’s mobile number, email address or social network account.

    The all-in-one addressing system – which would mean senders would not need a recipient’s bank account details – is being explored by banks and the Monetary Authority of Singapore (MAS), the organisation’s managing director, Ravi Menon, revealed during a panel discussion.Menon says that the move would fit in with MAS’s desire to boost interoperability within the industry as a way to promote innovation, arguing that common standards for payments systems would result in seamless transactions across a range of platforms.

    With this in mind, the country is also working towards a unified POS terminal that can read all kinds of cards at retail and hospitality outlets.

    Menon’s remarks came during a discussion on how Singapore can harness the power, and manage the risks, of fintech. The island has been aggressively pushing itself as a major global hub for the fast growing industry – last week it opened a dedicated office designed to help startups set up in the country as a part of a S$225 million, five year plan to build a vibrant ecosystem for innovation.

    Menon says that fintech is fundamentally changing the financial industry, and may well be its best hope for the future. He told the audience that MAS’s job as the country’s regulator is to adopt a risk-based approach to fintech innovation, not front-running but running alongside.

    The watchdog does this by actively engaging with fintech firms and allowing them to experiment with new technologies in a safe environment. This will be boosted soon by the introduction of a “regulatory sandbox” where firms can experiment and launch products or services within controlled boundaries.

    The all-in-one P2P payments platform and unified POS system are also part of MAS’s plan to promote innovation, this time by enabling interoperability. Another aspect of this strategy will see the publication of open APIs, with MAS working with FIs on sharing aggregated data to improve market and risk analyses, forecasts and projections.

  • Removing online commercial curbs can hurt consumers

    Removing online commercial curbs can hurt consumers

    Hong Kong manufacturers and retailers that increasingly use e-commerce may know that their contracts with EU companies may contain vertical restraints on online distribution. Competition authorities across Europe are currently discussing the appropriate treatment of such restraints under competition law.

    This is being done with a view to preventing distributors from imposing more restrictions on online retailers than on their rivals in traditional brick-and-mortar shops, Hong Kong Trade Development Council Research (HKTDC Research) has said in a report.

    The UK’s Competition and Markets Authority (CMA) commissioned a report from independent consultants in order to know why businesses use these restrictions and how these may affect consumers, both positively and negatively. The report surveyed 33 mostly small and medium-sized UK-based manufacturers and retailers. It was released on 30 March 2016 and will prove to be of interest to e-commerce users, HKTDC Research said.

    The businesses interviewed use a wide range of restraints in their contracts, with the most common being selective and exclusive distribution agreements (often excluding online retailers) and recommended retail prices (RRP) for retailers. The participants explained such restrictions by the need “to prevent free-riding” and to “protect brand image”.

    Free-riding may occur when customers visit ‘service retailers’ (e.g. providing free advice on products), but purchase the product from a cheaper retailer that does not provide any service support.

    Participants who mentioned maintenance of brand image said restrictions “helped signal the high quality of the product and maintain the image of the product (particularly for luxury brands)”.

    However, the report further shows that the restrictions are also “attractive because they limit the direct competition faced by the relevant manufacturers or retailers, particularly from online channels”, without any consumer benefit.

    Hong Kong companies may be interested in the conclusions of this report. In the long term, forbidding these restrictions “could bring about lower retail service standards and a poorer quality experience of the underlying product”. This is likely to hurt consumers, especially for high-tech products. On the other hand, especially in the short run, the absence of such restrictions could cut prices and widen product availability.

    The European Commission is also conducting an inquiry into the e-commerce sector. The inquiry was launched on 6 May 2015 and a Preliminary Report is due to be published in mid-2016.

    A sector inquiry is an investigation that is carried out by the European Commission into sectors of the economy and into types of agreements across various sectors, when it believes that a market is not working as well as it should, and that breaches of the competition law rules might contribute to the malfunctioning of that market.

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  • MCM aims to double sales in five years

    MCM aims to double sales in five years

    German accessories brand MCM, owned and run by South Korean entrepreneur Sung-joo Kim, aims to more than double sales to RM7.8 billion (US$2 billion) within five years.

    Founded in Munich in 1976, MCM is known for its colourful $700 studded canvas backpacks. It  plans to expand in markets from Japan to Europe.

    “We have not even explored the Japanese market yet, we are just starting there,” says Kim.

