Retail in general p1 Fung Group launches world's first retail business model testing platform in Shanghai

E-commerce p1

Tianjin FTZ awaits approval for designation as pilot city for cross-border e-commerce

CECRC: China’s cross-border e-commerce market hits 2 trillion yuan in 1H15

Dongguan opens first cross-border (export and import) O2O centre

China Aoyuan Property opens largest cross-border e-commerce centre in Guangdong

Alibaba taps Thailand market to directly deliver Thai products to Chinese consumers

Tmall Global reaches exclusive cooperation with South Korea-based CJ Group; to launch

“South Korean fashion week”

Taobao set up bonded warehouse specifically for cross-border e-commerce, first of its kind in

China

JD.com opens second milk tea house in Shenzhen to support 100 startup businesses

Cross-border e-commerce platform Bolome rolls out South Korean website

Xianlife.com opens first cross-border O2O experiential store in Beijing

Department stores and shopping malls p4

Dashang Group opens cross-border offline experiential store

Over 1,000 retail stores of Wuhan Zhongbai accept QQ Wallet

Supermarkets and hypermarkets p5

Carrefour China to open 10 Easy Carrefour convenience stores in Shanghai in 2015

800 CR Vanguard stores accept WeChat Payment

Apparel p6

Global Brands Group announces long term licensing agreement for brands under Buffalo

International and Iconix Brand Group

Uniqlo and other fashion brands accept WeChat Payment

Peacebird acquires stake in French high-end fashion house Alexis Mabille to tap domestic

high-end market

Lancy Group to acquire South Korean baby and kids brand Design Skin for 35.64 million yuan

Cosmetics p7

Bellabox to expand to China

Consumer electronics p7 Suning partners with Huatie Media to roll out interactive experience centre in high-speed

railway station

Kids products p8 U.S.-based Gerber taps China market and opens stores on three e-commerce platforms

18 September 2015 –24 September 2015

1 China Retail Weekly Updates (18 September 2015 – 24 September 2015)

Retail in general Fung Group launches world's first retail business model testing platform in Shanghai Hong Kong-based retailer and supply chain manager Fung Group has collaborated with IBM and brand activation company Pico and launched the world's first retail business model testing platform, the Explorium, in Shanghai on 24 September. It is located at a 23,000 sq m exhibition space at LiFung Plaza in Shanghai's Minhang district and features temporary pop-up stores for 35 international brands. The Explorium’s laboratory has tested a number of advanced technologies, including virtual-reality fitting rooms, magic mirrors that bring images to life and 3D printing for creating customised products. Brands can use the Explorium to understand opportunities in China for their products and services, based on consumer feedback collected and analysed at the laboratory. Retailers are using it to test different store concepts. The Explorium will initially focus on children’s products, and will gradually extend to women’s and men’s apparel, and home products. Press release, 24 September 2015 http://www.funggroup.com/eng/news/news150924.pdf http://www.funggroup.com/gb/news/news150924.pdf (in Chinese only)

E-commerce Tianjin FTZ awaits approval for designation as pilot city for cross-border e-commerce A news conference in Tianjin Free Trade Zone (Tianjin FTZ) has revealed that China’s General Administration of Customs has agreed in principle to designate Tianjin as the eighth pilot city for cross-border e-commerce, subject to formal approval. Tianjin FTZ also revealed that its Tianjin Airport Area will focus on the airborne cross-border import and export business based mainly on direct mail model, while the Tianjin Port Dongjiang Area will focus on the seaborne import business for cross-border e-commerce based mainly on the “bonded import” model. The Central Business Area will build an integrated service platform for cross-border e-commerce, with the aim of improving various supporting services such as warehousing, logistics, distribution and financial support. Ebrun, 24 September 2015 http://www.ebrun.com/20150924/150070.shtml (in Chinese only)

CECRC: China’s cross-border e-commerce market hits 2 trillion yuan in 1H15 According to a report released by China E-Commerce Research Center (CECRC), China’s cross-border e-commerce transaction value reached 2 trillion yuan in 1H15, up 42.8% year-on-year (yoy), accounting for 17.3% of China’s total trade volume. In terms of import/export structure of cross-border e-commerce, export made up of 84.8% while import made up of 15.2%. And in terms of the form of

2 China Retail Weekly Updates (18 September 2015 – 24 September 2015)

cross-border e-commerce, B2B transactions accounted for 91.9%, while B2C transactions accounted for 8.1%. China Chain Store & Franchise Association, 22 September 2015 http://www.ccfa.org.cn/portal/cn/view.jsp?lt=3&id=421743 (in Chinese only)

