Archive for ‘Affluence’

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06/05/2013

* Chinese buyers lured by local goods

China Daily: “Foreign brands no longer top choice for Chinese customers, says survey

Buyers lured by local goods

Chinese customers are no longer swayed by the lure of foreign brands and would instead prefer to buy more brands that are made in China, a survey said.

According to the 2013 China customers’ loyalty study conducted by marketing research firm Epsilon, six out of the 10 Chinese respondents endorsed foreign brands. However, there is a growing preference to buy products that are made in China. Local-brand supporters have grown to 43 percent from 31 percent in 2011, the report said.

Such trends are already visible in the Chinese fashion industry. In March, China’s first lady Peng Liyuan sparked off a craze for Chinese brands after dressing up in Chinese-made apparel for diplomatic visits.

Her elegant dressing code was dubbed by netizens as “Liyuan style”. Analysts argued that Peng’s support for domestic labels had stirred interest in local products and also helped attach a new, sophisticated image to Chinese-made clothes.

“Since local brands started to improve quality, establish appeal and step up their sophistication, they have garnered a bigger share from Chinese shoppers,” said Viven Deng, client services director of Epsilon China.

Chinese brands have started to win hearts not only from buyers pursuing extensive product features, but also from picky local consumers who previously stuck to foreign labels, she added.

Qi Lulu, a Beijing college student, who used to be a customer of leading international clothing brands such as Burberry and Polo Ralph Lauren, said she now focuses more on local brands.

“I buy dresses online, and I have found some domestic brands that have exquisite taste,” the 22-year-old woman said. Recently, Qi fell in love with a Beijing brand called Liebo, which featured traditional Chinese flavors and colorful patterns.

Self-branded products from other industries, such as cars and consumer electronics, are also growing in popularity. More Chinese people said they would support Chinese-made cars, especially after the Diaoyu Island dispute between China and Japan. Currently, Japan is still the major car vendor in the Chinese car market.

With a more than 1.1 billion mobile population in hand, China has grown into the world’s biggest smartphone market. The country manufactured the most number of smart devices, 224 million units, across the world last year.

Four out of the top five smartphone vendors in the Chinese market are domestic brands, with the South Korea-based Samsung Electronics Co the only international player in the list.

Huawei Technologies Co and ZTE Corp even successfully ranked as the world’s third and fifth smartphone manufacturer in the fourth quarter last year, according to research firm IDC Corp.”

via Buyers lured by local goods[1]|chinadaily.com.cn.

Posted in Affluence, China alert, Chinese labels, Consumer, Economics | Leave a Comment »

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05/05/2013

* ‘Speed money’ puts the brakes on India’s retail growth

Reuters: “Hong-Kong entrepreneur Ramesh Tainwala spent 18 months operating branded clothing retail stores in India before deciding it was impossible to succeed without paying bribes.

Customers exit a V-Mart retail store in New Delhi April 6, 2013. Picture taken April 6, 2013. REUTERS-Adnan Abidi

Tainwala, a 55-year-old expatriate Indian, owns Planet Retail, which held the India franchise rights for U.S. fashion labels Guess and Nautica as well as UK retailers Next and Debenhams. He sold the brands last September to various Indian businesses.

“Right now it’s not possible to do business in India without greasing palms, without paying bribes,” said Tainwala, who is also luggage maker Samsonite’s president for Asia Pacific and West Asia. Tainwala said he himself refused to pay bribes to licensing officials, though that could not be independently confirmed.

India is the next great frontier for global retailers, a $500 billion market growing at 20 percent a year. For now, small shops dominate the sector. Giants from Wal-Mart Stores Inc to IKEA AB have struggled merely for the right to enter, which they finally won last year.

But a daunting array of permits – more than 40 are required for a typical supermarket selling a range of products – force retailers to pay so-called “speed money” through middlemen or local partners to set up shop.

In interviews with middlemen and several retailers, Reuters found the official cost for key licenses is typically accompanied by significant expenses in the form of bribes. The added cost erodes profitability in an industry where margins tend to be razor-thin. It also creates risk for companies by making them complicit in activity that, while commonplace in India and other emerging markets, is nonetheless illegal.

That creates a handicap for foreign operators such as U.S.-based Wal-Mart, the world’s biggest retailer, and Britain’s Tesco Plc and Marks and Spencer Plc, which must comply with anti-bribery laws in their home countries even while operating abroad.

A Wal-Mart spokesperson said the company is strengthening its compliance programs, part of a global compliance review that has cost more than $35 million over the last 18 months. IKEA, which is awaiting final approval to enter India, has started assessing the market, a spokeswoman said, adding the group has “zero tolerance” for corruption in any form.”

via Insight: ‘Speed money’ puts the brakes on India’s retail growth | Reuters.

