China/Hong Kong China Consumer

Just Browsing 18 September 2013

China online retailing news for 9-19 September 2013 Top news and analysis Taobao Mall brand ranking Top-10 ladies footwear Ranking  Export tax rebates. There is widespread speculation brands Listed company change that two government agencies will release guidelines 1. Daphne/达芙妮 Daphne (210 HK, No Rated) – export tax rebates and reductions for e-commerce 2. O-Mei/欧美 Not Listed – companies as early as 1 October. The guidelines are 3. Belle/百丽 Belle (1880 HK, Underperform) – intended to boost the country’s exports amid a 4. Staccato/思加图 Belle (1880 HK, Underperform) – sluggish international trade environment. We believe 5. Teenmix/天美意 Belle (1880 HK, Underperform) +1 the policy will vastly benefit e-commerce companies 6. Red Dragonfly/红蜻蜓 Not Listed -1 heavily involved in cross-border trade. E-commerce 7. Josiny/卓诗尼 Not Listed – has become a significant platform for cross-border 8. Yearcon/意尔康 Not Listed – trade with transactions between China and other 9. Tata/他她 Belle (1880 HK, Underperform) +3 10. /新百倫 Not Listed +3 countries up 32% in 2012 to RMB2.3t, representing 9.6% of total international trade. Top-10 sportswear () Ranking brands Listed company change  Suning joins open platform e-commerce. 1. New Balance/新百倫 Not Listed +1 Traditional retailer Suning (002024 CH, Not Rated) is 2. Nike/耐克 Nike (NYSE US, Not Rated) -1 the most recent major player to launch an open 3. Lining/李寧 Li Ning (2331 HK, Neutral) +1 platform, the latest iteration in an interesting 4. /阿迪達斯 Adidas (ADS DE, Not Rated) +2 transformation taking place in China’s e-commerce 5. /特步 Xtep (1368 HK, Neutral) +1 world that is seeing a growing number of companies 6. Anta/安踏 ANTA (2020 HK, Neutral)) -1 moving to a hybrid model, offering goods both directly 7. Jordan/喬丹 Not Listed +1 to consumers but also through operating platforms 8. Erke/鴻星爾克 Not Listed +3 彪馬 where independent merchants can set up shop. 9. / Puma (PUM DE, Not Rat d) – 10. /銳步 Reebok (NYSE RBK, Not Rated) +1

 Online shopping behavior. According to a survey Focused Popularity Ranking conducted by Nielsen, apparel and accessories brands Listed company Category ranking change generate the most frequent online shopping trips and Magic/ Magic Facial mask/ 4 +2 enjoy the highest penetration among Chinese online 美即 (1633 HK, Neutral) 多效面膜 shoppers. As many as 91% of respondents said they Prince Frog/ Prince Frog Children’s skincare 9 +5 bought apparel and accessory products online over 青蛙王子 (1259 HK, and bath products/ the past three months. Household products came in Outperform) 儿童洗浴护肤 second with a 78% penetration rate. Lilang/ China Lilang Menswear/ 26 -2 利郎 (1234 HK, Neutral) 男装 Other highlights Labixiaoxin/ Labixiaoxin Candies and jellies/ 44 +10 蠟筆小新 (1262 HK, 糖果/果凍  UnionPay to join the online payment market Outperform)  Dangdang.com (DANG US, Not Rated) suspends Updated at 10am HKT on 19 September 2013 plans to launch own apparel line Source: Taobao.com 网络家  Taiwanese online shopping portal PChome ( 庭 ) said it would raise funds locally to launch an Forrest Chan, CFA e-commerce service in mainland China before the (852) 2532 6743 beginning of next year. [email protected]

 Prince Frog (1259 HK, Outperform) has become a Claudia Ching top-ten children’s skincare and bath product brand on (852) 2532 2528 Taobao. [email protected]

Please read the analyst certification and other important disclosures on last page Just Browsing 18 September 2013

Sector/company news

Tax rebates to be launched for online exporters (17 September 2013)

http://www.globaltimes.cn/content/811876.shtml

Two government agencies will release guidelines as early as 1 October concerning export tax rebates and reductions for e-commerce companies. The intention is to boost the country’s exports amid a sluggish international trade environment, according to various media outlets. The State Administration of Taxation (SAT) has already conducted meetings with e-commerce companies together with the Ministry of Finance (MOF), the Economic Information newspaper reported.

