Retail in general p1

NBS: Total retail sales of consumer goods up by 10.5% yoy in July

CNCIC: Retail sales of 50 key retailers in China rises 0.3 yoy in July 2015

E-commerce p1

Taobao Global: Maternal and child products are the most popular “haitao” products

Alibaba releases 2Q15 results, mobile revenue sees strong growth

Alibaba invests 28.3 billion yuan to buy 20% stake in Suning

Tmall Global accepts payment by Ant Huabei

Hang Seng Bank partners with Tencent to support WeChat Payment

JD.com announces 2Q15 results, maintains rapid growth

JD.com to invest in Yonghui Superstores to strengthen O2O cooperation

“JD Daojia” starts business in Nanjing

JD.com rolls out channel for agricultural materials to tap rural market

Amazon China launches flash sales service on cross-border direct sales platform

Guangzhou’s first cross-border e-commerce “scenario supermarket” opened for business

Benlai.com taps fresh food O2O business and rolls out Benlai Convenience Store app

Supermarkets and hypermarkets p5

Jiajiayue Group launches cross-border e-commerce business

CR Vanguard stops opening hypermarkets and focuses on small format stores

Metro Supermarket enters Dmall and provides one-hour home delivery service

Wumart rolls out high-end members-only Wumart BJ’s

Department stores and shopping malls p6

Macy’s forms joint venture with Fung Retailing to test e-commerce in China

Parkson and E-Land to build first “City Lifestyle Mall” in China

Zhengzhou New World Department Store opens O2O shopping experiential centre

Discount outlets p6

Top 10 outlets in China releases; Beijing Yansha Outlets tops the list

Apparel p7

Li Ning flagship store re-opens as sports experiential store

Consumer electronics p8 Suning.com opens first cross-border experiential store

Suning restructures communications business to establish Suning Mobile

Suning cooperates with Yili on e-commerce and big data

Personal care products p8 Amway rolls out mobile e-commerce system to tap China’s online retail market

Shoes p9 Price cut on 215 UGG products in China

7 August 2015 –13 August 2015

1 China Retail Weekly Updates (7 August 2015 – 13 August 2015)

General retail

NBS: Total retail sales of consumer goods up by 10.5% yoy in July According to the National Bureau of Statistics (NBS), total retail sales of consumer goods amounted to 2.4 trillion yuan in July, representing a nominal growth of 10.5% year-on-year. Of which, retail sales of enterprises above designated size were 1.1 trillion yuan, up by 7.3% yoy. By area, retail sales in urban areas reached 2.0 trillion yuan, up by 10.3% yoy; while retail sales in rural areas went up by 11.9% yoy to reach 334.2 billion yuan. Between January and July, online retail sales of goods and services grew 37% yoy and accounted for 9.7% of total retail sales. NBS, 12 August 2015 http://www.stats.gov.cn/tjsj/zxfb/201508/t20150812_1229265.html

CNCIC: Retail sales of 50 key retailers in China rises 0.3 yoy in July 2015 According to the China National Commercial Information Centre (CNCIC), retail sales of 50 key large-scale retail enterprises rose 0.3% year-on-year (yoy) in July 2015. The growth rate was 1.7 percentage points (ppts) lower than that in June, but 2.4 ppts higher than that in July 2014. By category, sales of apparel and cosmetics were down by 2.8% yoy and 1.8% yoy in July respectively. CNCIC, 10 August 2015 http://www.cncic.org/index.php?option=com_content&task=view&id=41807&Itemid=14 (in Chinese only)

E-commerce

Taobao Global: Maternal and child products are the most popular “haitao” products Taobao Global has released a report on the history of “haitao” consumption. Ten years ago, Chinese consumers made “haitao” purchases from Hong Kong and Macau. Now, they buy from over 100 countries and region, with Japan, the U.S. and South Korea the most popular ones. “Haitao” product categories are also expanding, with more than 2 million types of overseas products available. The majority of “haitao” consumers has bought cosmetics, beauty and skin care products. However, consumers have bought powdered milk and maternal and child products most frequently. Shanghai has the most “haitao” consumers, followed by Beijing. Meanwhile, more and more consumers from tier 3 and 4 cities also participate in “haitao” now. Linkshop.com.cn, 7 August 2015 http://www.linkshop.com.cn/web/archives/2015/331130.shtml (in Chinese only)