Posted in Affluence, corruption, Economics, India alert | Leave a Comment »

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03/05/2013

* Credit-Card Companies Battle in China

BusinessWeek: “The Ms. Magic credit card from China Citic Bank (601998) is dotted with Swarovski crystals and offers free beauty treatments and health insurance. Huaxia Bank’s (600015) Pretty Lady card, co-issued with Deutsche Bank (DB), entices women with triple points for cosmetic purchases and fitness club memberships. Citigroup (C), which last year became the first U.S. bank allowed to issue its own solo logo cards in China, offers to waive its first-year annual fee of 300 yuan ($49) for Rewards cardholders applying before March or spending more than 20,000 yuan by the end of December.

Credit-Card Companies Battle in China

They’re all part of a battle for affluent consumers in the world’s fastest-growing market for plastic, even as delinquencies have tripled in the past five years and profits remain elusive. “Credit cards are the ultimate growth area and also the battlefield for banks in China,” says Rainy Yuan, an analyst in Shanghai for Taipei-based Masterlink Securities. “Some may never earn a profit out of it, but they have to join the fight, as that’s the most efficient way of grabbing deposits and cross-selling other financial services.”

With interest rates fixed by the government at 18 percent annually, China’s banks can’t compete by lowering rates, so they differentiate themselves by offering merchant discounts and gifts, including Coach (COH) wallets, Hugo Boss (BOSS) quilts, and free Starbucks (SBUX) upgrades to a larger coffee. Chen Junjun, a marketing manager at China Guangfa Bank, spends 10 hours a day, seven days a week trying to lure customers to his roofless booth outside a subway station in Shanghai’s Pudong district. Among the gifts he offers: a wireless mouse, storage boxes, and coffee mugs. “No annual fees, buy-one-get-one-free for Starbucks coffee, and you get a free Coach wallet, too,” Chen says to a female passerby. “If you have a job, you are qualified. If you have a credit card, you are qualified.””

via Credit-Card Companies Battle in China – Businessweek.

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03/05/2013

* Stressed Chinese Leave Cities, Head for the Countryside

BusinessWeek: “Six years ago, Bei Yi did something many people considered crazy. He quit a high-paying job in Shanghai as a manager at an industrial glass company, sold his car and apartment, and left one of China’s most desirable cities. His destination: the town of Lijiang, deep in China’s poor southwest province of Yunnan, once a place of banishment for those who ran afoul of the emperor.

Friends and family were perplexed. “‘How can you come from such a lively, important city and move to a far-off mountain area to live?’ they all asked me. They didn’t understand at all,” recalls Bei, now 34 and proprietor of a guesthouse in Lijiang’s old city, which features rushing streams and ancient alleys. “In some ways, my life in Shanghai would have been considered quite good,” he says, sipping Pu’er tea in the bright sunshine on a recent Friday, with his Old English sheepdog lying nearby. “But I was not happy at all.”

Bei, in Lijiang’s old town, where 95 percent of residents are urban refugees

Bei, in Lijiang’s old town, where 95 percent of residents are urban refugees

Bei’s decision to abandon city life has made him something of a pioneer. Fed up with choking smog, traffic jams, unsafe food, stress, and the general toxicity of life in urban China, a growing number of affluent Chinese are deserting big cities such as Beijing and Shenzhen and settling in remote regions, says Gary Sigley, professor of Asian Studies at the University of Western Australia, who is studying the migration. Bei cites work stress as the No. 1 motivation for his move. (His once-doubting parents have joined him and his wife in Lijiang.)

Although no statistics are available on how many people have moved, Yunnan is a very popular destination. An account of a husband and wife’s decision to leave Beijing and move there was one of the top posts on Sina Weibo (SINA), China’s microblogging site, in late February. Yunnan’s attractions include its tolerance—it’s home to 25 minority groups—and pristine environment. Other than tourism, tea, and tobacco, there is little industry.”

via Stressed Chinese Leave Cities, Head for the Countryside – Businessweek.

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03/05/2013

* China Factories Try Karaoke, Speed Dating to Keep Workers

WSJ: Third in a Series: China’s Changing Work Force

“After years of offering production bonuses and other financial incentives to boost employee loyalty, TAL Group this year tried an unconventional tactic at its factory here in southeastern China: holding a “Sewing Olympics.”