China’s cross-border e-commerce tops US$375b in 2012 (16 September 2013)

https://www.internetretailer.com/2013/09/16/chinas-cross-border-e-commerce-tops-3 75-billion-2012

E-commerce transactions between China and other countries increased 32% to RMB2.3t (US$375.8b) in 2012 and accounted for 9.6% of total international trade, according to the just released “2012 China Cross Border e-commerce report” from iResearch, a research firm based in Beijing. Business-to-business transactions – mainly overseas companies ordering online from Chinese firms – accounted for 95% of that cross-border trade, with Chinese consumers buying from foreign web sites accounting for the remainder. Over 90% of cross border e-commerce transactions in 2012 were exports from China to other countries. The US purchased the most goods from China, 17.2% of the total, a figure that takes into account purchases by both businesses and consumers. Europe was next at 16.3% followed by Hong Kong (15.8%), South Asia (10%), Japan (7.4%), Korea (4.3%) and India (2.3%), according to the iResearch report. Popular categories for cross-border e-commerce trade include electronics, apparel and sporting goods.

Suning joins open platform e-commerce (12 September 2013)

http://www.scmp.com/comment/blogs/article/1308789/suning-joins-open-platform-e-c ommerce

An interesting transformation is taking place in China’s e-commerce world, as traditional retailer Suning becomes the latest major player to launch an open platform where independent merchants can sell their wares. Most of China’s top e-commerce firms began by mimicking the traditional retailing model: purchasing goods from wholesalers and then selling them directly to consumers via their online stores. The notable exception was industry leader Alibaba, which does not sell merchandise directly but instead operates online “malls” where third-party merchants are able to set up shop. But now a growing number of companies are moving to a hybrid model, offering goods both directly to consumers and also operating platforms where independent merchants can set up shop.

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Just Browsing 18 September 2013

Suning becomes the latest e-commerce firm to join the hybrid business model with the official launch of its open platform this week, complementing its existing online store and also its older chain of brick-and-mortar shops. It joins other major e-commerce firms that made a similar move over the past year, including Jingdong, China’s second-largest player, and Dangdang, one of the country’s first major e-commerce firms. Such platforms offer consumers more choice, but they also could lead to internal competition between site operators and their individual merchants. Suning officially launched its open platform on Tuesday, announced with a banner at the top of its main webpage at Suning.com. In a smart move, Suning has decided to work exclusively with major brands and retailers on the platform, excluding smaller, independent merchants from setting up shop, at least for the time being. The list of partners at the launch includes names like clothing seller H&M (HMB SS, Not Rated), luxury watch maker Rolex, and electronics makers like Lenovo Group (992 HK, Outperform), Samsung (005930 KS, Not Rated) and Apple (AAPL US, Not Rated).

Nielsen surveys e-commerce trends In China (16 September 2013)

http://www.asiamediajournal.com/pressrelease.php?id=5314

The rising popularity of the internet in China has changed consumer shopping behavior, according to a recent report by Nielsen, a leading global provider of information and insights into what consumers watch and buy. Apparel and accessories generate the most frequent shopping trips online. According to Nielsen’s annual report on online shopping behavior of Chinese consumers, apparel and accessories enjoy the highest penetration rate among Chinese online shoppers. As many as 91% of respondents said they bought these products online over the past three months. Household products ranked second, with a penetration rate of 78%.

In addition to having the greatest online penetration among Chinese shoppers, apparel and accessories also generate the most shopping trips – 42.43 shopping trips on average every year among survey respondents. “Travel less” (57%) and “Easy to shop and time-saving” (56%) were the top-two incentives for online shoppers in this category.

