Uniqlo Archives ~ Business China : news for investors in China

News Digest: July 21, 2015

By newsdoug on July 21, 2015

The following press releases and media reports about Chinese companies were carried on July 21. To view a full article or story, click on the link next to the headline.
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Micron (Nasdaq: MU) Does Not Believe Deal With Tsinghua Is Possible – Sources (English article)
Huawei’s H1 Revenue Up 30 Pct Year-on-Year at $28 Bln (English article)
Travel Site Tongcheng Launches 100 Bln Yuan Promotion, Links With Wanda (Chinese article)
Uniqlo Leaves JD.com (Nasdaq: JD) After 3-Month Trial (English article)
No Money Makers Among China’s New VNOs (Chinese article)

CELLPHONES: Xiaomi Sued In Shanghai, Wooed By Facebook

By newsdoug on January 15, 2015

Bottom line: A new lawsuit against Xiaomi spotlights the lack of premium quality behind its trendy brand, though it could succeed in the shorter term as the leading maker of “fast fashion” smartphones.

I had to smile on reading about the latest scandal surrounding Xiaomi, which came in a media report on a new lawsuit accusing the smartphone sensation of false advertising claims. This kind of overinflated claim has become a symbol of Xiaomi, reflecting the kinds of hype it regularly generates even as its actual products are described as quite ordinary and even sub-par.

Xiaomi’s hype contrasts sharply with its primary role model, Apple (Nasdaq: AAPL), which has built a hugely loyal following based on products that most users agree are superior to those from its rivals and worth the big premiums that Apple charges. A separate news item shows the hype factor is still enough to attract big-name investors, with word that social networking (SNS) giant Facebook (Nasdaq: FB) previously sought to invest in Xiaomi. Read Full Post…

Retail: Tesco Goes Online, Perry Ellis in New JV 零售：乐购推出网购，派瑞•艾力斯成立合资企业

By newsdoug on April 27, 2012

Perry Ellis chases China middle class Let’s start off this Friday before the long Labor Day weekend with a couple of retail items, one from British grocery giant Tesco (London: TSCO) in the online space and another from mainstream clothing maker Perry Ellis (Nasdaq: PERY), which is entering China with a new joint venture. The Tesco plan attests to the incredible popularity of buying things over the Internet in China. As an American living in China, I’ll be the first to say the growing Chinese fondness for buying things online is quite unlike anything I’ve ever seen in the west. Nearly anything can be ordered over the Internet these days, from a McDonalds (NYSE: MCD) hamburger to books, clothing and just about any other merchandise you can think of. Now Tesco will be adding grocery store items to that list, according to a media report citing a company spokeswoman. WalMart (NYSE: WMT) is also playing in the online grocery game through its investment in Yihaodian, while Carrefour (Paris: CA) is developing the space through a tie-up with a Thai partner. This kind of online service differs from many more traditional ones because deliveries take place very soon after an order is placed, and same-day delivery is essential. But the economics for this kind of initiative seem to work in China, thanks to its high population density and the fondness for shopping online to avoid the throngs of people and long lines at grocery stores. I would expect this kind of initiative to be quite successful if Tesco and other big names can execute their plans well, perhaps meaning trouble for smaller operators like Lianhua (HKEx: 980). The other retail news will see Perry Ellis form a joint venture with local partner China Outfitters (HKEx: 1146) to open new stores selling the US company’s Manhattan brand. (company announcement) The partnership will initially focus on big cities like Beijing and Shanghai, with the first store set to open by the end of this year. This tie-up looks a lot like another one announced last November by Gap (NYSE: GPS), another mainstream US retailer, which said it planned to have 15 stores in China by the end of its current fiscal year and 45 within a year of that. (previous post) The arrival of these more mid-range retailers reflects the emergence of a growing middle class in China, who like to enjoy higher quality products like fashionable clothing and pricey lattes from Starbucks (Nasdaq: SBUX) but don’t want to pay the big prices for luxury brands. Perry Ellis and the Gap are joining even bigger chains like H&M (Stockholm: HMb) and Uniqlo (Tokyo: 9983) in their China expansions, and I don’t really see any problems yet as this segment of the market is growing so quickly it can probably support quite a number of well-run players. Look for more similar mainstream foreign clothing chains to join this trend in the next couple of years, and also for possibly 1 or 2 to withdraw as they discover that a big market doesn’t necessarily guarantee success.

Bottom line: Tesco’s testing of online sales reflects the popularity of e-commerce in China, while Perry Ellis’ new joint venture reflects the big opportunity offered by a growing middle class.

Gap’s China Plan: Chasing the Middle End Gap锁定中国中产阶层

By newsdoug on November 28, 2011

Gap brings cheap chic formula to China US retailer Gap (NYSE: GPS) is bringing its formula for selling cheap but trendy clothing to mainstream young Chinese, with a plan that looks like a smart way to tap the nation’s growing urban middle class despite its late arrival to the market. Executives from the US chain, an early pioneer in the trendy, affordable clothing business whose image has become a bit faded lately, detailed their China plans during a trip to the region late last week for the opening of their first Hong Kong store. (company announcement; English article) According to reports from the event, the company plans to have 15 stores in China by the end of its current fiscal year, and then to triple the number to 45 within a year of that. Frankly speaking, the company’s arrival to China is a bit late, as big foreign names like Japan’s Uniqlo (Tokyo: 9983), Hong Kong’s Esprit (HKEx: 330) and Sweden’s Hennes & Mauritz (Stockholm: HMb) have all operated in the market for several years now. But that said, all these foreign chains do quite well in China, and their stores are often packed on weekends with eager young urban shoppers eager to spend their hard-earned savings on the latest trendy but affordable clothes that these companies all offer. I see no reason why another big name like Gap can’t survive in this market, especially if it can find the right clothing mix and create a marketing campaign to establish itself as a trendy fashionable brand with strong overseas roots. Of course, that might be easier said than done, as Gap’s image in the US has faded quite a bit in recent years as the brand ages and younger, trendier chains like H&M take a bigger slice of the market. Still, if General Motors (NYSE: GM) can take a nameplate like Buick, considered a stodgy older brand in the US, and make it into a popular mainstream name in China, then there’s no reason why Gap can’t draw on its years of experience to do the same thing in China, potentially building the market into one of its top global contributors in the next 10 years.

Bottom line: Gap’s entry to China, despite its lateness, could stand a good chance of success, catering to young Chinese with limited funds but who still want to buy the latest trendy clothes.