Foreign Retailers Struggling in China

From fast food to smartphones, from luxury goods to groceries, the way China shops — and what mainland shoppers want to buy — is changing rapidly. The changes are leaving foreign supermarket and hypermarket chains struggling to keep up by revamping store formats and selling more groceries online, retail analysts say.

On Wednesday Walmart announced a plan to turn round its declining sales in China by boosting store numbers by more than 25 per cent, renovating existing shops and introducing a new online shopping app.

The US chain has been hit by food safety scandals in China, along with rapidly intensifying competition from other big hypermarket chains and from new online grocers.

The sector’s woes are not limited to foreign brands either. A new report by OC&C strategy consultants finds that “nearly all the major players among China’s big-box grocers … have experienced near-consistent negative growth since 2010.” Growth during that period has come almost entirely from new store openings, OC&C said.

Competition from online grocers is one of the biggest threats to brick and mortar sales at chains such as Walmart, Carrefour and Auchan’s SunArt Retail, retail analysts say. Consumer tastes in China change more rapidly than in many established markets, and in the past year or two, online grocery sales have exploded.

OC&C says online sales rose nearly 50 per cent in 2014, year on year, compared with a paltry 6.7 per cent for hypermarkets and supermarket sales (including new store openings). Many consumers are shifting their buying to convenience stores too, retail analyst say, prompting grocers including Walmart and Carrefour to try new, smaller formats for their stores in big cities. (www.chinainout.com)

Walmart already has one of the strongest ecommerce presences in China, through its 51 per cent stake in Yihaodian, the popular online grocer.

In 2014 from Which Countries China Imports Beer and What Quantity China Imports

2014年中国出口啤酒25.8万千升，同比上升3.40%，出口额17705.39万美元，出口单价提高了5.03%；进口啤酒33.82万千升，同比大幅上升85.59%，进口额40356.66万美元，进口平均价格下降6.13%。进口啤酒量近十几年来首次超过出口啤酒量，中国啤酒进出口首次由顺差变为真正意义上的逆差。（中国进出口网）

In 2014, China exported 258,000 kiloliters of beer, an increase of 3.40% year over year, with the amount of 177,053,900 dollars, unit price increasing by 5.03%; China imported beer of 338,200 kiloliters, an increase of 85.59% year on year, with the amount of 403,566,600 dollars, unit price decreasing by 6.13%. In recent ten years, the amount of imported beer exceeds the amount of exported beer for the first time, China's beer importing and exporting transforms from surplus to deficit for the first time.

State Council to Deploy Policies to Improve Import and Export of Consumer Goods

On April 28 Chinese Premier Li Keqiang chaired an executive meeting of the State Council, main content of the meeting includes, the deployment and improvement of policies on the import and export of consumer goods, abundance of domestic consumer shopping choices; acceleration of oil products quality upgrading to promote air pollution control and technological upgrading of enterprises; implement of the rare earth tungsten and molybdenum resource tax reform to rationalize the relationship between resources and tax.

The meeting held that the expansion of domestic consumer demand could promote economy growth and structural adjustment. In order to meet the consumption upgrading requirements, the government will improve the tax adjustment policies to create a fair competitive environment for import and export, to increase the imported consumer goods which masses have strong willingness to buy, the government will also promote exports of goods with international competitiveness, thus expanding domestic demand and employment, promoting the domestic industry towards high-end level. 

The meeting confirmed that the relevant departments should come up with concrete programs based on scientific assessment, first, regarding some foreign consumer goods for which the consumers have a large demand, the government will carry out pilots, reduce tariffs, and expand the scope of the tax reduction goods before the end of June this year. Second, the government will improve the consumption tax policy of the clothing, cosmetics and other consumer goods, coordinate and adjust the tax base, tax rate and links. Third, the duty-free stores will be increased, the duty-free varieties will be expanded, the amount of the tax-free shopping will be increased, thus it would be more convenient for Chinese consumers to buy foreign products in China. Fourth, the government will further promote the establishment of passenger shopping clearance and tax facilitation, formulate inspection and quarantine policies to promote the development of the cross-border e-commerce and clean up unreasonable charges during importing. Five is to accelerate the Chinese brand promotion projects, support the development of the offline store and achieve online and offline interaction.  (www.chinainout.com)

Economic Recession Good for Health

While an economic crisis results in untold misery for countries and their people, a new study of health in Cuba has suggested there could be a silver lining during lean times.

