Former Manchester United stars Ryan Giggs and Gary Neville will open a football-themed cafe in Singapore next year as part of a business venture with real-estate firm Rowsley.
Gary Neville (left) and Ryan Giggs team up.
Cafe Football is the first overseas venture for the UK franchise, which also includes Hotel Football just beside Old Trafford in Manchester.
Cafe Football and Hotel Football were initially set up by Singaporean businessman Peter Lim along with five of the Manchester United’s “Class of 92” cohort, which includes Giggs, the Neville brothers Gary and Philip, Paul Scholes and Nicky Butt. Rowsley last year acquired the majority share of both Cafe Football and Hotel Football, as well as hotel management company GG Collections.
The company has just revealed its intention to bring the franchise to Asia, as well as Europe, over the next decade. It has identified China and India as the main markets it is targeting for expansion.
“We’ve been approached quite a lot by partners to expand,” says Gary Neville, who played 602 games for the club. “Knowing there’s quite a lot of excitement in the market, we’re filtering down to the best opportunities that support our brand and product.
“So far, we’ve had fantastic reviews in Manchester, with a more than 80 per cent occupancy rate even during non-match days. Now we are looking for a UK, Europe and Asian expansion over the next 12 to 18 months to add multiple properties.”
Neville says they hope to build more than 5000 rooms over the next 10 years. They are hoping to open in Indonesia, Malaysia and Thailand, with some developments including both a hotel and cafe, while others will be a cafe only.
There are currently two Cafe Football outlets in the UK, in Manchester and London. The cafes feature menus divided into “defence, midfield and attack”, with dishes named after football phrases such as “The Special One”, “Mexican Wave” and “El Classico”.
Lim previously was involved in a football-themed eatery in Singapore. Fashion brand distributor FJ Benjamin, of which Lim is a shareholder, co-owned the now-defunct Devil’s Bar, a sports pub with a Manchester United theme, at Orchard Parade Hotel.
Whether paying with contactless cards or mobile wallets, Thais prioritize security over convenience and are more likely to use contactless payment methods when they know strong security measures are in place, according to a recent study conducted by Visa.
The Visa Mobile Wallet and Contactless Study found that the majority of Thais (82 percent) believe security is more important than convenience when it comes to mobile and contactless payments.[1] With accelerated growth in financial technology (FinTech), public and private sectors are grappling with ways to increase consumer confidence in electronic payments, particularly when it comes to transactions carried out on mobile devices.
The average Thai spends around 160 minutes a day on their mobile devices.[2] By the end of 2016, it is estimated that around 20 million people will own smartphones in Thailand, a figure expected to rise to 24.8 million by 2019.[3] Although internet access and mobile device ownership among Thais are on the rise, uptake of mobile financial services has been gradual, partly due to Thai consumers being unaware of advancements in cyber security, and technology.
Suripong Tantiyanon, Visa Country Manager, Thailand said: “Based on our study, the more secure the mobile payment experience is, the more willing Thai consumers will be to use it. We’re confident this cautious yet optimistic attitude, coupled with Visa’s multilayered approach to security, will drive the uptake of mobile transactions in Thailand.”
The Visa study, independently conducted by YouGov on behalf of Visa, examines Thais’ attitudes towards mobile and contactless payments alongside those of other Southeast Asian markets, namely Singapore and Malaysia. It finds that the three biggest fears in mobile wallet security are hacking of mobile phone (73 percent), theft of mobile phone (65 percent) and getting charged for unintended purchases (63 percent).
“Among the respondents, only 39 percent said they would consider using third-party mobile wallets. But within this particular group of potential adopters 74 percent are already aware of how encrypted tokens eliminate the risk of personal data theft,” added Mr. Suripong.
Visa Token Service (VTS) ensures mobile and contactless payments are secure as well as convenient. VTS replaces cardholder information, such as account numbers and expiration dates, with a unique digital identifier (a “token”) that can be used for payment, via a user’s mobile wallet, without exposing the cardholders’ more sensitive account information.
Tokenization hides consumers’ confidential account information during digital transactions, making digital payments more secure. According to the study, approximately 55 percent of Thais are familiar with VTS, with awareness highest among those that are also familiar with mobile wallet technology.
Just under half of Thais (46 percent) believe paying with a mobile device is as safe as with physical cards; a figure likely to increase in the future, as people become more familiar with advancements in Visa’s mobile payment systems.
Three in five Thais (61 percent) believe that one day they will no longer need to carry a card or cash and will instead be able to use their mobile wallets for everyday spending.
“Once Thais become familiar with innovative security measures, such as encrypted tokens, they are much more likely to use mobile and contactless payments more regularly,” said Mr. Suripong.
Ant Financial Services Group has announced a strategic agreement with Thailand fintech company Ascend Money.