2 China Retail Weekly Updates (7 August 2015 – 13 August 2015)

Alibaba releases 2Q15 results, mobile revenue sees strong growth Alibaba announced its 2Q15 results on Thursday. According to the company, revenue for the quarter ended June 30, 2015 was 20,245 million yuan, an increase of 28% yoy. The increase was mainly driven by the continued rapid growth of our China commerce retail business. Net income up by 148% and reached 30,816 million yuan. Driven by the growth in online marketing services revenue and commission revenue, revenue from China commerce retail business in 2Q15 was 15,712 million yuan. Among which, mobile revenue from the China commerce retail business increased by 225% to 7,987 million yuan, or 51% of the China commerce retail revenue. It was the first time that the mobile revenue exceeded 50% of Alibaba’s total China commerce retail revenue. People.com, 13 August 2015 http://media.people.com.cn/n/2015/0813/c40606-27453879.html Press Release http://www.alibabagroup.com/en/news/press_pdf/p150812.pdf

Alibaba invests 28.3 billion yuan to buy 20% stake in Suning Alibaba Group Holding announced that it will spend 28.3 billion yuan for a 19.99% stake in Suning Commerce Group to become Suning’s second-largest shareholder. Meanwhile, Suning will also invest 14 billion yuan to acquire a 1.1% stake in Alibaba. Alibaba and Suning have also signed a collaboration agreement to strengthen cooperation on e-commerce, logistics and O2O development. Alibaba’s online platforms will be connected to Suning’s 1,600 stores and 3,000 after-sale service points across China. Suning’s logistic arm will also become a partner of Cainiao Network to form a distribution network that covers the 2,800 counties and districts in China. Besides, Suning will open a flagship store on Alibaba’s Tmall platform, focusing on consumer electronics, home appliances and baby products. The two companies will also leverage big data, Internet of Things, mobile applications, financial payment tools and other advanced means to develop O2O mobile applications and foster innovation in O2O business model. Ebrun, 11 August 2015 http://www.ebrun.com/20150810/144118.shtml (in Chinese only) China Daily, 11 August 2015 http://www.chinadaily.com.cn/business/2015-08/11/content_21556900.htm

Tmall Global accepts payment by Ant Huabei Ant Huabei is working to expand its presence in the “haitao” market. At present, all merchants on Tmall Global accept payment by Ant Huabei. Users who make “haitao” purchases on Tmall Global may spend up to the credit limit provided by Ant Huabei. In the future, Tmall Global will also accept installment plan of Ant Huabei. Users will then be able to pay in installments. Ant Huabei is a credit payment tool launched by Ant Financial this year. Users may spend up to the credit limit provided by Ant Huabei. They may repay within a month after the goods are delivered.

3 China Retail Weekly Updates (7 August 2015 – 13 August 2015)

Ebrun, 10 August 2015 http://www.ebrun.com/20150810/144118.shtml (in Chinese only)

Hang Seng Bank partners with Tencent to support WeChat Payment Hang Seng Bank has partnered with Tencent to launch WeChat Payment, becoming the first foreign bank to launch this service in China. Customers of Hang Seng China can bind their accounts to WeChat Payment to enjoy the convenience of quick payment in shopping, online bill payment and transport fee payment In recent years, Hang Seng China has been actively developing e-banking services. In the first half of 2015, it has launched the foreign exchange and trading services for personal e-banking, the mobile personal e-banking service, as well as the TenPay payment function of its debit cards. Ebrun, 12 August 2015 http://www.ebrun.com/20150812/144451.shtml (in Chinese only)

JD.com announces 2Q15 results, maintains rapid growth JD.com announced its financial results for 2Q15 ended 30 June. Net revenues were 45.9287 billion yuan (US$7.4079 billion), up 60.5% year-on-year (yoy). GMV was 114.5 billion yuan (US$18.5 billion), up 82% yoy. GMV from online direct sales and online marketplace businesses totaled 64.7 billion yuan and 49.8 billion yuan respectively, an increase of 65% and 110% respectively. Net loss was 510.4 million yuan (US$82.326 million), which was less than last year’s loss of 582.5 million yuan. Annual active customer accounts increased by 72% to 118 million in the 12 months ended 30 June. Mofashion.cn, 7 August 2015 http://www.nofashion.cn/a/1438950418762.html (in Chinese only)