    Unlike many European brands, MCM does not have a star designer, but has an in-house team of stylists to develop its products. Its collection is loaded with logo-embossed products. Its prices are around the same level as brands such as Celine and Louis Vuitton, and it makes around $700 million in annual sales, similar to Versace, reports Reuters.

    MCM is the second-biggest fashion brand by sales after Louis Vuitton in the duty-free market, where South Korea leads with annual sales of about $8 billion, says Kim. MCM makes about 60 per cent of its sales in Asia, with the balance in Europe, the Middle East and America.

    The youngest daughter of South Korean magnate Kim Soo-keon, Kim built her businesses from scratch after gaining experience at US department store Bloomingdale’s then developing Gucci’s South Korean business. After licensing MCM in 1991, she bought the German brand from a Swiss financier in 2005.

    Kim says she estimates that within five years, 15 to 20 per cent of MCM’s sales could be through eCommerce.

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  • Singapore Pavilion on Alibaba’s Tmall helps access China market

    Singapore Pavilion on Alibaba’s Tmall helps access China market

    Local food manufacturers looking to expand into China will now have an easier time with the help of a new initiative by IE Singapore and the Singapore Food Manufacturers’ Association (SFMA).

    Dubbed “Singapore Pavilion”, it is an online store on Alibaba’s Tmall, a major Chinese website for business-to-consumer online retail.

    The initiative will “provide companies with a plug-and-play model, so they can export their products to China more quickly and easily”, said Ms Liane Ong, IE Singapore’s China group director.

    The trade agency said it sees e-commerce as an “important retail channel for Singapore companies to access the huge China market”.

    Ms Ong added that the Singapore brand commands a premium in China, amid rising affluence of Chinese consumers and food safety concerns.

    Despite this, companies wanting to export to China have always faced obstacles, with issues such as product registration and marketing to consumers being key problems, according to Mr Chong Ka Wee, chief executive of Kino Biotech, which owns proprietary brand Kinohimitsu.

    Kino Biotech is one of 45 firms to have signed up under Singapore Pavilion to sell its products and that has helped it save time and cut costs.

    “Normally, for product registration, you would have to go through processes like changing your labelling to adhere to the local regulations,” Mr Chong said. “All these processes can take up to 15 months.

    “Selling through a cross-border e-commerce platform, the product registration process can be simplified and shortened to just one month. The best part is that you can use the existing product labelling and original packaging.”

    Mr Thomas Pek, president of SFMA, said that under the initiative, companies would have to pay an initial deposit of $10,000, and then just $300 a month.

    A single company trying to get online space in Tmall would usually have to pay around $300,000 per year.

    For Mr Chong, an added benefit of joining Singapore Pavilion is getting to raise awareness of the firm’s products as part of a stronger Singapore brand along with those in the industry, and the feedback from Chinese consumers will be valuable in deciding how to expand in China.

    “We may be competitors in Singapore but we can form an alliance overseas as part of the Singapore brand and capture market share together.”

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  • Alibaba entry stirs up Thai e-commerce

    The recent acquisition of Lazada Group by Chinese e-commerce giant Alibaba Group poses a challenge to local online product manufacturers and retailers who anticipate a potential flood of Chinese-made products.

    The move by Alibaba is expected to shake up Thailand’s e-commerce market. It’s also putting more pressure on other e-commerce companies.

    “The number of business-to-consumer e-commerce companies is likely to fall to only two to three over the next three years, down from five, because of fierce competition,” said Punnamas Vichitkulwongsa, chief executive of Ascend Group, a subsidiary of CP Group that operates the iTruemart and weloveshopping websites.

    “But the entry of Alibaba will spur competition in the local e-commerce market, which is likely to benefit Thai consumers and the industry,” he said.

    There are usually two dominant e-commerce players in a country, said Ms Punnamas.

    Pawoot Pongvitayapanu, president of the Thai E-Commerce Association and founder of Tarad.com, said if Alibaba continued using Lazada’s subsidised promotion strategy, the Chinese firm could become a dominant player in Thailand’s e-commerce ecosystem as it has its own payment and logistics systems for websites.

    However, local online product manufacturers, especially those that make IT accessories, consumer electronics and fashion items, will face a greater challenge from cheap Chinese products.

    Paul Srivorakul, group chief executive of aCommerce, believes Alibaba’s entry will create an innovative e-commerce market in Thailand, attracting more foreign investors.

    He expects more mergers and acquisitions in the local e-commerce industry next year as a result.