Under the agreement Ant Financial will invest in Ascend Money, with the aim of accelerating the growth of a mobile lifestyle and digital financial services platform in Thailand and support the company’s growth in Southeast Asia.
Headquartered in Bangkok, Thailand, Ascend Money operates in six countries, including Thailand, Indonesia, the Philippines, Vietnam, Myanmar and Cambodia. Ascend Money targets two under-served groups, including digital consumers with its innovative mobile wallet application and the under-banked with its massive agent network.
It currently provides payment services such as domestic and international remittance, bill payment, top up services, online and offline payments and payroll services. Future services will include lending, insurance and investment.
Together with Ant Financial, Ascend Money will grow its online and offline payment and financial services ecosystem and strengthen its payment services for users and merchants. The deal represents Ant Financial’s first-ever investment in a Thailand-based company. With this partnership Ant Financial, which also runs Alipay, the largest mobile lifestyle and payment app in China, will provide Ascend Money with strategic and technical support for the growth of its business.
Leveraging Ant Financial’s capabilities in payment, Big Data, risk control and cloud computing capabilities, the partnership with Ascend Money aims to offer Thai consumers comprehensive and equal access to financial services. Ascend Money is Ant Financial’s first partner in Southeast Asia and second globally after Paytm in India.
“Ascend Money’s mission is to enable everyone access to innovative financial services, leading to better lives,” said Suphachai Chearavanont, Chairman of Ascend Group. “The shared vision of financial inclusion and company values in creating opportunity and sustainability have lead us to this partnership.”
“Ant Financial is setting its footprint worldwide, not only to provide services for its Chinese users, but to promote equal access to financial services globally,” added Ant Financial SVP Douglas Feagin.
“Partnerships are vital for Ant Financial’s growth and we want to work alongside companies around the world who share our missions.”
In early 2015 Ant Financial joined forces with Paytm, the world’s fourth largest e-wallet, to promote secured digital payment to local users in India. Ant Financial is also working with dozens of global payment partners, including Concardis, Ingenico, Wirecard and Zapper in Europe, First Data and Verifone in North America, Paysbuy and Counter Services in Southeast Asia, Recruit in Japan and KICC and ICB in Korea.
Thai hypermarket operator Big C Supercenter boosted margins in the latest quarter despite the challenging economic climate.
The company has reported continued resilient rental and service income growth, margin improvement across the board thanks to a focus on the quality of sales – delivering a “robust” Big C profit boost.
The third quarter to September 30 was the first full reporting period of its new strategic focus on quality of sales rather than the absolute sales amount.
“On our operations we continued our push to localise our offer in order to become the ‘Thai retailer with customers in our heart’ as we will be better positioned to serve local communities and their varying tastes,”explained Rumpa Kumhomreun, CFO & VP of accounting and finance, in a filing with the Thai SET. “Our work to capture synergies between BJC and Big C is continuing, and during the quarter we for example moved some of our private label tissue manufacturing to BJC. We also started serving Big C Soft Serve ice cream in pilot hypermarkets and Mini Big C stores. Our access to TCC “land bank” also made it possible for us to open an additional Big C Market store at Pantip Chiang Mai during the quarter.”
The company also improved its online offer, rebranding its Cdiscount.co.th to Cmart.co.th, with over 70,000 SKUs available.
Big C’s Total Revenues from retail sales, rental and service income, and other income, for the quarter reached Baht 25.892 billion – a decline of Baht 5.799 billion or 18.3 per cent over the same period last year. This decrease was driven by a retail sales decline of 20 per cent from the same period last year, and a same-store-sales decline of 22.6 per cent.
“The significantly declining same-store-sales trend was driven by our strategic focus on the quality of sales rather than absolute sales volume,” said Kumhomreun.
With a similar fall in expenses, however, Big C’s net income attributable to shareholders grew by 14.6 per cent to Baht 1.538 billion for the quarter, up Baht 196 million year-on-year.
Gross profit margin reached 17.8 per cent for the quarter, representing an increase of 487 basis points from last year.
Store expansion continued during the quarter in all store formats, with two hypermarkets opening in Phonphisai and Na Thawi, two Big C Market stores in Loei and Chiangmai, 23 Mini Big C stores including 15 franchise stores, and one Pure Drugstore. Those took the store count at the end of September to 128 large format stores (Big C Supercenter, Extra, and Jumbo), 59 Big C Market, 431 Mini Big C (including 21 franchise stores), and 142 Pure Drugstores.
Samsung Electronics has confirmed Samsung Pay Thailand will make its debut before the end of this year.
Thailand, Malaysia and Russia are three of 10 new markets where the payment technology will be introduced.
Samsung Pay has also announced a global partnership with MasterCard to offer a simplified online payment and express checkout solution through its digital payment service Masterpass, starting early next year. Hundreds of thousands of merchants in 33 countries currently accept Masterpass for online payments.
“When we introduced online payments in South Korea last year, the service was well received by the market.