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The manufacturer for such companies as Burberry Group BRBY.LN +1.21% PLC and Brooks Brothers Group Inc. had workers race to cut, stitch and fold raw fabric into high-end dress shirts. The 10 winners received small cash prizes and had their life-size images hung at an outdoor location where thousands of workers pass on the way to meals.

Cheng Pei Quan is a winner of the ‘Sewing Olympics’ at a factory. Manufacturers are looking beyond bonuses to retain workers and boost production in China.

First in the Series: China Manufacturers Survive by Moving to Asian Neighbors

Second in the Series: A Billion Strong but Short on Workers

“Chinese people put quite a lot of value on ‘face,’ ” says 23 year-old winner Cheng Pei Quan, who earned the nickname “The King of Collars” because he can sew 95 collars an hour, a third more than average. “This competition gives me a sense of pride that other benefits such as rising wages cannot give me.”

After boosting pay to compete with other manufacturers, factory owners are finding money alone no longer is enough to attract and retain a generation of workers that demand a greater work-life balance than their parents did.

Companies are holding “American Idol”-esque singing contests, sponsoring dating events, constructing libraries and karaoke rooms on campus, and organizing small dinners between managers and top workers.

Businesses also are sending postcards to workers who visit their families during the Lunar New Year—when manufacturers can lose 20% or more of their staff—urging the employees to return to work.

The measures are a response to an unprecedented shortage in China’s workforce. Demand for workers exceeded supply by a record in the first quarter. China’s working-age population, defined as people from ages 15 to 59, fell last year for the first time in decades, a result of the national one-child policy that was implemented in 1980.

While the number of migrant workers in China rose 3.9% last year, manufacturers face stiff competition from construction, mining and other industries for staff. The average monthly wage for such workers has increased 74% in the past four years, to $395 in the first quarter.

For factory owners, the ability to recruit workers is a matter of survival. If plants can’t find or replace staff quickly enough, they won’t be able to fill customer orders on time. Those that can’t will be forced to turn elsewhere in Asia to manufacture goods—or go out of business.

via China Factories Try Karaoke, Speed Dating to Keep Workers – WSJ.com.

Posted in Affluence, China alert, Economics, employment, Labour, labour reform, labour shortage, Low income, Manufacturing, Migrant workers, wage rises | Leave a Comment »

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30/04/2013

* Samsung Galaxy S4 lands on Bangalore, hundreds get in line

reutrs: ““I’m very excited. I’ve been waiting a couple of hours; I couldn’t get any sleep last night,” said Arif, an employee of UK retailer Tesco. He was near the front of the line of hundreds of people to line up at the UB City Mall in Bangalore to buy the new Galaxy S4 smartphone.

The phone went on sale at the Samsung store on Saturday, and Arif waited for about two hours for the privilege of spending 41,500 rupees, or about $763, on the new model, which comes with a 5-inch screen and 13-megapixel camera, and runs on Google’s Android platform.

Samsung is trying to increase its lead over Apple, a possibility for the South Korean company, considering the preference of many Indian shoppers for a good discount over products priced at the top of the line compared to their competitors. Both companies are now handing out discounts on some of their older models. The S4 also is competing with other phones on sale in India such as the HTC One and the BlackBerry Z10, not to mention Apple’s iPhone 5 — its primary rival.

Manu Sharma, Samsung India’s director for its mobile business, said Samsung is looking forward to selling more Galaxy S4s than previous phones in the line. The S3 has sold more than 50 million units since its launch last year, the Wall Street Journal reported in March.

Sharma also promised that there would be no supply problems that forced it to begin selling the S4 later than planned in the United States. The S4 is going on sale in the United States on Saturday as well, and warned that supply problems might strike there. Its reason for this? Better-than-expected demand, of course.

In Bangalore, crowd control was more of a problem than availability. People waited impatiently in a queue that snaked past a near-empty Apple Imagine store. Some people tried to shove and jump the queue, while some got into arguments with store guards who were trying to maintain order. For technology fans in India’s IT capital, arguing that it’s “just a phone” probably wouldn’t make much of an impression anyway.”

via Samsung Galaxy S4 lands on Bangalore, hundreds get in line | India Insight.

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27/04/2013

* In China, the license plates can cost more than the car

Something like this used to be for Singapore care owners.

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19/04/2013

* China’s 2020 consumer is in a town you’ve never heard of

Reuters: “Wearing a floral brocade cardigan and toting a Huawei smartphone, Guo Qian, 22, gushes over her latest purchases on Taobao, China’s largest e-commerce platform. As an administrative worker, Guo makes only 3,000 yuan a month and spends most of it.

