Retail in general p1 NBS: Total retail sales of consumer goods up by 10.8% yoy in August 2015

CNCIC: Retail sales of 100 key retailers in China rose 0.9% yoy in August 2015

E-commerce p1

SAIC promulgates Interim Administrative Provisions on the Online Mass Promotion of Goods

and Services

MOFCOM promulgates Basic Services Provided by Third-party Online Retail Platforms for

Settled Commercial Merchants (Draft for Comment)

CECRC: China’s online retail sales surge 49% in 1H15

JD.com sells seafood from Zhoushan City to expand fresh food offerings

JD.com partners with Russian e-payment enterprise

Yougou.com introduces six South Korean brands to expand cross-border e-commerce

S.F. Haitao launches Italy Mall to import European products

Supermarkets and hypermarkets p3

Aeon to open five new shopping malls in 2015 to expand presence in China

Yonghui Superstores rolls out cross-border direct sales business in Chongqing to tap “haitao”

market

Chengdu Hongqi Chain rolls out WeChat micro store to promote O2O strategy

Apparel p4

Trinity is licensed by David Beckham’s JV Seven Global for distribution of Kent & Curwen

products

Inditex’s Oysho launches official website for China

Cosmetics p5

Estée Lauder plans for expansion in Tmall business and China market

Consumer electronics p5 Xiaomi opens first physical store in Beijing

Home products p6 Luolai Home Textile to form a JV with Japan-based Uchino Lifestyle Designing

Ikea enjoys rapid growth in China; to open 16 stores over next five years

Retail logistics p6 S.F. Express, STO Express and six other express delivery companies join hands with Jiangxi

Branch of China Post Group

Cainiao teams up with the US Postal Service

11 September 2015 –17 September 2015

1 China Retail Weekly Updates (11 September 2015 – 17 September 2015)

Retail in general NBS: Total retail sales of consumer goods up by 10.8% yoy in August 2015 According to the National Bureau of Statistics (NBS), total retail sales of consumer goods reached 2.49 trillion yuan in August 2015, up nominally by 10.2% year-on-year (yoy). Of which, retail sales of companies above designated size were 1.13 trillion yuan, up by 8.0% yoy. By area, retail sales in urban areas reached 2.15 trillion yuan, up by 10.6% yoy; while retail sales in rural areas were 336.5 billion yuan, up by 11.9% yoy. In the first eight months of 2015, online retail sales of goods and services grew 36.5% yoy to reach 2.24 trillion yuan. National Bureau of Statistics, 13 September, 2015 http://www.stats.gov.cn/tjsj/zxfb/201509/t20150913_1243824.html (in Chinese only)

CNCIC: Retail sales of 100 key retailers in China rose 0.9% yoy in August 2015 According to the China National Commercial Information Centre (CNCIC), retail sales of 100 key large-scale retail enterprises rose 0.9% year-on-year (yoy) in August 2015. The growth rate was 2.4 percentage points (ppts) lower than that in August 2014. By category, sales of apparel and cosmetics were down by 4.4% yoy and up by 1.1% yoy respectively. CNCIC, 14 September, 2015 http://www.cncic.org/index.php?option=com_content&task=view&id=41825&Itemid=14 (in Chinese only)

E-commerce SAIC promulgates Interim Administrative Provisions on the Online Mass Promotion of Goods and Services The State Administration for Industry and Commerce (SAIC) has promulgated the Interim Administrative Provisions on the Online Mass Promotion of Goods and Services (the “Provisions”) for implementation as of 1 October, 2015. According to the Provisions, online mass promotion organizers, namely third-party trading platforms, shall record and save the details and publication dates of any product and service information published on the platforms during online mass promotion. They shall check and monitor online mass promotion organized by merchants of online shops. The Provisions also clearly require that third-party trading platforms shall not adopt standard clauses to set up unfair or unreasonable provisions for consumers such as the provisions stating that no deposit is to be refunded, and the return of goods without reasons within seven days is not applicable to pre-sale goods. In addition, the Provisions also forbid acts such as making false turnover, false trading volume and favourable comments, and deleting negative comments during the promotion. E-commerce platforms and merchants of online shops that violate these requirements shall be subject to corresponding punishments. News.cn, 14 September, 2015