Online payments accounted for more than 25 per cent of the 2 trillion won in processed transactions, demonstrating that consumers may be actively looking for solutions to make their online experiences faster, simpler and secure,” said Thomas Ko, VP and Global GM, Samsung Pay, Mobile Communications Business at Samsung Electronics.
Samsung Pay will provide consumers with a seamless online payment platform with benefits including:
Express Checkout: Skip the process of filling out long online forms. With the express checkout solution, customers will be able use their Mastercard debit or credit cards along with the shipping information saved on their Samsung Pay account to quickly complete online transactions.
Make Purchases from Any Device: Customers can make online purchases from a computer, tablet or smartphone while shopping on their favorite sites or apps.
Secure Transactions: Security remains our top priority. When making online payments, a unique token is used in an encrypted form – not the actual debit or credit card number. Users can authenticate transactions using secure methods including a fingerprint scanner, which is built into Samsung’s mobile devices.
Thai online fashion retailer Pomelo has raised a follow-on round, bringing its total Series A funding to US$11 million.
This round was again led by Singapore-based Jungle Ventures, with participation from existing investors and new contributors including 500 Tuk Tuks (a fund of major venture capitalist 500 Startups), Andre Hoffmann and Jonathan Price.
Pomelo says it will use the funds to continue expanding in Southeast Asia. While focussed on Indonesia, Singapore and Thailand, it has customers in more than 40 countries.
“We strive to provide the absolute best in terms of online fashion through our vertically integrated supply chain,” says Pomelo co-founder/CEO David Jou. “eCommerce is clearly approaching a tipping point in Southeast Asia, and we’re lucky to be one of the leaders in the fast-growing fashion vertical.”
Additionally, the label continues to strengthen its management depth, having added Meg Mistry as brand president and James Lamrock as regional VP (operations). Mistry was previously regional creative director for online fashion house Zalora, while Lamrock was chief logistics officer at Luxola, which was acquired by beauty products company Sephora. Investment firm TPG senior adviser Jonathan Price has also joined in an advisory capacity. He was previously MD of cosmetics and skincare group The Body Shop Asia and global COO of accessories company Targus.
Global Business Outlook (GBO), a business publication based out of London, has conferred the 2016 awards for ‘Best Commercial Bank’ and ‘Best Retail Bank’ in Thailand to Bank of Ayudhya (Krungsri).
Krungsri was established in 1945, and its ordinary shares were listed on the Stock Exchange of Thailand in 1977. The bank is currently the fifth largest in Thailand in terms of loans and deposits. Krungsri provides a comprehensive range of banking, consumer finance, investment, asset management, and other financial products and services to individual consumers, SMEs, and large corporations through 681 branches and over 28,000 service outlets nationwide. Also Krungsri Group is the largest card issuer in Thailand with 7.8 million credit cards, sales finance, and personal loan accounts in its portfolio.
Noriaki Goto, Krungsri President and Chief Executive Officer, upon receiving the awards said: “Krungsri is honoured with the Best Retail Bank Thailand and the Best Commercial Bank Thailand for 2016 awards. They are testimony to the strength of both our retail and commercial banking businesses and the fruit of our people’s passion to deliver excellent financial products and services to our valued customers. We are proud that these efforts are recognised by such a large base of professional organizations. Driven by our customer centricity strategy, we anticipate customers’ demands and serve them through innovation and technology. Krungsri remains committed to investing for the future and delivering innovative financial products and services for both retail and corporate segments.”
Legal representatives from both TrueMove and Dtac have slammed the new computer misuse act for moving the burden of proof to ISPs to prove their innocence while True said that the Single Gateway government mass surveillance program was still alive and well.
Speaking at a recent seminar entitled Online life: which way shall we go, Akarawit Jongsawasdiworakul from Dtac’s legal division said that unlike the US’ common carrier law, Thailand’s computer misuse act article 15 puts telcos at risk of criminal prosecution for the actions of their subscribers as service providers face the same criminal liability as their users for, say, an illegal posting.
Dtac has to invest significant resources into monitoring its users to stay safe legally, resources that could have better been invested in 5G, he said.
Unlike most aiding and abetting clauses in Thai law in which the aider gets two-thirds of the punishment, the computer misuse act doles out the same punishment to the service provider as it does to the criminal using it.
However, the latest draft amendment is much worse. In trying to fix that glaring problem, the new version lays out a system where authorities can issue orders to service providers to block the offending post. The law then goes on to say that if the service provider can prove they complied with the order, then they are exempted from any punishment.
Akarawit said that the computer misuse act shifts the burden of proof. Instead of the prosecution proving guilt, the service providers will now have to prove their innocence to a court.
He also noted that under the current law, censorship orders must be only via a court order. The new version only needs an order from a “the official in charge” without any judicial oversight.