    Santit Jirawongkraisorn, co-founder of Lalamove Thailand, a Hong Kong-based on-demand delivery app provider, said existing e-commerce companies in Thailand would face intense competition from Alibaba’s presence. But the increased competition can drive consumer gains and promote the overall e-commerce market, he said.

    Alessandro Piscini, chief executive of Lazada Thailand, said Alibaba’s investment reflected the huge potential it saw in e-commerce for the region and the role it expected Lazada to play in the local markets.

    The partnership will bring significant synergies that enhance the online experience for both buyers and sellers in Thailand, he said.

    In a related development, PwC Thailand released its latest report on Global Total Retail 2016: They say they want a revolution which polled some 23,000 online shoppers in 25 countries to track retail consumer trends, including mobile shopping and social media influence.

    The report revealed that 51% of online shoppers in Thailand said they purchase goods directly via a social media channel, outpacing India (32%), Malaysia (31%), and China (27%).

    Fifty-three percent of Thai online shoppers said that customer reviews influenced their buying behaviour.

    The survey also showed that social media influenced 78% of shoppers globally, up from 68% in a similar study last year, with 92% of emerging market shoppers buying products based on social media recommendations.

  • More Thai Men Shopping for Women’s Underwear Online

    More Thai Men Shopping for Women’s Underwear Online

    WearYouWant, Thailand’s leading online fashion and beauty marketplace, is praising the romantic generosity of its male customers in Thailand. Since the start of 2016, there has been a steady rise in men buying underwear online at WearYouWant for that special woman in their life.

    According to WearYouWant, in the last six months, underwear purchases by men on their online shopping platform have increased by 22%, with the first half of April seeing record highs. Approximately 56% of underwear sales are to men in Bangkok who seem to know exactly what women in Thailand want!

    It could be the summer sun turning up the heat on underwear purchases by men or perhaps the Thai New Year Songkran festival spirit has meant more men showering women with gifts. With a few clicks, shy men can easily shop for lingerie online for their loved one.

    Of course, WearYouWant stocks much more than lingerie, retailing over 17,000 different fashion and beauty items, including shoes, dresses and men’s clothing too.

    Julien Chalté, Co-Founder & Co-CEO of WearYouWant.com welcomes the sales, even if they are a little unexpected. “On WearYouWant, it’s always been women who have bought their own underwear traditionally, so it is surprising to see that in 2016, that trend is shifting. Perhaps it is that more men are in touch with their feminine side and keen on using women’s underwear,” he adds with a smile, “or maybe it is just more men are shopping online for underwear as presents for women.”

    It is not just men who like their loved ones to be well-dressed when they are undressed either. Women in Thailand also enjoy shopping for boxer shorts and briefs for their male partners too. Some 19% of all men’s underwear bought online at WearYouWant in February 2016 was purchased by female customers.

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  • Mobile money service launched in Bangladesh

    Mobile money service launched in Bangladesh

    Financial inclusion in Bangladesh just took a stride closer to reality with the launch of a new international remittance receiving service via a partnership between MasterCard, Western Union, bKash and BRAC Bank.

    The new service enables bKash’s registered customers to use their mobile phones to receive remittances from abroad directly into their bKash accounts.

    A subsidiary of BRAC Bank and a joint venture between BRAC Bank and Money in Motion LLC of USA, bkash serves the low income masses of Bangladesh to achieve broader financial inclusion by providing services that are convenient, affordable and reliable.

    With 70% of the population living in rural Bangladesh many of whom have no access to formal financial services, it is also the eight largest receiver of international remittances in the world. Under 15% of Bangladeshis are connected to the prescribed banking system whereas over 68% have mobile phones.

    World Bank South Asia Financial Inclusion Index 2014These phones are not only devices for talking, but can be used for more useful and difficult processing tasks. bKash was conceived primarily to use these mobile devices and the universal telecom networks to extend financial services in a protected manner to the under-served distant population of Bangladesh.

    By using the new service, bKash’s registered customers can receive remittances from every Western Union send market and channel directly into their bKash account, 24 hours a day.

    MasterCard’s Matthew Driver said: “This relationship is another step towards achieving our global commitment to make the financial system accessible to 500 million more people by 2020. Working with companies such as bKash and Western Union is crucial to taking advantage of the latest technology; digitizing money transfers and supporting financial inclusion efforts in the South Asia region and worldwide. The choice, flexibility and convenience of this new bKash service will help to expand financial inclusion to some of the most remote parts of this thriving nation.”