JD.com to invest in Yonghui Superstores to strengthen O2O cooperation JD.com and Yonghui Superstores Co. Ltd. have reached a strategic cooperation agreement. JD.com will buy a 10% stake in Yonghui Superstores with 4.31 billion yuan through its two subsidiaries. They will strengthen O2O cooperation: JD.com can enhance its offline commercial presence, while Yonghui can leverage JD.com to increase its online presence. In addition, they will also cooperate in aspects such as procurement, finance and information technology. Meanwhile, the Dairy Farm Company also intends to subscribe to Yonghui’s private placement. Sina.com.cn, 9 August 2015 http://finance.sina.com.cn/stock/s/20150809/221822917330.shtm (in Chinese only)

“JD Daojia” starts business in Nanjing

4 China Retail Weekly Updates (7 August 2015 – 13 August 2015)

JD.com’s O2O service platform “JD Daojia” (literally JD to your home) has started business in Nanjing, which is the sixth city “JD Daojia” has set foot in after Beijing, Shanghai, Guangzhou, Shenzhen and Wuhan. By leveraging its strong logistics network and its “JD Crowdsourcig” service, Nanjing residents can now experience a two-hour home delivery service for orders they made from merchants located within 3 km. Partner merchants of “JD Daojia” in Nanjing are all well-known merchants, including supermarkets, snack brands, flower shops, fresh suppliers, etc. China Chain Store & Franchise Association, 10 August 2015 http://www.ccfa.org.cn/portal/cn/view.jsp?lt=2&id=420955 (in Chinese only)

JD.com rolls out channel for agricultural materials to tap rural market On 11 August, JD.com rolled out a channel for agricultural materials to sell pesticides, farm tools, chemical fertilizers and other agricultural materials. JD.com is the first e-commerce enterprise in China to run a self-operated platform for agricultural materials. Through JD.com or its mobile app, farmers can browse the channel and buy agricultural materials. They can enjoy the home delivery service as well as installment plans and insurance service provided by JD.com. The channel can help agricultural enterprises to expand sales and explore the “producing to demand” model. Since early 2015, a lot of famous domestic agricultural enterprises have set up online stores on the channel. China Chain Store & Franchise Association, 12 August 2015 http://www.ccfa.org.cn/portal/cn/view.jsp?lt=2&id=420994 (in Chinese only)

Amazon China launches flash sales service on cross-border direct sales platform Amazon China announced the launch of a flash sales service on its cross-border direct sales platform. All the goods are directly sourced by the Amazon China team. In logistics, bonded import model is being adopted, in which the goods will first be imported and stored in bonded warehouses in free trade zones or warehouses in Hong Kong. After that the goods will be directly delivered by a domestic logistics company, and it takes just three days on average to reach the buyers. The whole shopping experience is fully localized, including local payment options, local customer services and local return policies. The first batch of goods sold in the flash sales includes nearly 70 types of goods, which are mainly overseas health supplements and powdered infant formula. Ebrun, 12 August 2015 http://www.ebrun.com/20150813/144614.shtml (in Chinese only)

Guangzhou’s first cross-border e-commerce “scenario supermarket” opened for business

5 China Retail Weekly Updates (7 August 2015 – 13 August 2015)

Guangzhou’s first cross-border e-commerce “scenario supermarket”, 891WORLD Global Supermarket, is set to be opened for business on 15 August. The supermarket is located at Huacheng Avenue of Zhujiang New Town, the central business district of Guangzhou. It has an area of over 1,000 sqm and offers more than 3,000 types of authentic imported foreign goods, including maternal and children products, wine, home products, etc. Consumers may scan QR codes to place online orders. They may pick up the goods on site or opt for delivery service, enjoying a one-stop shopping experience. In the supermarket, there is a customer lounge area, a separate toilet and supply of drinking water. Together with a relaxed atmosphere rendered by the forest-like decoration, it provides a combination of leisure and “haitao” experience for customers. Linkshop.com.cn, 12 August 2015 http://www.linkshop.com.cn/web/archives/2015/331426.shtml (in Chinese only)