Researchers appear to have implied that people can lose weight during a recession due to a reduction in eating and increasing physical activity.

Their dramatic findings, published online in the British Medical Journal, were based on a study in Cuba, wher the population suffered food and fuel shortages following the economic crisis of the early 1990s triggered by the collapse of the Soviet unio.

This resulted in an average of 4 to 5kg (8 to 11 lbs) being shed by the people and subsequent rapid declines in deaths from diabetes and coronary heart disease.

The scientists from the University of Alcalá, in Madrid, also discovered that when Cubans put the weight back on, cases of diabetes surged again.

The researchers concluded that the Cuban crisis could have lessons Britain.

They suggested that an average weight loss of just eleven pounds across the UK could cut deaths from heart disease by a third while the mortality rate of type 2 diabetes, the form of the condition related to obesity, could also be halved.

Whole population trends in food consumption and transport policies linked to physical activity could reduce the burden of two major illnesses, said the researchers.

"During the deepest period of the economic crisis in Cuba, from 1991 to 1995, food was scarce and access to gas was greatly reduced, virtually eliminating motorised transport and causing the industrial and agricultural sectors to shift to manual intensive labour,” said Prof Manuel Franco, who led the international team of researchers from Spain, Cuba and the United States.

"We found a population-wide loss of 4-5 kg in weight in a relatively healthy population was accompanied by diabetes mortality falling by half and mortality from coronary heart disease falling by a third.

"So far, no country or regional population has successfully reduced the distribution of body mass index or reduced the prevalence of obesity through public health campaigns or targeted treatment programmes." (www.chinainout.com)

In First Quarter of 2015 Car Imports and Exports both Fall

The general administration of customs recently released data, in the first quarter of 2015, imported motor vehicles (including chassis, the same below) reached 260,000, down by 16.3% year on year, the amount of the imported motor vehicles $10.647 billion, down by 21.7%; the imported auto parts reached $6.509, down by 10.0%. The exported car reached 190,000, down by 5.7%, the amount of the exported car $2.735 billion, an increase of 2.4%; the auto parts exports amounted to $10.906 billion, an increase of 0.1%.

There are sharp distinctions between automobile import and export. The decreasing amplitude of the imported vehicle number is more than the decreasing amplitude of the exported vehicle number, but the imported vehicle is 70,000 more than the exported vehicle; the declining amplitude of imports is more than 20%, the exports slightly increase, the deficit amounts to $7.914 billion. However, the auto parts export situation is much better than imports, the amount of surplus reaches $4.397 billion.

For automobile imports, in January and March, 100,000 were imported, in February 60,000 imported. Due to the Spring Festival, it is a normal condition. For automobile exports, in January 72,000 were exported, in February 60,000 exported, exports in March was slightly lower than exports in February.

China's auto exports have greater progress, ranging from exclusively exporting the commercial vehicle to exporting the passenger car, which accounts for 60 percent of total auto exports, exporting to more countries, ranging from exporting CBU to exporting the CKD parts. However, according to the first quarter’s automobile imports and exports, there’s still a gap between China’s auto and the auto of other countries like EU, US, Japan and South Korea, the international competitiveness of China’s auto is behind other countries, from the first quarter’s vehicle trading volume and value, we can know, one exported auto price is only $14,400 on average, while the average price of imported auto reaches $41,000.

In the first quarter, the imported car market was in downturn. According to the imported car market information joint committee feedback, the imported car registration number was much lower than imports, the current inventory was close to 4.8 months, hitting a record, the average sales price declines by 67,000 yuan, a decrease of 10.5%.