    Western Union’s Jean Claude Farah said international money transfers over mobile phones will accelerate financial inclusion in Bangladesh where there are currently more mobile phones than there are customers with bank accounts.

    In 2011, the Bangladesh Bank, the country’s central bank, issued the Mobile Financial Services (MFS) Guidelines and mandated that the model where MFS must be bank-led but also clearly indicated that partnerships with mobile operators must be forged to reach customers. The first two MFS providers to emerged as leaders early on were BRAC/bKash and Dutch Bangla-Bank/DBBL.

    Like many parts of developing Asia, financial inclusion is part of the government via the central bank’s strategic plan, aimed at ensuring these products meet the needs of the traditionally underserved segments of society. Among the services on priority list include expanding access to financial services to women, poor and rural populations; and formalizing financial services by promoting registered transactions.

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  • McKinsey report shines light on online-to-offline services

    McKinsey report shines light on online-to-offline services

    As world’s largest and fast-growing e-commerce market, China is expecting the potentialgrowth of the online-to-offline services, which are cutting into incumbents’ margins, accordingto the latest McKinsey’s survey of China’s Internet users.

    “Online-to-offline services can win consumers and even convince them to spend more thanthey might want to,” said Gong Fang, a partner at McKinsey’s Shanghai office.

    China’s online retail market is the world’s largest after 2015 sales grew to approximately $630billion, nearly 80 percent bigger than that of the US. E-commerce in China accounts for 13.5percent of all retail spending.

    “In an e-commerce market as large and fast as China’s, retailers and consumers will have noshortage of opportunities, especially in low-tier cities where online and e-commercepenetration remains relatively low,” said Alau Lau, senior partner and head of McKinseyDigital in Asia.

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  • Philippine eCommerce to grow 101 per cent by 2018

    Philippine eCommerce to grow 101 per cent by 2018

    The Philippine eCommerce industry is expected to grow by 101.4 per cent by 2018 from $1.15 billion in 2013, according to the Philippine eCommerce Outlook.

    Prudencio Reyes Jr, undersecretary of the Department of Trade and Industry said

    eCommerce will help “connect domestic industry with the global economy.”

    The DTI said the country’s internet-connected population has grown by around 530 per cent over the past five years.

    Of the country’s 101.1 million population, 44 per cent are active internet users, 42 per cent are active social media users, 113 per cent have mobile connections, and 36 per cent are active mobile users.

    Philippine eCommerce sales reached P79 billion in 2012, equivalent to 0.6 per cent of the country’s total income during the year. More than 76.2 per cent or P60.17 billion came from the services sector, especially transport and storage, administrative and support service activities, and wholesale and retail trade.

    The DTI is encouraging micro, small and medium enterprises (MSMEs) to expand locally and globally by venturing into eCommerce.

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  • 11street Brings Shocking Deals to Life

    11street Brings Shocking Deals to Life

    11street, Malaysia’s most exciting e-mall celebrates its one-year anniversary by bringing 11street’s Shocking Deals to Life, a carnival-themed celebration that shares the joy of saving and shopping online, as a gesture to thank Malaysian consumers for their tremendous support since its launch on 11th April 2015.

    11street’s CEO, Hoseok Kim shared that moving forward, 11street aims to continue grow its customer base and enhance existing users’ experience with its recently renewed Shocking Deals* section optimized on mobile app with greater variety to curb the economy downturn.

    Photo 1

    “Malaysians are known to be prudent and are always on the lookout for greater value for money. Backed by the promise of lowest price guaranteed, which is an online offer only by 11street, we enhanced our shocking deals section with new features to make online shopping easier and to meet the purpose of helping Malaysians in savings. This includes mobile app exclusive deals with significant mark-down and discounts, top 100 hot selling deals, new sorting capability that reveals free shipping items, and more,” Kim added.

    Unveiled Xpax’s Reload Savings for Magic SIM

    11street also announced another shocking deal in collaboration with Xpax, the main prepaid brand for youth under Celcom Axiata Berhad and launched the unbeatable Year-long Exclusive 10% Reload Savings, where new Magic SIM customers will get to enjoy more credit with this amazing Shocking Deals during its 1st birthday carnival.