Suporn Hornchaiya from True’s legal division, added that the definition of service provider is so vague that anyone with an unsecured WiFi hotspot would be subjected to the full force of the law.
Suporn said that today authorities use article 20 to block websites, not just those which are a threat to national security or good morals which are allowed under the law, but also use it to block gambling websites and copyright infringement sites which is not allowed under the law. He noted that courts regularly grant blocking orders for the latter.
Suporn said True has in the past appealed a court order, but the appeal was not accepted as the courts said that True was not an affected party to the blocking order.
Following a decade of declining health, 88-year-old King Bhumibol Adulyadej of Thailand, the world’s then-longest-reigning monarch, passed away in Bangkok on October 13. The king’s untimely death concluded a reign that lasted more than seven decades and initiated a year-long period of mourning, bearing substantial consequences for the nation’s luxury and fashion sectors.
As declared by Prime Minister Prayuth Chan-ocha, leader of the junta that has ruled the country since 2014 after seizing power through a bloodless coup d’état, civil servants will be expected to wear “sombre-coloured” attire for the duration of the mourning period, while the rest of the population has been ordered to “tone down” or cancel entertainment and “joyful events” for at least the next month.
Though the first full week of mourning has yet to pass, the consequences are already being felt. “I think [the fashion and luxury sectors] are definitely going to suffer — there will be a drastic decline in consumers of fashion brands,” predicts Kullawit ‘Ford’ Laosuksri, editor-in-chief of Vogue Thailand. “For example, I have spoken to a distributor of Kate Spade and Valentino, and they said that they had to re-estimate their Spring/Summer orders … The tourist and retail sectors are going to see a decline in sales — that is something the whole nation is afraid of.”
Indeed, many of these fears are justified. “Retailers and hotels cancelled all promotions and activities related to sales and events during October to November,” says Anisa Ngandee, an analyst from Euromonitor. “Generally, the last quarter is usually the peak tourism period and the months where retailers [see] festive spending [during the] holiday seasons; thus, it will have a short-term impact on the retailers and hotels sales.”
Regarding his publication, Laosuksri says, “There’s nothing we can do for the November issue, [but] for December issue, we are definitely going to decrease the print run, [while] a lot of traditional advertisements will be — if not in black and white — condolence messages.”
From a Western perspective, the extent of mourning may seem extreme, but King Bhumibol’s reign was unique. For most Thais, life under Bhumibol is all they have ever known. “I and all the Thai people view this passing of the king as something that is quite personal as if somebody from our family has passed,” says Laosuksri. King Bhumibol’s heir, Crown Prince Maha Vajiralongkorn, has delayed his ascension to join the Thai people in grieving for his father; however, the country’s general election will go ahead as planned in late 2017.
In recent years, the Thai luxury market has shown tremendous promise, growing 8 percent year-on-year from 2015 to 2016, reaching a total value of nearly $1.6 billion, according to Euromonitor. This can partly be attributed in part to the country’s young, wealthy upper-middle class. According to Digital Luxury Group,a business intelligence firm headquarted in Geneva, 20.5 percent of consumers who earned $150,000 or more in 2014 fell into the 30-34 age bracket, while another 18.6 percent fell into the 35-39 bracket, giving luxury brands and retailers ample space to penetrate the Thai market.
The tourist and retail sectors are going to see a decline in sales — that is something the whole nation is afraid of.
Nevertheless, despite this wealthy domestic consumer base, tourism still plays a significant role in sales of luxury goods. According to Bain & Company’s 2015 Global Luxury Goods Report, “Thailand [is a] top performer [in the Southeast Asia market] thanks to Chinese flows with strong potential going forward.” Just two days before the death of the king, Thailand’s biggest retailer, Central Group, announced expectations of a 21 percent rise in revenue to 320 billion baht ($9.17 billion) for fiscal 2016; sales at Central stores to foreigners rose 15 percent while transactions with domestic consumers merely increased by 5 percent.
Given the immediate decline in the domestic demand for luxury goods, the Thai government must now tighten their dependence on the tourism sector to offset regressions, as retailers scramble to compensate losses in sales. “[The fashion industry] is very much going to depend on tourism; therefore, I think the government will be trying their best to promote it … after the one-month period,” predicts Laosuksri.
If Laosuksri’s forecasts are correct, the Thai government will need to amplify its current efforts to engage Chinese tourists. “Thai authorities are leveraging Mandarin websites and KOL (key opinion leader) representation in China to promote the destination,” says Thibaud Andre of Daxue Consulting, a market research firm based in China. “[They] are strongly pushing their domestic practitioners to be more educated on Chinese culture and basic Mandarin, as well as [to increase activity] on Chinese platforms such as Wechat, Weibo or Taobao.”