Benlai.com taps fresh food O2O business and rolls out Benlai Convenience Store app Benlai.com, an online fresh food store, has launched its O2O project – Benlai Convenience Store mobile platform. When a consumer opens the Benlai Convenience Store app, the app will find a nearby partner convenience store within two to three km through the location-based service. If the consumer places an order, he may choose to pay immediately or pay on delivery. The convenience store will deliver the goods within one hour. At present, more than 300 convenience stores in Beijing have joined the Benlai Convenience Store mobile platform. It is reported that 1,400 convenience stores of FamilyMart across China will join the platform soon. This will help Benlai Convenience Store to tap the Shanghai and Guangzhou markets quickly. Linkshop.com.cn, 12 August 2015 http://www.linkshop.com.cn/web/archives/2015/331429.shtml (in Chinese only) Cyzone.cn, 11 August 2015 http://www.cyzone.cn/a/20150811/278628.html (in Chinese only)

Supermarkets and hypermarkets Jiajiayue Group launches cross-border e-commerce business On 11 August, Shandong-based Jiajiayue Group’s first batch of direct sales imported goods from South Korea finished customs clearance, marking the launch of its cross-border e-commerce business. Jiajiayue Group’s O2O business includes an online store and an offline experiential store. The online store (Jiajiayue.com) mainly offers imported goods from South Korea, Australia, Japan, etc., which will be delivered to consumers through overseas direct shipping. The offline direct sales experiential centre at Weihai Kowloon City Plaza shopping mall, Shandong Province, will be opened for business on 2 September. It provides O2O shopping experience for customers as they can feel and touch the goods offline and place orders online. Linkshop.com.cn, 13 August 2015 http://www.linkshop.com.cn/web/archives/2015/331530.shtml (in Chinese only)

6 China Retail Weekly Updates (7 August 2015 – 13 August 2015)

CR Vanguard stops opening hypermarkets and focuses on small format stores Six months after CR Vanguard proposed that it would focus on small format stores, it has announced its small format development plan in Beijing for the first time. CR Vanguard plans to open 10 supermarkets and 30 VanGo convenience stores in Beijing. CR Vanguard said that in order to control costs and practise meticulous management, it is working to make the retail format “smaller” in Beijing, and it has no plan to open any hypermarkets. Moreover, it will promote the development of small format stores across China. China Chain Store & Franchise Association, 13 August 2015 http://www.ccfa.org.cn/portal/cn/view.jsp?lt=2&id=421015 (in Chinese only)

Metro Supermarket enters Dmall and provides one-hour home delivery service Members only supermarket chain Metro Supermarket has entered into the O2O local service platform “Dmall”, following the steps of other supermarkets such as Wumart, Guangming, A-Best, Merry Mart and Tesco. From now on, Beijing consumers can buy items of Metro Supermarket through the Dmall app. Dmall also promises a one-hour home delivery service. Consumers can choose to pay cash or by POS cards on delivery, or pay online through WeChat Payment. Linkshop.com.cn, 11 August 2015 http://www.linkshop.com.cn/web/archives/2015/331336.shtml (in Chinese only)

Wumart rolls out high-end members-only Wumart BJ’s On 10 August, Wumart Stores Inc. rolls out its high-end members-only supermarket “Wumart BJ’s”. Located at Chaoyang Road, Chaoyang District of Beijing, the first Wumart BJ’s store features 4,000 items, which are mainly high-end domestic and foreign brands. Imported products account for 20% of the total, and the figure is set to reach 30% within half a year. Currently, most of the imported brands are those of food and beverages, electrical appliances and home products. Wumart said that Wumart BJ’s is targeted at middle-class and middle- to high-income groups. Linkshop.com.cn, 11 August 2015 http://www.linkshop.com.cn/web/archives/2015/331326.shtml (in Chinese only)