Dongguan opens first cross-border (export and import) O2O centre Dongguan Chashan Cross-border E-commerce Exhibition Centre has been opened. It is the first online cross-border trading service platform that conducts both export and import trade in Dongguan, as well as the largest cross-border e-commerce O2O centre in Dongguan. The centre will help Dongguan enterprises, and Chashan enterprises in particular, to sell their products around the world. Its online import platform will leverage Dongguan’s location in the neighbourhood of the Free Trade Zone to focus on the import of overseas products. Meanwhile, its online export platform “World’s Factory” is committed to helping manufacturers to reach global buyers. Ebrun, 19 September 2015 http://www.ebrun.com/20150919/149466.shtml (in Chinese only)

China Aoyuan Property opens largest cross-border e-commerce centre in Guangdong Guangdong Nansha Aoyuan Cross-border Commodity Exhibition & Trading Centre, owned by China Aoyuan Property Group’s cross-border e-commerce unit Aomygod, has been opened in Guangdong’s Nansha Free Trade Zone. The centre has an area of nearly 20,000 sqm and is the largest cross-border e-commerce centre in Guangdong Province. The centre adopts a direct sales model, providing tens of thousands of authentic imported products for consumers. Aoyuan has also signed a deal with international inspection and certification company SGS-CSTC Standards Technical Services Co. Ltd., ensuring the authenticity of all imported products. Aoyuan said that a number of self-operated stores and franchised stores will be opened in Guangzhou, Chongqing, etc. within the year. About 80 self-operated cross-border e-commerce experiential centres and 200 franchised stores will also be opened over the next three years. Linkshop.com.cn, 22 September 2015 http://www.linkshop.com.cn/web/archives/2015/334103.shtml (in Chinese only)

Alibaba taps Thailand market to directly deliver Thai products to Chinese consumers Alibaba’s group-buying platform Juhuasuan announced in Bangkok, Thailand that it will work together with Thailand’s Ministry of Commerce and Thai brands to jointly launch an “annual card” for Thai food and daily products, with the aim of directly delivering Thai products to Chinese consumers. Consumers who have bought the “annual card” will enjoy a wide range of Thai products throughout the

3 China Retail Weekly Updates (18 September 2015 – 24 September 2015)

year, including fresh Thai rice, seasonal fresh fruit, natural latex bedding, a gift package for Thai New Year, a travel package for Songkran Festival and so on. Ebrun, 23 September 2015 http://www.ebrun.com/20150923/149930.shtml (in Chinese only)

Tmall Global reaches exclusive cooperation with South Korea-based CJ Group; to launch “South Korean fashion week” Tmall Global announced an exclusive strategic partnership with South Korea-based CJ Group on areas such as food, cross-border distribution, media and entertainment, logistics and cross-border O2O. CJ Group will also open three flagship stores on Tmall Global, namely CJmall, Olive Young and Get it Beauty. Tmall Global also announced that it will work together with more than 20 large South Korean enterprises to launch “South Korean fashion week”. These enterprises include CJ Group, LG Household & Health Care, supermarket chains E-mart and Lotte Mart, SBS, e-commerce platform Gmarket, fashion platform Stylenanda, flash sale platform We make price, etc. ChinaSSPP.com, 22 September 2015 http://www.chinasspp.com/News/Detail/2015-9-22/204583.htm (in Chinese only)

Taobao set up bonded warehouse specifically for cross-border e-commerce, first of its kind in China Taobao has set up a bonded warehouse in Chongqing Xiyong Bonded Area dedicated specifically for cross-border (import) e-commerce. The warehouse is the first cross-border e-commerce bonded warehouse in China that serves only imported goods. The 100,000 square meter bonded warehouse will attract qualified Taobao vendors, and will create more diversified business models for small and medium-sized businesses. The bonded warehouse has exclusive channels for storage and delivery, which will help to achieve fast and efficient clearance procedures. Shanghai Daily, 22 September 2015 http://www.shangha idaily.com/business/it/Taobao-warehouse-set-up-in-Chongqing/shdaily.shtml CNR, 21 September 2015 http://tech.cnr.cn/techgd/20150921/t20150921_519920953.shtml

JD.com opens second milk tea house in Shenzhen to support 100 startup businesses JD.com has opened its second JD+ Smart Milk Tea House in Shenzhen, meaning that JD+ incubation program has entered the South China market. JD.com said that it will invest over 10 million yuan of marketing resources to support 100 smart

4 China Retail Weekly Updates (18 September 2015 – 24 September 2015)

startup businesses. So far, nine startups have joined the JD+ Smart Milk Tea House. Products on display include a smart exercise bike, an EEGSmart eye mask, etc. Besides, JD+ incubation program, Tencent’s smart hardware open platform and other institutions have signed an initiative proposal to ask for a cooperation of smart hardware incubation programs from domestic and abroad. Ebrun, 22 September 2015 http://www.ebrun.com/20150922/149868.shtml (in Chinese only)