Despite the negative image of Chinese tourists in Thailand and controversy surrounding the recent crackdowns on “zero-dollar” budget tours targeted at lower-income tourists from China earlier this month, according to the Siam Commercial Bank, the average daily expenditure per person amongst Chinese tourists has grown to 5,748 baht ($164.1) in 2015, from 4,425 baht ($126.4) five years prior. In terms of purchasing power, foreign shoppers, especially Chinese tourists, have become a cornerstone of the Thai luxury market.
In data provided by Thailand’s Department of Tourism, from January to August of this year, approximately 6.6 million tourists from China visited Thailand — more than from Europe, the United States, Australia, Africa and the Middle East combined – with nearly two million arriving between January and February 2016 alone, an especially high-traffic period for the Lunar New Year.
In the near future, Thailand’s luxury retail market may face several hurdles in sustaining recent growths in sales — particularly given the country’s strict lèse-majesté laws and the increasing risk of ultra-monarchist violence in the capital deterring inbound tourists from mainland China. “In the short term … we already lowered our expectations to 10.5 million visits for 2016 due to the mourning period,” says Andre. “Chinese agencies are already refunding their clients and tour operators are cancelling trips.”
While the short-term forecast may seem turbulent, market analysts remain positive about the future. According to Ngandee, “In the long term, with the development of infrastructure, expected number of tourists are projected to be positive; [compounded with] the expansion of Thai middle-income population, industries are generally looking forward to more optimistic performances.” Nevertheless, Euromonitor suggests that stability still remains contingent upon next year’s government election.
However, the country has shown resilience during previous political and social upheavals, and many Thai industry insiders like Laosuksri maintain a sense of hope in this period of uncertainty.
“Euromonitor projects that more than 12 million incoming Chinese tourists at the end of 2020, [and] Thailand is expected to remain among the top destinations and might overtake the second hit destination [for outbound Chinese travellers] at the end forecast period,” assures Ngandee.
The ASEAN region (The Association of Southeast Asian Nations) is emerging as one of the most promising e-commerce markets in the world to replace the saturated Chinese market.
Following the establishment of the ASEAN Economic Community (AEC) at the end of 2015, e-commerce is providing huge opportunities for Korean retailers seeking new customers abroad.
Most member states of ASEAN, including Indonesia, Thailand, Malaysia, Singapore, the Philippines and Vietnam, are experiencing an e-commerce boom.
The Internet-based retail market has been relatively underdeveloped in Southeast Asia due to low Internet penetration and lack of customers with purchasing power.
However, with the middle class growing and Internet penetration spreading, the number of online and mobile shoppers in the region is rising fast.
Still, it is fragmented and Internet users account for only around 40 percent of the total population of Southeast Asia, indicating that the region has much room to grow.
According to the 2016 report “E-Conomy SEA (Southeast Asia)” released jointly by Singapore’s sovereign fund Temasek and Google, the average annual growth rate of Internet users in the region is forecast to reach approximately 14 percent by 2020, well above 4 percent for China and 1 percent for the United States.
Online shoppers, accordingly, are also on a sharp rise.
According to Bain & Company, the number of digital consumers, or those aged over 16 and using e-commerce, reached 150 million in 2015. Of them, around 100 million or 75 percent actually purchased goods online.
By nation, Indonesia ranked at the top with 51 million digital consumers, followed by Vietnam (31 million), the Philippines (28 million), Thailand (23 million), Malaysia (14 million) and Singapore (3 million).
“Chinese and global Internet companies should look at Southeast Asian e-commerce as their next potential gold rush,” reported IT-specialized media TechCrunch in June, 2015.
In particular, ASEAN’s e-commerce has a special feature that sets itself apart from other countries.
For example, the online retail market in the U.S. and Korea first grew with expansion of PC-based shopping. However, Southeast Asia experienced the e-commerce boom with more consumers accessing Internet via smartphones.
In 2015, e-commerce in the ASEAN is estimated at $5.5 billion (6.06 trillion won), and the amount is expected to rise to $8.78 billion by 2025, according to E-Conomy.
The portion of e-commerce to retail sales in the region stood at only 0.8 percent in 2015 but is forecast to jump to 6.4 percent by 2025.
Global players eye ASEAN
Against this backdrop, global players are making fast forays into the ASEAN e-commerce market.
In April, Alibaba, China’s largest e-commerce company, purchased a controlling stake in Southeast Asian online retailer Lazada Group for $1 billion, its largest overseas investment.
Lazada was started by Germany’s Rocket Internet in 2012 with headquarters in Singapore. It is operating in Malaysia, Indonesia, the Philippines, Thailand and Vietnam. It is the number one e-commerce player in Philippines, Malaysia, Thailand and Vietnam.
In June, U.S. retail giant Amazon also decided to invest $600 million to open an e-commerce platform in Indonesia, according to Daniel Tumiwa, chairman of the Ecommerce Association of Indonesia (IDEA).