UnionPay just woke up to China’s e-payment bonanza (16 September 2013)

http://www.chinaeconomicreview.com/Alibaba-Alipay-UnionPay-third-party-payment-e commerce

An official at China UnionPay just searched “third party payment” on his computer and he's rubbing his sleep-filled eyes in disbelief. Between April and June, a horde of non-financial firms channeled US$196b (RMB1.2t) via online transactions, up 10% on the first three months of the year, according to Beijing-based consultancy iResearch. China’s central bank grants UnionPay, a state-backed bank card monopoly, the right to take a cut of many of these transactions. Until now, however, many of the digital transactions were processed under the company’s nose as if it had been sleeping. Now the firm has woken up and will try to bring every last yuan processed by a third party into its clutches, charging up to 0.55% on each transaction. But UnionPay will face resistance from market leader Alibaba Group and its online payment company Alipay.com, which built China's digital payment industry from scratch.

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Just Browsing 18 September 2013

Dangdang.com suspends plans to launch own apparel line (16 September 2013)

http://www.chinatechnews.com/2013/09/16/19724-dangdang-com-suspends-plans-to -launch-own-apparel-line

One of China’s largest online book sellers has suspended its plans to launch its own branded clothing line. Li Guoqing, chief executive officer of Dangdang.com, revealed during a media communications meeting that the company has suspended its brand apparel plans. Instead the products sold through their online apparel channel will be all from third-party vendors. Dangdang.com launched its own brand in May 2012 with products covering basic apparel products and home supplies. However, in the second half of 2012 the company halted the design and manufacture of its own branded apparel, and has since formerly stated that it will cease selling these goods. The company added that it is still too early to launch its own branded apparel.

Alibaba sales “to exceed entire US e-commerce” (14 September 2013)

http://www.china.org.cn/business/2013-09/14/content_30029543.htm

Sales of Alibaba Group Holding Ltd’s e-commerce business are expected to surpass those of the total retail e-commerce market in the United States by year-end, Alibaba’s chairman said. In addition, Ma said, Alibaba has a near-term target. “Alibaba hopes to exceed Wal-Mart to become the world’s biggest e-commerce retail company by 2015,” Ma told reporters in Beijing as Alibaba signed a strategic cooperation agreement with China Telecom (728 HK, Not Rated). He added that Alibaba aims to be an innovative company just as Wal-Mart was in the last century, when the United States-based company essentially created the business-to-consumer retail model.

PChome poised to tackle Chinese e-commerce sites (12 September 2013)

http://www.taipeitimes.com/News/biz/archives/2013/09/12/2003571905

Online shopping portal PChome (網絡家庭) said it would raise funds locally to launch an e-commerce service in China before the beginning of next year. “We aim to challenge Chinese e-commerce sites Taobao Mall (淘寶) and JD.com (京東) to become the largest e-commerce site in China,” PChome Online Inc chairman Jan Hung-tze (詹宏志) said. Speaking on the sideline of a cross-strait e-commerce forum held by Sen Sen Home Shopping Co (森森百貨), which operates three local TV shopping channels, Jan said PChome will allocate most of its employees to China after opening its business there.

China’s online travel bookings to double by 2015 (9 September 2013)

http://www.techinasia.com/chinas-online-travel-bookings-double-2015/?utm_source=r ss&utm_medium=rss&utm_campaign=chinas-online-travel-bookings-double-2015

Web sales currently account for only 15% of overall travel sales in China, and the number is rapidly growing. A new study by travel industry market research firm PhoCusWright says China’s online air travel bookings grew 50% in 2012, and hotel bookings grew 37%. The firm predicts that by 2015, mobile bookings will grow from just a fraction of a percent to one-fifth of all travel bookings. That would represent an over 560% increase in 2013 alone. One such site, Qunar, already sees 20% of its bookings being made via its smartphone app.

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Just Browsing 18 September 2013

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