Customers selects hats at a street stall at the business area of Jiaozuo, China's central Henan province, December 20, 2012. REUTERS-Aly Song

Not only does she spend nearly all of her own money, Guo also fritters away most of her father’s 1,000 yuan monthly pension on trinkets and clothes on Taobao. “Sometimes I feel guilty using his money, so I buy him some clothes.”

Guo, a Zhengzhou native, already owns an apartment – her parents helped finance the purchase last year – and is on the upward climb to join China’s burgeoning middle class.

As Beijing tries to engineer a crucial macroeconomic shift– toward more consumption and less investment, the crucial “rebalancing” China’s new leadership is committed to, and the rest of the world is counting on — it is young consumers like Guo Qian who may hold the key to the transition.

Raised in an era of unprecedented prosperity, Guo, like many other members of what is known as the `post-80s’ generation (anyone born after 1980) has a very different answer than her parents when it comes to a central economic question: whether to spend the money she has, or save it?

“I don’t save at all,” she told Reuters. ” Why should I?”

Her “spend it if you’ve got it” attitude, some economists argue, may help unlock the surge in consumption that China urgently needs to rebalance its economy over the next decade, ending an era of lopsided, investment driven growth.

“This 18-35 group, for a variety of reasons, are much more optimistic and more open to risk, because they haven’t yet experienced bad times at all,” says Benjamin Cavender associate principal analyst with China Market Research. “They tend to have high disposable income relative to their earning power, and they tend not to be saving heavily.”

This generational change in mindset, harnessed to the sheer number of people growing more prosperous in once poor provinces throughout the country – such as Guo’s native Henan – is recasting China’s economic landscape: both the composition of growth, and its geography, are about to change significantly.”

via Insight: China’s 2020 consumer is in a town you’ve never heard of | Reuters.

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11/04/2013

* British shops ration baby milk as Chinese demand surges

Reuters: “British shops are rationing sales of baby milk after Chinese visitors and bulk buyers cleared their shelves to send it to China, where many parents fear the local versions are dangerous.

Shoppers browse the aisles in the Canary Wharf store of Waitrose in London January 23, 2013. REUTERS/Neil Hall

The British Retail Consortium (BRC), whose members account for 80 percent of the sector, said many stores had imposed a two-box limit on each customer to deter the “unofficial exports” to China.

Demand for foreign milk powder has been high in China since at least six infants died and 300,000 fell ill in 2008 after they drank milk laced with the industrial chemical melamine.

The scandal sapped consumer confidence in Chinese-made food and led to shortages of powdered milk in Hong Kong and Australia as people bought boxes to export to China.

The rise of the middle-class Chinese working mother has greatly increased sales of baby milk in the world’s most populous country. Fast-growing markets like China support a global baby food market worth an estimated $30 billion a year.”

via British shops ration baby milk as Chinese demand surges | Reuters.

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09/03/2013

* Some Chinese Seek a Divorce to Avoid Real Estate Tax

NYT: “When the Chinese government announced new curbs on property prices this month, homeowners bombarded social networking sites with complaints. They formed long lines at property bureaus to register to sell their homes before the restrictions went into effect.

And some couples went even further: they filed for divorce.

Divorce filings shot up here and in other big cities across China this past week after rumors spread that one way to avoid the new 20 percent tax on profits from housing sales was to separate from a spouse, at least on paper.

The surge in divorce filings is the latest indication of how volatile an issue real estate has become in China in the past decade and how resistant people are to additional taxes.

Worried that housing prices are spiraling out of control and threatening social stability, the central government regularly rolls out measures aimed at damping demand and weeding out speculators.

Then home buyers, sellers, property developers and even local governments — which are typically heavily dependent on land sales for income — try to find ways to get around the restrictions.

“They always do this,” said Du Jinsong, a property analyst in Hong Kong for Credit Suisse. “When they implement new measures, people are always trying to circumvent the rules.”

China’s housing market has been one of the prime engines of economic growth in the past decade, and recently a sharp upturn in prices has reignited fears about inequality and a housing bubble.

On March 1, just days before the opening of China’s annual legislative session, the powerful State Council, which is led by Prime Minister Wen Jiabao, announced a series of new property measures that analysts say unsettled the housing market.

In its statement, the State Council, or cabinet, said that local governments should strictly enforce an earlier rule that ordered people selling a secondary home to pay a 20 percent tax on the profit.

Almost immediately, housing administration bureaus and real estate trading centers in big cities were flooded with people hoping to sell their apartments before the restrictions took effect. (Most local governments have not yet announced a deadline.)”

via Some Chinese Seek a Divorce to Avoid Real Estate Tax – NYTimes.com.

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