Japanese SoftBank and Silicon Valley venture capitalist Sequoia Capital acquired a $100 million stake in Tokopedia, the biggest startup investment in Indonesia. eBay, another U.S. e-commerce giant, currently owns Qoo10, the online shopping mall based in Singapore.
Korean companies are also expanding their operations in the region to capitalize on the rising popularity of hallyu or the Korean Wave.
On Sept. 20, CJ Korea Express, South Korea’s largest parcel delivery service company, signed an international delivery service contract with Lazada. Under the deal, CJ would deliver goods made in Korea purchased by customers via Lazada’s website.
On the same day, KOTRA, Korea’s trade-investment promotion agency, joined hands with Qoo10 to start an online support program and help Korean small firms export their goods to Southeast Asia. Qoo10 has a total of 300 million online members in Singapore, nearly 60 percent of its population.
SK Planet opened 11th Avenue, its online shopping mall, in Indonesia in 2014 and Malaysia in 2015.
Korea is now focusing on expanding exports of consumer goods to ASEAN as it has faced limitations to increase external shipments of parts and intermediary products.
“With more Korean firms entering the ASEAN e-commerce network, including Lazada, exports of Korean consumer goods, such as mobile phones, cosmetics, food and fashion items, are on a sharp rise,” Roh In-ho, KOTRA’s Asia Regional Director based in Singapore, said.
For sustainable growth, Korean firms need to make more effort to come up with localized strategies that meet demands from local customers.
“If diversifying marketing strategies, ASEAN e-commerce will offer good opportunities for small Korean exporters,” Roh said. “It is very important to develop designs and products that locals would like.”
Thai retailer Central Group expects revenue to rise 21 per cent to Bt320 billion ($9.17 billion) this year following strong growth in overseas business plus tourist spending.
Controlled by Thailand’s Chirathivat family, Central is seeking to expand in Southeast Asia, says CEO Tos Chirathivat, citing Cambodia, Laos, Myanmar and Vietnam.
He expects overseas revenue to account for 40 per cent of total in the next five years from 30 per cent now.
Central bought superstore chain Big C‘s Vietnam business from French retailer Casino in April, comprising 43 stores and 30 malls. Vietnam is Southeast Asia’s fastest-growing market for Central, and the company expects sales to reach Bt37 billion this year.
Central has also benefited from rising tourist numbers in Thailand, with sales up 15 per cent this year versus 5 per cent for Thai customers, says Tos.
The group, whose interests include shopping mall developer Central Pattana, Robinson Department Store and Central Hotel Plaza, plans to spend more on its online retail business, which currently accounts for just 1 per cent of revenue.
Central bought fashion-focused eCommerce site Zalora in April as part of a push to win back shoppers who increasingly prefer internet shopping.
Asia is home to more than half the world’s most dynamic retail hubs, according to new research that reinforces images of the region’s mall-strewn megacities.
The research, by professional services and investment management company JLL, says 12 of the fastest-growing retail cities are in Asia, with eight in China alone — another indication that global economic growth is increasingly driven by the Asia-Pacific region.
JLL lists Dubai as the world’s fastest-growing retail destination, with Shanghai second and Beijing third. Places 9 to 13 are occupied by Bangkok, Chengdu, Kuala Lumpur, Jakarta and Manila, respectively. Only two European cities make the top 20 — Moscow and Istanbul — with none from Africa. Mexico City is the sole city from the western hemisphere, sitting at number 19.
Overall, JLL lists London as the “most attractive” city for retailers, with Hong Kong second and Paris third. Dubai, Singapore, Shanghai, Tokyo and Beijing all make the top 10, with Bangkok, Taipei, Seoul and Osaka in the top 20.
Shanghai at night. The Chinese megacity is projected to be one of the world’s retail hubs in the coming years (Photo: Simon Roughneen)
The study looks at the presence of 240 international retail brands in 140 cities — which altogether make up 36% of the world’s gross domestic product, 13% of the global population and a third of total worldwide consumer spending.
“The search for growth is escalating the penetration of international brands across the world’s most attractive retail cities, especially in Asia,” said David Zoba, chairman of JLL’s Global Retail Leasing Board.
Asia catching up
Many Western economies continue to suffer from slow growth — in stark contrast with Asia, where the International Monetary Fund predicts overall growth of more than 5% in 2016-17 and describes the region as “the engine of the global economy.”
Asia is urbanizing rapidly as economies develop and incomes rise, meaning that big global brands will increasingly look to Asia as a source of consumers. World Bank research shows that nearly 200 million people in the East Asia and Pacific region –excluding India and its heavily populated neighbors such as Pakistan — moved from the countryside to cities during the decade after 2000.
In 1800, only 3% of the world’s population lived in cities, a figure that rose to 13% by 1900. Now more than half the world’s population is urbanized, with projections that 70% or more of the world will live in urban areas by 2050. And while in the 19th and 20th centuries urbanization was mainly a Western and Japanese phenomenon, developing countries are catching up fast, particularly in Asia.