Department stores and shopping malls

Macy’s forms joint venture with Fung Retailing to test e-commerce in China

7 China Retail Weekly Updates (7 August 2015 – 13 August 2015)

Macy’s Department Store has formed a joint venture with Hong Kong-based Fung Retailing Limited named Macy’s China Limited to explore retailing in China The joint venture, which is 65% owned by Macy’s and 35% owned by Fung Retailing, will start with an e-commerce pilot and begin selling in China in late 2015 through an e-commerce presence on Alibaba Group’s Tmall Global. Alipay will be a primary payment platform for Macy’s e-commerce offerings in China. Sina.com, 12 August 2015 http://finance.sina.com.cn/world/20150812/203322948317.shtml (in Chinese only) Press release http://phx.corporate-ir.net/phoenix.zhtml?c=84477&p=irol-newsArticle&cat=news&id=2079038

Parkson and E-Land to build first “City Lifestyle Mall” in China Parkson Retail Group announced that it will set up a joint venture with South Korea-based E-Land Group for a total investment of 100 million yuan. They will build the first “City Lifestyle Mall” in China. The Mall, located at the Tianshan Parkson Department Store in Changning District of Shanghai, will be opened for business at the year end. It will have a retail area of 45,687 sqm and will offer a number of fashion brands popular among young consumers, covering brands of apparel, accessories, sports and restaurants. Selected brands of E-Land and Parkson will also be available in the mall. Linkshop.com.cn, 10 August 2015 http://www.linkshop.com.cn/web/archives/2015/331284.shtml (in Chinese only)

Zhengzhou New World Department Store opens O2O shopping experiential centre On 8 August, Zhengzhou New World Department Store opened an O2O shopping experiential centre. Its products are directly sourced from countries of origin, and are priced the same as in foreign countries. The products are stored in and delivered from bonded warehouses. The experiential centre offers a wide range of products and brands, including 935 kinds of duty-paid goods and over 500 kinds of bonded import goods, such as cosmetics, diapers, baby formula, food, wine and daily products. The products come from more than 80 countries such as South Korea, Japan, European Union countries, etc. Linkshop.com.cn, 7 August 2015 http://www.linkshop.com.cn/web/archives/2015/331090.shtml (in Chinese only)

Discount outlets

Top 10 outlets in China releases; Beijing Yansha Outlets tops the list The financial results of outlets in China for 1H15 have come out. Among the top 10, Beijing Yansha Outlets Shopping Center returned to the top position with a sales revenue of 2 billion yuan, an increase of 26.6%. Last year’s leader, Bailian Outlets

8 China Retail Weekly Updates (7 August 2015 – 13 August 2015)

Plaza (Shanghai), ranked number two with a sales revenue of 1.86 billion yuan. The third place goes to Florence Town Outlets (Beijing-Tianjin), with a sales revenue of 1.6 billion yuan. Data show that outlets industry as a whole maintains rapid growth, but regional development is uneven. South China and Northwest China lag behind in outlets development. China Chain Store & Franchise Association, 11 August 2015 http://www.ccfa.org.cn/portal/cn/view.jsp?lt=3&id=420976 (in Chinese only)

Apparel

Li Ning flagship store re-opens as sports experiential store On 8 August, Li Ning Co. Ltd.’s flagship store in Wangfujing of Beijing has been renovated and re-opened as its first sports experiential store. The first floor and second floor of the flagship store display Li Ning’s sports technology products and general sports products respectively. On the third floor, the Li Ning iRun Club offers professional sports experience and services to provide consumers with diversified and customized consumption experience. Analysts point out that Li Ning is no longer satisfied to be a sports equipment provider, but rather trying to become a service provider of “Internet plus sports experience”. ChinaSSPP.com, 10 August 2015 http://www.chinasspp.com/News/Detail/2015-8-10/202012.htm (in Chinese only)

Consumer electronics

Suning.com opens first cross-border experiential store Recently, Suning.com cloud store has teamed up with Wisepower Transportation Distribution Group to open its first cross-border O2O experiential zone. The O2O cross-border experiential zone is located at a newly opened cloud store in Guangzhou Grandview Plaza. The direct sales zone of the cloud store displays several hundreds of bonded goods, where consumers only need to scan the products’ QR codes shown on monitors to make online payments. The whole logistics procedures of the cross-border O2O store are mainly handled by Wisepower. Ebrun, 6 August 2015 http://www.ebrun.com/20150806/143843.shtml (in Chinese only)