    Kim said, “11street constantly look for the best deal in town to offer its customers, and this timely collaboration comes in handy to help Malaysians save more.  Sharing the same view, both 11street and Xpax are committed to provide high quality products and services to Malaysians at competitive prices.”

    During the event, Zalman Aefendy Zainal Abidin, Chief of Sales and Marketing Officer, Celcom Axiata Berhad highlighted, “Prepaid users are the larger segment of our customer base, and understanding the market preference, we want to ensure that only the best deals and services are brought to our customers. We continuously seek for channels to extend our reach to the users, either existing or potential.”

    “Being on board 11street will expand the avenue further for our customers to obtain our product. Via this channel, we are keen to create more demand for Magic SIM from Xpax, the prepaid product with more credit, more internet, as well as adding on more subscribers to our prepaid customer base.  Furthermore, the yearlong promotion on reload savings will benefit our customers greatly,” he added.

    The new Magic SIM purchased through the 11street app will allow customers to get 10% discount on every reload at 11street for the next 12 months.

    Introduced 11street’s New Brand Ambassadors – Zizan Razak and Elizabeth Tan

    Apart from the exclusive reload savings promotion launch, the two new brand ambassadors, Zizan Razak, prominent local actor-cum-entertainer and Elizabeth Tan, Malaysia’s YouTube sweetheart-turned-singer made their first appearances at 11street’s anniversary celebration.

    Photo 4

    “Even though we’re only one, our dream to reach out for the stars are exactly why we chose to welcome Elizabeth and Zizan into our growing family. They are the key to unlock our journey as we move closer to understand Malaysians in order to cater to their shopping needs and wants.”

    “Looking at both Zizan and Lizzy, a young and dynamic brand like 11street could very well relate to their boundless youth and energy that exuberates through their passion and enthusiasm to take the bulls by the horns. Honing these positive vibes, we believe the duo will bring 11street to greater heights and be loved by all Malaysians as much as they are now,” Kim added.

    Photo 2

    While enjoying the fun-filled carnival of all things shocking that includes fun games, coupons, and activities, six lucky “Fly high LIKE A STAR with 11street” contest winners were announced during the event. These lucky winners won the chance to experience an unforgettable helicopter ride followed by an intimate dinner session with the 11street’s brand ambassadors, Zizan and Elizabeth.

    Along with this, as a treat to 11street’s loyal app consumers, 11street has also officially launched the ‘11 Days of Shocking Giveaways’ with irresistible deals at lowest price. During the 11 Days of Giveaways campaign, Shocking coupons will be available every day for popular brands, including BHPetrol, Caring Pharmacy, Laneige, Melissa Shoes, OPPO, Seagate, Tefal, TGV and more. The 11 Days of Shocking Giveaways will definitely mesmerise Malaysians as 11street celebrates its 1st year anniversary with all things shocking!

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  • Online shopping in rural China nearly doubles in 2015

    Online shopping in rural China nearly doubles in 2015

    Online shopping is thriving in rural China, with last year’s transactions nearly double the 2014 amount, a Ministry of Commerce official said.

    Online purchases in rural areas were up 96 percent year on year to 353 billion yuan (US$55 billion) in 2015, said assistant minister of commerce Wang Bingnan, at a briefing.

    China now has more than 3,000 commercial websites specifically targeting rural areas, Wang told reporters, but acknowledged that a lack of properly trained people, poor competitiveness, an incomplete marketplace and weak infrastructure were hindering expansion. The ministry hopes to improve the logistics network and train more people.

    Despite an economic slowdown, online retail sales in China remained strong, jumping 33.3 percent year on year to 3.88 trillion yuan in 2015.

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  • China’s e-pharmacy eyes prescription drug for full-bloom growth

    China’s e-pharmacy eyes prescription drug for full-bloom growth

    China’s e-commerce giants are getting a hand in pharmaceuticals as the government directs prescription drug sales away from hospitals and into retail.

    China’s online pharmacy business has grown from virtually nothing five years ago to more than 7 billion yuan (1.1 billion U.S. dollars) in 2014, accounting for 3 percent of all retail sales of medicine in the country, Boston Consulting Group (BCG) said in a report Thursday.

    But analysts say the boom in online medicine sales is only a preview of explosive growth to come, provided that authorities allow online pharmacies to sell prescription drugs. So far online pharmacy sales consist mostly of over-the-counter medicine, which contributes very little to margins.