Cross-border e-commerce platform Bolome rolls out South Korean website Bolome, a cross-border e-commerce platform known for its overseas live videos, has rolled out its South Korean website (www.bolome.kr). It has also announced the employment of South Korean entertainment and media veteran Lee Dong Eun as the General Manager of Bolome Korea. Bolome Korea has formed partnership with dozens of brands, and established local warehousing and logistics systems as well as an anchor team. The Bolome South Korean website offers hundreds of South Korean products at present. Bolome Korea said that the SKUs of South Korean products will be increased to 5,000 by the end of the year. In addition to conventional product categories such as beauty, personal care and household products, it will also work to introduce apparel, shoes and hats as well as services such as health care and tourism. Ebrun, 21 September 2015 http://www.ebrun.com/20150921/149615.shtml (in Chinese only)

Xianlife.com opens first cross-border O2O experiential store in Beijing Xianlife.com, a cross-border e-commerce platform for fast moving consumer goods, has opened its first Xianlife experiential store in Dongcheng District of Beijing, with the aim of expanding its O2O business. The experiential store mainly offers snacks, beauty and fitness products, dietary supplements, maternal and child products, natural and organic food, affordable luxury, daily products, etc. Earlier, Xianlife.com has partnered with Good Neighbors Convenience Stores to tap the cross-border O2O business. Ebrun, 24 September 2015 http://www.ebrun.com/20150924/150112.shtml (in Chinese only)

Department stores and shopping malls

Dashang Group opens cross-border offline experiential store Dashang Group’s 51tiangou.com will open a cross-border direct sales O2O offline experiential store in Dalian on 26 September. The store covers an area of about 700 sqm. 51tiangou.com said that thousands kinds of imported goods can be

5 China Retail Weekly Updates (18 September 2015 – 24 September 2015)

purchased and picked up on-site in the store. Dashang Group has set up subsidiaries in France and Australia responsible for the procurement and logistics of the goods. 51tiangou.com reportedly has two features: the guarantee of lowest price and refund of price difference; and no offering of Japanese goods. Linkshop.com.cn, 23 September 2015 http://www.linkshop.com.cn/web/archives/2015/334176.shtml (in Chinese only)

Over 1,000 retail stores of Wuhan Zhongbai accept QQ Wallet Recently, Tencent’s QQ wallet has partnered with Wuhan Zhongbai Holdings Group. Over 1,000 retail stores of Wuhan Zhongbai have connected with the payment platform of QQ Wallet. QQ Wallet said that the cooperation with supermarket operator is a first step in expanding the service scope of QQ Wallet, which will further be expanded to convenience stores, gas stations, etc. in the future. Earlier, QQ Wallet has teamed up with several chain enterprises in transportation and retail sectors, such as Better-Life, Dianping.com, Sinopec, Didi Dache, 7-11 and FamilyMart. It was reported that QQ Wallet will work in five areas in the future: meeting the payment needs of virtual businesses; meeting the payment needs of mobile terminals; supporting social payment; supporting online third-party payment; and expanding offline cooperation. Ebrun, 19 September 2015 http://www.ebrun.com/20150921/149602.shtml (in Chinese only)

Supermarkets and hypermarkets

Carrefour China to open 10 Easy Carrefour convenience stores in Shanghai in 2015 Carrefour China has opened its third Easy Carrefour convenience store in Shanghai on Golden City Road. The convenience store covers a business area of 280 sqm, mostly selling food and fresh products. Carrefour China said that 10 Easy Carrefour convenience stores will be opened within this year. A Carrefour app will also be unveiled at the end of the year. The new Easy Carrefour convenience stores will be the final step of Carrefour O2O e-commerce ecosystem, which will help link its e-commerce business to offline business. ChinaSSPP.com, 22 September 2015 http://www.chinasspp.com/News/Detail/2015-9-22/204597.htm (in Chinese only)

800 CR Vanguard stores accept WeChat Payment All of the 800 stores of CR Vanguard in South China have connected with WeChat Payment, with the aim of building “smart supermarkets”. In addition to the use of QR code scan for payment, a smart supermarket also has the following features: first, the use of WeChat official accounts to set up an efficient membership

6 China Retail Weekly Updates (18 September 2015 – 24 September 2015)

management system; and second, the use of social marketing to improve the conversion rate of promotional activities. From 16 September, CR Vanguard will also conduct promotions for WeChat payment in hundreds of stores in South China. It was reported that the number of CR Vanguard stores that accept WeChat Payment is far less than those accept Alipay (over 3,000). Ebrun, 17 September 2015 http://www.ebrun.com/20150917/149229.shtml (in Chinese only)

Apparel Global Brands Group announces long term licensing agreement for brands under Buffalo International and Iconix Brand Group Hong Kong-based Global Brands Group (GBG) recently announced the signing of a long-term licensing agreement through 2025 with the joint venture between Iconix Brand Group and Buffalo International for Buffalo David Bitton brand and with Buffalo International for i Jeans by Buffalo, both iconic denim brands with North American roots. According to the agreement, Buffalo David Bitton and i Jeans by Buffalo will join GBG’s portfolio of fashion and lifestyle brands, with GBG to design, produce and distribute products across both brands’ core categories.