Despite the steady rural-urban shift, only 36% of East Asia’s population had moved to urban areas by 2010, with only Japan, Malaysia, South Korea and Taiwan having larger urban than rural populations.
While China had by far the largest absolute numbers of people moving to cities, smaller countries such as Cambodia, Laos and Vietnam showed higher rates of urbanization. Laos more than doubled its small urban population, while high-growth economies such Cambodia and Vietnam both had between 4% and 4.5% annual urban population growth rates. Retail investors are noticing opportunities even in smaller cities such as Phnom Penh, where Japanese mall operator Aeon opened the city’s first large shopping mall in 2014.
Asia’s cities will continue to grow over the coming decades as the region becomes wealthier. McKinsey Global Institute expects that in the next 15 years, “the center of gravity of the urban world will move south and, even more decisively, east.” According to MGI, half of global GDP in 2007 came from 380 developed world cities, with the 22 biggest cities in developing countries contributing a mere 10%.
However, MGI predicted that by 2025 half of the cities in its 2007 rankings will not make the list, with 136 developing world cities entering its ranking of the 600 biggest urban economies — including 100 from China alone.
“By 2025, developing-region cities of the City 600 will be home to an estimated 235 million middle-class households earning more than $20,000 a year at purchasing power parity (PPP),” MGI reported. The figure is larger than the 210 million such households expected in the cities of developed regions.
Thinktank Oxford Economics said that cities such as Chengdu, Hangzhou and Wuhan “will become as prominent in 2030, in economic terms, as cities like Dallas and Seoul are today.”
Shift east
The thinktank predicted that by 2030 eight European cities will drop out of the global top 50 cities ranking, measured by GDP, while nine Chinese cities will join that group, taking the Chinese total to 17, which will be more than North America and four times more than Europe.
In turn, the thinktank said, this will mean more Asian consumers with money to spend. “Starting from a comparatively low base today, China will boast some 45 million high-income urban households (exceeding $70,000 per annum at 2012 prices and exchange rates) by 2030, putting it well ahead of Europe and hot on the heels of North America. Shanghai will jump from a rank of 69th today to 8th for its number of high-income households in 2030,” Oxford Economics said.
Otherwise, however, the seven megacities with the most high income residents will remain the same as today, with Tokyo leading New York, London, Osaka, Los Angeles, Paris and Chicago.
But Asian cities are set to add tens of millions of middle-income households (incomes between $10,000 and $70,000) to their ranks by 2030. Jakarta will be home to 9.4 million, with 7 million to 9 million more in each of Chongqing, Shanghai, Tokyo and Beijing, the projected top five cities ranked by population of middle-income households, according to the thinktank.
JLL said that for retailers, vying for market share in emerging economies is sometimes risky, but the potential prize — market access to vast populations and rapidly expanding middle classes — outweighs any perils.
For example, China’s anti-corruption crackdown has had “a knock-on effect” on the luxury goods market in the world’s second-biggest economy, said James Hawkey, JLL’s head of retail for China. But retailers are nonetheless “increasingly comfortable dealing with these risks, and generally have their eyes on the long-term prize of establishing a strong position in major world markets.”
Although incomes and spending power remain lower in many Asian countries and cities than in the West, part of the attraction of smaller, less-developed markets is relatively low rental costs.
“Places like Ho Chi Minh City, Jakarta and Bangalore present an opportunity for retailers to establish their brands at rents of less than $2,000 per square meter per year with projected in-store sales increasing by 8% to 10% until 2019,” JLL reported.
Wealthy mid-sized cities or trade-oriented city-states such as Singapore and Hong Kong also benefit from high numbers of visitors such as tourists or business travelers.
But Asia’s urbanization will not mean that rural dwellers will be ignored by retailers, particularly in China.
“Retail potential in Asian hubs is strongly influenced by what is happening in their hinterlands — what is happening in nearby provinces and/or countries,” Steven McCord, JLL’s head of research for northern China, told the Nikkei Asian Review.
“Shanghai exerts a ‘gravity effect’ over its surrounding cities and provinces due to its size and the wealth of its retail offer. Therefore, close to 80 million people within day-trip distance to Shanghai will regularly travel to that city for large shopping sprees,” McCord added.
In a first for the Asean region, Thai operators AIS and Dtac have teamed up to facilitate cross-network VoLTE calls.
The operators enabled AIS-Dtac VoLTE calls last week and plans to implement cross-network 4G video calls from Tuesday.
Cross-network VoLTE calls are being made available to both prepaid and postpaid customers at no additional cost.
While each of Thailand’s top three mobile operators – AIS, Dtac and True Corp – recently launched VoLTE, the functionality had previously only been available for within-network calls.