    One of the key themes in China’s ongoing medical reform is to reduce hospital reliance on drug sales for revenue. Over the long term this will enable patients to choose between hospitals and retail pharmacies for prescription drug purchases.

    Authorities also consider allowing prescription drugs to be sold online, giving e-commerce firms such as Alibaba and JD.com the opportunities to get involved in the lucrative prescription drug business.

    “E-Pharmacy business is changing very quickly in China with new regulations and different competitors entering the space. Each one is trying to grab a piece of the business,” said John Wong, a partner for BCG’s pharmaceutical practice.

    While regulations are ushering more prescription drug sales toward retail channels, including online pharmacies, the pace of that transition remains uncertain.

    Such uncertainties have forced Alibaba to scrap last week a plan to inject its online pharmacy business into its health subsidiary. Its plan to operate in the country’s medical tracking system also drew backlash from brick-and-mortar pharmacies.

    Online pharmacies are working with hospitals and local governments on separate trial programs to allow patients to buy drugs online with a doctor’s prescriptions.

    Access to prescriptions is the key for online pharmacies to get into prescription drug sales. Some local trials have managed to extend medical insurance coverage to online medicine purchases, an important incentive for patients to buy online.

    But analysts are cautiously optimistic about potential nationwide trials, given that China’s social security system is still managed by fragmented jurisdictions, creating discrepancies in coverage policies across the country.

    Another challenge, says another BCG partner Magen Xia, is for authorities to figure out a way to cap expenditure online. Under the current scheme, the cap for insurance coverage has been maintained by hospitals that prescribe these drugs.

    Regulatory challenge aside, Xia said online pharmacy cannot thrive in the prescription drug sale business alone. Given the importance of access to doctor’s prescription, retailers need to penetrate upstream.

    “Pharmacies can’t just limit themselves to selling drug online. They have to either extend to consultations and diagnosis or find upstream partners that can refer prescriptions to them,” Xia said.

    Unlike the United States where brick-and-mortar pharmacies like CVS and Walgreens holds dominance in retail prescription drug sales, the lack of nationwide pharmacy chains in China puts them in a much weaker position. This creates opportunity for e-commerce to consolidate the fragmented national market through online platforms. And once they gain access to prescription, they can ask local pharmacies to become a distribution channel for prescription drugs.

    “China’s online pharmacy will grow, but whether it grows faster or slower depends on regulation on the separation between drug prescribing and dispensing,” Wong said.

    “Right now hospital still wants money from drugs but as soon as the government says ‘stop’ you will see the industry rapidly, rapidly transform,” Wong said.

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  • Uber starts motorbike taxi service in Indonesian capital

    Uber starts motorbike taxi service in Indonesian capital

    Ride-hailing app Uber on Wednesday launched a motorbike taxi service in the Indonesian capital where Southeast Asian rivals Go-Jek and Grab are already battling for dominance.

    Jakarta is one of the world’s most congested cities and motorbike taxis ordered from a smartphone app have exploded in popularity in the past 18 months as a way to beat snarled traffic.Uber said that its “UberMotor” service would provide cheap and reliable transportation for hundreds of thousands of people.The company used a local social media and YouTube star Arief Muhammad to launch its service, saying he was the first person in Jakarta to use an Uber motorcycle taxi.

    Both Go-Jek, an Indonesian startup, and Grab, which operates in several Southeast Asian countries, claim to be the biggest provider of motorbike taxi rides in Indonesia.The popularity of motorbikes and regular taxis ordered from a smartphone has provoked a backlash in the taxi industry.Thousands of taxi drivers caused traffic chaos in Jakarta last month in a violent protest against what they believe is unfair competition.

    Drivers say the apps, which are using funding from venture capitalists to offer heavily discounted fares, have severely reduced their income. The app companies say the transport industry should adapt to new technology.The Indonesian government is drawing up new regulations to govern transport apps but has so far resisted calls to ban Uber and similar services.Officials estimate Jakarta’s traffic jams cause economic losses of about $3 billion a year.

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  • Expansion Alibaba to Indonesia to Cause Rising Trade Deficit with China?

    Expansion Alibaba to Indonesia to Cause Rising Trade Deficit with China?