Company Announcement, 23 September 2015 http://media.globalbrandsgroup.com/file/view.php?id=148002 Sina, 23 September 2015 http://finance.sina.com.cn/stock/hkstock/ggscyd/20150923/141423328063.shtml

Uniqlo and other fashion brands accept WeChat Payment Recently, some Uniqlo stores in Shanghai have connected with WeChat Payment. Fashion brands such as Hotwind and Giordano have also accepted WeChat Payment. In addition, Bestseller, Daphne, Anta, Decathlon and many other apparel brands will soon accept WeChat Payment. The use of WeChat Payment in the offline apparel industry will be greatly expanded. Analysts believed that the apparel industry aims to expand O2O development through WeChat Payment. Ebrun, 21 September 2015 http://www.ebrun.com/20150921/149581.shtml (in Chinese only)

Peacebird acquires stake in French high-end fashion house Alexis Mabille to tap domestic high-end market Peacebird Group, a mid-end apparel retailer in mainland China, has acquired a stake in French high-end designer label Alexis Mabille, and planned to help Alexis Mabille to establish a sales network in Greater China. It was reported that Peacebird Group plans to open as many as 100 stores for Alexis Mabille. At first, only three or four stores will be opened to test the market response. If the stores receive a positive response, 30 to 40 more stores will be opened in tier 1 and 2 cities. The first Alexis Mabille’s mono-brand store in China is expected to be

7 China Retail Weekly Updates (18 September 2015 – 24 September 2015)

opened in 2017 or 2018 in Beijing or Shanghai. Alexis Mabille will only sell apparel in China and will not develop products specifically for the China market. Nofashio.cn, 17 September 2015 http://www.nofashion.cn/a/1442466567348.html (in Chinese only)

Lancy Group to acquire South Korean baby and kids brand Design Skin for 35.64 million yuan Chinese high-end fashion brand Lancy Group announced that its joint-stock subsidiary Agabang & Company has signed an acquisition agreement with the three shareholders of Design Skin, a South Korean baby and kids brand. Agabang & Company plans to acquire a 100% stake in Design Skin owned by the three shareholders for 6.6 billion won (equivalent to about 35.64 million yuan) from its equity fund. Lancy Group said that the acquisition will help the company expand its presence in South Korea and China. Currently, Design Skin holds a market share of 10% in the baby and kids market in South Korea. ChinaSSPP.com, 24 September 2015 http://www.chinasspp.com/News/Detail/2015-9-24/204737.htm (in Chinese only)

Cosmetics

Bellabox to expand to China

Australian beauty subscription service and e-commerce platform Bellabox has teamed up Tmall to help its expansion into China. The cooperation is also an important strategy of Bellabox to become the dominant beauty e-commerce platform across Asia. According to Bellabox, it will be moving away from its subscription-based model and introducing limited edition themed beauty boxes exclusively for the Chinese market. To provide discerning Chinese consumers with more choice and variety, Bellabox will feature “the best of Australian beauty and cosmetic brands” as its slogan. Insider Retail, 23 September 2015 https://insideretail.asia/2015/09/23/bellabox-expands-to-china/

Consumer electronics Suning partners with Huatie Media to roll out interactive experience centre in high-speed railway station Suning and Huatie Media, a railway media operator, have jointly opened a one-stop interactive experience centre in Shanghai Hongqiao High-speed Railway Station. The centre houses Suning brands such as Suning.com, Suning Finance, Suning Global, Suning Redbaby and PPTV. Customers can also enjoy the payment experience brought by Suning Yifubao. Suning’s strategic partnership with Huatie Media is aimed at leveraging Huatie Media’s experience in high-speed railway media operation and relevant media resources to turn railway passengers into potential consumers of Suning.

8 China Retail Weekly Updates (18 September 2015 – 24 September 2015)

China Chain Store & Franchise Association, 18 September 2015 http://www.ccfa.org.cn/portal/cn/view.jsp?lt=2&id=421695 (in Chinese only)

Kids products

U.S.-based Gerber taps China market and opens stores on three e-commerce platforms Gerber, a U.S.-based infant and baby food brand, has opened up its cross-border e-commerce channel to tap the China market. It will also open stores on Mia.com, JD.com and Tmall Global. From now on, Gerber products can be directly shipped from factories in the U.S. to the bonded warehouse in Shanghai after completing the custom clearance processes at the customs of the U.S. and China. The products can then be directly delivered from the bonded warehouse to Chinese consumers. Ebrun, 24 September 2015 http://www.ebrun.com/20150924/150063.shtml (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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