Industry watchers believe the move may be an attempt by market leaders AIS and Dtac to fend off competition from fast-growing challenger True Corp. But the Nation quotes True Corp’s chief commercial officer Kittinut Tikawan as stating that the company is confident it can negotiate simila deals with both AIS and Dtac.
The move will also pave the way for the launch of the iPhone 7 and iPhone 7 Plus in Thailand later this month.
Financial Services Authority (OJK) Chairman Muliaman D. Hadad said that the OJK is in the process of exploring the possibilities of expanding Indonesian banking industry overseas.
“The most possible [cooperation] is with Thailand, because there have been two or three meetings,” Muliaman said.
Muliaman said that similar cooperation will also be established with other countries. Muliaman explained that Thailand serves as an important stepping stone to establish cooperation with Cambodia, Vietnam, Laos, and Myanmar. “Why Thailand? Because Thailand has dominant business [partnership] with its neighbouring countries,” Muliaman added.
Muliaman said that there are lots of possibilities for Indonesia to expand its financial industry to Thailand. Moreover, several of Indonesian business sectors have started to expand to Thailand, including property and trade.
Aviliani, an economist from the Institute for Development of Economics and Finance (Indef) praised OJK’s plan to integrate the national banking industry with ASEAN. Aviliani said that the integration is important to allow Indonesian banks to open branch offices and conduct business activities in neighbouring countries. However, Aviliani asserted that the policy may not always favour the banking industry. “Banks will always reflect on market potential,” Aviliani said.
Aviliani added that the potential for overseas banking market is not quite as large as the domestic market. “Opening [branch offices] overseas will be difficult if [banks] cannot profit. But when foreign banks expand to Indonesia they will reap benefits because [Indonesia] has a large market potential,” Aviliani said.
Asian cities dominate the latest retail destination rankings, with the Middle East taking most of the remaining spots.
According to the latest edition of JLL’s Destination Retail report, which ranks markets for retailer expansion around the world, Asia is fuelling global growth, taking 12 of the top 20 spots. Six of those cities are in China – but Singapore, Hong Kong and Macau are not among them. Six months ago Hong Kong was second only to London – neither city makes the list now.
This time around, the top two cities are Dubai and Shanghai, with Beijing ranking third. The other Asian cities in the top 20 are Bangkok, Chengdu, Kuala Lumpur, Jakarta, Manila, Tianjin, Shenyang, Shenzhen, Chongqing and Hangzhou. (The full list is below).
Besides Dubai, Abu Dhabi, Kuwait, Jeddah and Riyadh make the list, meaning 85 per cent of the top 20 destinations are in just two regions.
“The global retail landscape is expected to change significantly over the next 10 years, as a fast-growing middle class in emerging markets attracts retailers hungry for growth,” says David Zoba, chairman of JLL’s Global Retail Leasing Board.
JLL says Shanghai has become a favourite of international brands looking to test the Chinese market and gain exposure. While established prime markets include West Nanjing Rd and Huaihai Rd, new submarkets targeting local residents are popping up along the many new metro lines leading out of the city, and the city’s retail network is growing and shifting.
Beijing follows as the third-fastest-growing retail market with its swelling middle class and strong concentration of high-net-worth individuals. Properties such as China World Mall and the landmark project Taikoo Li continue to draw high-end shoppers, while malls like Beijing APM and Oriental Plaza dominate tourist-friendly shopping strip Wangfujing. The Chinese capital’s suburbs are also experiencing rapid growth as people choose to shop more locally rather than brave the traffic into the city centre.
“Emerging markets can expose international retailers to greater levels of economic and geopolitical risks. One pertinent example is China’s anti-corruption campaign and the knock-on effects on the luxury market,” says James Hawkey, head of retail for China, JLL. “However, international retailers are increasingly comfortable dealing with these risks, and generally have their eyes on the long term prize of establishing a strong position in major world markets.”
Added Zoba: “The search for growth is escalating the penetration of international brands across the world’s most attractive retail cities, especially in Asia. Retailers who succeed in acquiring the right space in the right place at the right time will benefit from successful, profitable growth, but they should be mindful that potential rewards go hand in hand with risk,” continues Mr Zoba.
Retail rents in these emerging markets reflect legislation, market transparency, reputational risk, maturity, as well as growth potential, meaning that their levels are relatively low compared to more mature markets. Places like Ho Chi Minh City, Jakarta and Bangalore present an opportunity for retailers to establish their brands at rents of less than US$2000 per square metre per year with projected in-store sales increasing by 8 to10 per cent until 2019, based on Oxford Economics forecasts. However, as cities mature and the pace of new construction of retail centres slows, rents will gradually increase.
JLL’s Destination Retail report 2016 examines the presence of 240 international retail brands across 140 retail cities, giving insights for international retail expansion. The 140 cities make up 36 percent of the world’s GDP, 13 per cent of the global population and 33 per cent of total consumer spending.