As part of the import car market, parallel imported cars lead to “the castle in the air”. Because multinational companies’ profit is falling, parallel imported cars share the market of authorized imported auto, the growth of parallel imported cars is impacted, for example, the BMW X5 and X63.0T has been authorized channels to sell in China, and their displacement is 2.979L, while the displacement of the parallel imported cars reaches 3.001L, vehicle excise duty and VAT of parallel imported cars will increase; the manufacturer of Mercedes-Benz and Land Rover prohibits sales across the region in order to suppress the parallel import business; Toyota desires to take domestic strategy to reduce vehicle prices to significantly narrow the spreads; vendors set up barriers of cash payment for parallel import car buyers, and so on.
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Surging Dollar Impacts US Corporate Profits

A surging dollar is expected to hit some of the largest US multinationals this week, as more than a fifth of S&P 500 companies report results for a quarter marked by a 9 per cent jump in their domestic currency.

Blue-chip behemoths such as IBM, General Motors, United Technologies, Coca-Cola and McDonald’s are among those set to release earnings by Friday.

With the S&P up only 1.1 per cent this year, investors are concerned that several companies could emulate General Electric and Philip Morris, which each said last week that the dollar reduced their revenues by nearly $1bn in the first quarter. GE said currency swings hit profits by $120m, and Philip Morris reported a $585m hit to “operating companies income”.

Fears of a new Greek crisis are resurfacing and US economic data has disappointed of late, but corporate earnings are likely to be a key driving force for US equities this year, said Russ Koesterich, global chief investment strategist at Blackrock.

“For 2015, it will come down to earnings and whether companies can overcome a higher dollar,” he said.

Earnings reports so far have validated recent concerns over falling energy prices and a rising dollar that have led to the largest downgrade of earnings estimates since the financial crisis.

FactSet expects first-quarter earnings for the S&P 500 to decline 4 per cent and revenues to dro 3 per cent. But it expects both earnings and revenues to be down 10 per cent for companies that generate less than half their sales in the US.

Between the end of October and mid-March, the dollar index – which measures the greenback against a basket of its peers – climbed 15 per cent .

The euro suffered its biggest quarterly decline against the dollar since it was created in 1999, and many strategists hastily brought forward their target date for the dollar reaching parity with its transatlantic partner, although that expectation has been tempered by poor US economic data. (www.chinainout.com)

WGWG Cooperates with Henan Radio, Nation’s Largest O2O Offline Experience Center Launches

The Provincial Press Publication and Radio Administration has been in the cooperation with WGWG. They take full advantage of Tower Fu and build the nation’s largest cross-border e-commerce bonded exhibition center, with the areas of over 20,000 m². The products come from the United States, Britain, Germany and other core trading countries and cover a wide range of categories.

Through the connection with customs and CIQ’s IT systems, cross-border e-commerce platform will achieve the effective integration of information flow, capital flow and logistics, thus consumers will enter an age of the intelligence global shopping. Then the intelligent terminal will be able to extract consumer orders, payment, logistics and other information, submit to the Customs and then make clearance, finally the product will be delivered to the consumer's hands.

The director of Henan Press Publication and Radio Administration, Zhu Xiayan said that intelligent global shopping is the future trend of development of the e-commerce, as a leading cross-border retail e-commerce platform, WGWG has the efficient management and advanced technology, which is the key to cooperation. At the same time, the WGWG CEO Kate Guo said, "Relying on the favorable policies, coupled with the successful collaboration, Henan cross-border e-commerce companies will have a leading position in the nation’s cross-border e-commerce circle and win the initiative." 

Back in 2013, the strategy "one belt one road" made it clear that Zhengzhou would be built into an inland open economy Heights, the cooperation with coastal ports and border ports would be strengthened, and that cross-border e-commerce pilots would be launched. Last May, when the party and state leaders inspected in Zhengzhou, they also made important instructions on the "buy from global, sell to global". This time, WGWG chose to cooperate with Henan Radio, turned down the model of the country's largest O2O offline experience and exhibition hall, and would create a offline flagship brand of the cross-border e-commerce based on central China.

Up to now, WGWG’s exhibition hall has attracted many e-commerce merchants and many famous international brands like Aptamil, Garbo, Asco, Coach, Ecco settled.
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