    Through the acquisition Alibaba is to have a firmer grip on the online retail business in Southeast Asia, including Indonesia, the region’s largest economy where Internet and smartphone penetration have been developing rapidly in recent years (although coming from a low base). The Southeast Asian nations where Lazada has been operating so far have a combined population of 560 million (of which an estimated 35 percent are online and thus potential online shoppers). However, Southeast Asia is also a challenging environment for online retail firms as the area is characterized by tough logistical issues (partly due to the relatively weak state of infrastructure) and there remains a lack of warehousing outside more advanced markets such as Singapor

    Through the China-ASEAN Free Trade Agreement (CAFTA), effective per 1 January 2010, about 90 percent of imported goods between Indonesia and China are subject to a zero percent tariff. Due to China’s higher developed manufacturing industry and lower logistics costs the implementation of CAFTA has caused a continuously rising flow of Chinese products into Indonesia. This has caused a rising trade deficit and also curtails development of Indonesia’s manufacturing sector (after all it is cheaper and quicker to import products from China than to invest in costly and long-term import-substitution industrialization).

    In 2015 Indonesia imported USD $29.22 billion worth of (non-oil & gas) products from China, while Indonesian exports to China only totaled USD $13.26 billion, implying a trade deficit of nearly USD $16 billion for Indonesia that year. This is in stark contrast to the years before 2008 when Indonesia had the upper hand in trade with China. The table below shows that Indonesia’s trade deficit with China rose significantly after the implementation of CAFTA in early 2010.

    Indonesia-China Trade Balance (non-oil & gas):

     2007  2008  2009  2010  2011  2012  2013  2014  2015
    Export to China
    (in USD billion)    		   9.7  11.6  11.5   14.1   21.6   20.9   21.3   16.5   13.3
    Import from China
    (in USD billion)    		   8.6  15.3  14.0   19.7   25.5   29.0   29.6   30.5   29.2
    Trade Balance
    (in USD billion)
    		   1.1  -3.7  -2.5   -5.6   -3.9   -8.1   -8.3  -14.0  -15.9

    Source: Indonesian Trade Ministry

    With Alibaba now owning a controlling stake in e-commerce platform Lazada, which has a rising costumer base in Indonesia, it could cause two developments: (1) due to the stronger ties between Lazada and China it gives rise to an increasing flow of Chinese products into Indonesia putting pressure on Indonesia’s trade balance, and (2) it threatens the position of local Indonesian start-up e-commerce businesses such as Bukalapak or Tokopedia because Lazada is expected to get a capital injection from Alibaba for expansion purposes and has easier access to cheap Chinese products (more competitive).

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  • Mei.com & Alibaba Launch the TMALL Luxury Flash-Sale Channel with Star-Studded Live-Streamed Fashion Show

    Mei.com & Alibaba Launch the TMALL Luxury Flash-Sale Channel with Star-Studded Live-Streamed Fashion Show

    A live-streamed fashion show featuring 42 looks has marked the launch of a luxury Tmall flash sales channel via app that makes the styles immediately available to shoppers.

    Alibaba Group’s B2C online marketplace Tmall.com has launched the channel through its mobile-phone app, allowing viewers of the live stream to “scan and buy” the runway looks.

    Soft-launched about three months ago, the Tmall channel is being managed by Mei.com, which since 2010 has run a website in China that provides a flash sales outlet for nearly 300 international luxury brands including Armani, Longchamp, Michael Kors, Tumi and Zegna, through exclusive partnerships.

    Mei.com CEO Thibault Villet with Olivia Palermo and Mei.com President Seamon Shi.

    Mei.com CEO Thibault Villet with Olivia Palermo and Mei.com President Seamon Shi.

    Alibaba invested an undisclosed amount in Mei.com in July, saying the site’s relationships with affordable luxury goods merchants would complement Tmall’s roster of high-end retailers such as Burberry, Coach and Hugo Boss. The new flash-sales channel gives Tmall.com shoppers direct access to discounted luxury goods from more than 3000 retailers and authorised distributors.

    “The launch of the channel will further the variety of brands on Tmall and offer China’s burgeoning middle class a one-stop shopping platform,” says Alibaba Group CMO Chris Tung.

    Millions of consumers across China watched the fashion show. It featured clothing and accessories, including 30 womenswear looks, 10 menswear looks, and a finale including two children’s looks.

    Actor Peter Sheng, famous for his role in the China web series Go Princess Go, made his runway debut in the show wearing a Carven suit. American socialite Olivia Palermo styled one of the runway looks and was a front-row attendee of the show wearing the look herself.
    Trendsetters and tastemakers attending the event also included singer Chris Lee and runway model and pop star Tia Ray, who also performed.

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