Thursday, March 31, 2011

Reading Now: Weekly Update From Access Asia

Matthew Crabbe has done it again... informative, hilarious, ...another must read Weekly update from Access Asia 

-- enjoy reading-- 

Fat China
Access Asia directors Paul French and Matthew Crabbe have just seen published their latest collaborative book called "Fat China: How Expanding Waistlines are Chainging a Nation", which takes a long hard look at China's rapidly expanding obesity problem, and how this issue is becoming a real issue of significance for China's society, politics and economy. Published on July 1st, 2010, click here for more information. Author Paul French will be presenting the case laid out in Fat China to the Asia Society on January 12th, 2011, from 6:30pm to 8:00pm at the Hong Kong Club, 1 Jackson RoadCentral Hong Kong. Click here for details.

One Billion Shoppers: Accessing Asia's Consuming Passions and Fast-Moving Markets after the Meltdown by Paul FrenchMatthew Crabbe

Cover ImageOne Billion Shoppers provides a practical, up-to-date and highly comprehensive guide to Asia's consumers, their tastes, trends and future aspirations now that a thorough understanding of Asia is more important than ever. Despite the economic crisis in parts of the region, Asia remains a crucial market. One Billion Shoppers is a guide to the new 'hot zones' of Asia, the emerging trends and the ways in which Asia's historic consuming passions are being fulfilled in a new era. As Asia increasingly becomes a region of nuclear families, only children and middle class professionals, so new business opportunities emerge in fast-food, financial services and retailing. The book pays special attention to how the nations and businesses of Asia and their consumers are bouncing back.

When in Doubt...Build More Malls
The DIY Revolution in China
No, no, no... don't get excited! It's not ordinary Chinese middle class folk doing DIY. No, they're still into MIY (manage it yourself), so the prospects for B&Q, Leroy Merlin and poor old Home Depot still look glum. We're talking about retailers doing a bit of DIY when it comes to malls.

It's quite simple really. China has two gazillion property developers, and 1.5 gazillion of them want to build retail malls and jump on the consumption bandwagon. It's a good bet. The banks are lending to retail property plays, all the local Red Tammany Halls around China love shopping malls (modern, international, cosmopolitan, lifestyle...), building them keeps the migrant workers paid and employed (and stops them getting all jasmine-like) and then, finally, a faux marble Consumption Palace opens with a Starbucks and suddenly everyone's got somewhere new to go at the weekend to be tamed by glitzy retail shows. That's how it works (and was also probably the outline for an unfinished Aldous Huxley novel somewhere). (ugh - soo true...if you've been in China, you have been to these malls, Kuala Lumpur too)

But there was a fly in the ointment (or perhaps we should say a beetle in the massively depleted salt cellar), and that was that 1.49 gazillion property developers only wanted to build malls that had shiny skating rink floors, fake marble exteriors and the ubiquitous, ultimate, nouveau riche, Essex-comes-to-China symbol - "Louis Vuitton Flagship Opening Soon". Everyone was high-end, and there's yet more (and more and more) high-end to come. But simply not enough regular malls for regular folk. (Wal-Mart seems to be doing a good job focusing on the low hanging fruit, the under-served 'regular' folk with their superstores and now local stores. Nicely done WMT!)

So that's where retailers such as Jusco, Tesco and IKEO (sorry, IKEA) come in. To be fair Japan's Jusco started getting fed up with the high end mall developers years back and built their own malls in northern cities like Qingdao. Tesco has carried on that tradition. We reported on that before, so you should know how that works. Now IKEA is having a crack at it. Basically it's not rocket science, but it does require deep pockets and long term commitment.

IKEA's plan is, we think, rather neat. Build some malls yourself (avoid the LV lovers, ghost mall square badge security guards and fake marble costs and bring in some decent partners) and get French supermarket Auchan, Chinese appliance retailer Suning and cinema operator Jin Yi Film on board for three malls in Beijing, Central Wuhan and Eastern Wuxi. Should attract the real punters for a lot of shopping rather than the ghost malls that appeal only the corrupt looking to launder and the concubine looking to, well, be a concubine really. (hilariously funny because it's soo freekin' true!)

This week's one-stop-shop of an Access Asia Weekly Update includes the usual reports news, as well as: the nasty problem with having a Haibao infestation; another Bad Brit who likes to come to China for a little added cash and no tabloid hacks in tow; the Disney rat's latest evil plans to conquer Shanghai's kids; and a bar where most probably nobody knows your name, or English, or how to pull a pint.

Access Asia Report News
The latest issue of the China Retail Quarterly dominates our efforts at the moment, and the key theme in the retail world seems to be an increasingly tangible shift from the "growth at all costs" approach, more towards development of fewer, better stores backed up by better logistics and organisational efficiency. Even the likes of Carrefour and Wal-Mart are finding time to close inefficient stores at poor locations in order to rethink local strategies in some cities.

As the consumer market matures in China, so the need to develop better, more realistic retail businesses that are truly more competitive increases. There continues to flow mad money into mad schemes, such as the luxury malls and doughnut chains, but the really serious retailers are working harder now to adapt their business models to meet real local demand.

China does still support a quite substantial market for the pointless though. Consider the recent news that New York high-end fashion brand Coach (NYSE:COH) announced its operating revenues in China had doubled to reach above US$100m in 2010, through its then total of 49 stores. That's about US$5,600 per store every day for 365 days of the year, which is roughly, what, three handbags a day? This would be over 50,000 handbags a year! And they are planning to open a total of 25 new stores this year, of which three have already opened. Who said there was any logic to consumer economics??

We were also interested, as a consumer side-line, by the news that Beijing is planning to introduce a ban on smoking in public places on the 1st of May. How this will help reduce the roughly 1,362.326 billion (yes, billion) cigarettes smoked in China each year, we are not sure. However, we did work out that if each cigarette is about 10cm in length, and you lined all of China's annual cigarette consumption end-to-end, upwards, the Chinese would be able to smoke their way to the moon and back 177 times.

For More Access Asia
Note: If you want to receive this newsletter by e-mail, please click here, or e-mail us on the link below. We will not necessarily confirm receipt, but will certainly add your address to our mailing list. Contact us at: or +86-21-6374-7484.
Related Posts Plugin for WordPress, Blogger...