Suning restructures communications business to establish Suning Mobile On 6 August, Suning Commerce Group held a press conference for “Suning 818 Mobile Festival” to promote the online sales of 3C (computers, communication and consumer electronics) products. At the same time, it also announced a restructuring of its communications business and the establishment of Suning Mobile. Business scopes of Suning Mobile include mobile phones retailing, virtual network operators, smart home, e-books and game platforms, etc. It conducts both online and offline business through integrating resources of players in the

9 China Retail Weekly Updates (7 August 2015 – 13 August 2015)

industrial chain. The restructuring also means that Suning has not only sales channels for hardware, but is also becoming an integrated communications service provider. Ebrun, 7 August 2015 http://www.ebrun.com/20150807/143904.shtml (in Chinese only)

Suning cooperates with Yili on e-commerce and big data Suning Commerce Group and dairy producer Yili Group have signed a strategic cooperation agreement. They plan to carry out in-depth cooperation in aspects such as marketing, technology and sales channels. Suning will collect and study consumer data in e-commerce and Internet big data, so as to look into and analyse consumer behaviour and habits. On the basis of these analyses, it will also help Yili to conduct research and development of new customized products that can meet the demand of online consumers. Suning hopes to work with Yili and other upstream manufacturers to develop Internet retail. Linkshop.com.cn, 6 August 2015 http://www.linkshop.com.cn/web/archives/2015/331082.shtml (in Chinese only)

Personal care products Amway rolls out mobile e-commerce system to tap China’s online retail market Amway China has announced its digital strategy. It will go beyond its existing offline direct selling business and tap China’s online retail market by launching a mobile e-commerce system. The mobile e-commerce system includes 10 WeChat accounts and 12 apps that sales representatives can use to communicate with their consumers. The mobile e-commerce system will also reduce costs for its direct selling representatives as they will no longer need to rent a physical store or spend money on inventories. Amway will be responsible for storage and distribution of goods. Amway China also plans to double its sales representatives from the present 60,000 people by 2025. China Daily, 4 August 2015 http://usa.chinadaily.com.cn/epaper/2015-08/04/content_21498682.htm

Shoes Price cut on 215 UGG products in China Australian footwear brand UGG announced a price cut on its autumn series new products in the mainland, which have been for sale since mid-July. This aims to narrow global price differences. UGG said that the price cut applies to a total of 215 basic-style shoes products across all product categories. The price cut is made simultaneously in UGG’s official e-commerce channels (including UGG China official website and official flagship stores on Tmall and JD.com) and offline stores.

10 China Retail Weekly Updates (7 August 2015 – 13 August 2015)

ChinaSSPP.com, 13 August 2015 http://www.chinasspp.com/News/Detail/2015-8-13/202266.htm (in Chinese only)

Fung Business Intelligence Centre

The Fung Group is a privately held multinational group of companies headquartered in Hong Kong whose core businesses are trading, logistics, distribution and retailing. The Fung Group employs over 45,000 people across 40 economies worldwide, generating total revenue of more than US$22.6 billion in 2013. Fung Holdings (1937) Limited, a privately held business entity headquartered in Hong Kong, is the major shareholder of the Fung group of companies.

The Fung Business Intelligence Centre collects and analyses market data on sourcing, supply chains, distribution and retail. It also provides thought leadership on technology and other key issues shaping their future. Headquartered in Hong Kong, FBIC leverages unique relationships and information networks to track and report on trends and developments in China and other Asian countries. In addition, its New York-based Global Retail & Technology research team follows broader retail and technology trends, specialising in how they intersect and building collaborative knowledge communities around the revolution occurring worldwide at the retail interface. Since its establishment in 2000, the FBIC (formerly known as the Li & Fung Research Centre) has served as the knowledge bank and think tank for the Fung Group. Through regular research reports and other publications, it makes its market data, impartial analysis and expertise available to businesses, scholars and governments around the world. It also provides advice and consultancy services to colleagues and business partners of the Fung Group on issues related to doing business in China, ranging from market entry and company structure, to tax, licensing and other regulatory matters.

Contact

Teresa Lam Vice President Asia Distribution and Retail

Fung Business Intelligence Centre 10/F LiFung Tower 888 Cheung Sha Wan Road Kowloon, Hong Kong

T: (852) 2300 2466 F: (852) 2635 1598 E: TeresaLam@fung1937.com W: www.fbicgroup.com

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