2 China Retail Weekly Updates (11 September 2015 – 17 September 2015)

http://sx.news.cn/jrrd/20150914/2544406_c.html (in Chinese only)

MOFCOM promulgates Basic Services Provided by Third-party Online Retail Platforms for Settled Commercial Merchants (Draft for Comment) Recently, the Ministry of Commerce (MOFCOM) has promulgated the Basic Services Provided by Third-party Online Retail Platforms for Settled Commercial Merchants (Draft for Comment). It specifies that platforms engaging in third-party online retail platform trading within China shall provide their settled commercial merchants with the following basic services: settlement services, commodity trading services, liability assumption of after-sales services, information and technology services, training services and sales promotion. Lexiscn.com, 16 September 2015 http://hk.lexiscn.com/latest_message.php?id=183144 (in Chinese only) Lexiscn.com, 16 September 2015 http://hk.lexiscn.com/latest_message.php?id=183149

CECRC: China’s online retail sales surge 49% in 1H15 According to China e-Business Research Center (CECRC)’s latest report, China’s online retail sales increased by 48.7% to reach 1.6 trillion yuan in 1H15, accounting for 11.4% of total retail sales in China. CECRC expects the figure to reach 3.8 trillion by the end of 2015. Tmall ranked the first in the B2C market with 57.7% market share. JD.com came in second at 25.1 %, followed by Suning.com at 3.4%. On the other hand, mobile retail sales amounted to 842.1 billion yuan in 1H15. Alibaba’s mobile site ranked the first with 80.1% market share, followed by JD.com and VIP.com’s mobile sites with market share of 10.7% and 2.6% respectively.

Linkshop, 9 September 2015 http://www.linkshop.com.cn/web/archives/2015/333784.shtml?from=rss (in Chinese only) Shanghai Daily, 9 September 2015 http://www.shanghaidaily.com/business/consumer/Chinas-H1-online-retail-sales-surge-nearly-49/shdaily.shtml

JD.com sells seafood from Zhoushan City to expand fresh food offerings JD.com has signed a strategic cooperation agreement with Zhoushan Electronic Commerce Association. A variety of seafood products from Zhoushan City of Zhejiang Province will be sold on JD.com. The cooperation helps JD.com increase its fresh food offerings. It is also one of JD.com’s initiatives on direct supply from origin. Zhoushan Electronic Commerce Association will work with JD.com to control product quality. Meanwhile, JD.com will leverage its platforms to help with the promotion and marketing of the products. JD.com will also hold an online “Zhoushan Fishing Festival” to sell all kinds of seafood.

3 China Retail Weekly Updates (11 September 2015 – 17 September 2015)

Ebrun, 17 September 2015 http://www.ebrun.com/20150917/149154.shtml (in Chinese only)

JD.com partners with Russian e-payment enterprise Recently, JD.com’s Russian website has begun to accept online payments in Russia through the payment solutions provided by Yandex.Money, the largest e-payment service provider in Russia. Shoppers on JD.com can pay via the electronic wallets provided by Yandex.Money, and the online banking of Sberbank, Alfa-Bank and Promsvyazbank. Before this, JD.com’s Russian website can only accept user payments via foreign bank cards or Paypal. Ebrun, 16 September 2015 http://www.ebrun.com/20150916/149131.shtml (in Chinese only)

Yougou.com introduces six South Korean brands to expand cross-border e-commerce Yougou.com has expanded its procurement of South Korean apparel brands and introduced six of South Korea’s popular brands including CLRIDE.n, Advisory, GGPX, Bonnie Alex, Top Girl and Frank Stone. Besides offline stores-in-stores and official online shops, these brands currently do not have other online channels in China. Yougou.com is their first partner in e-commerce platform. Earlier, Yougou.com said that its Seoul Mall, launched in July, has a sell-through rate as high as 70%. Ebrun, 16 September 2015 http://www.ebrun.com/20150916/149115.shtml (in Chinese only)

S.F. Haitao launches Italy Mall to import European products S.F. Express’s cross-border e-commerce import website “S.F. Haitao” (www.sfht.com) has rolled out “Italy Mall”. The mall offers product categories such as cosmetics, daily products, personal care products and small home appliances. Earlier, S.F. Haitao has already rolled out Taiwan Mall, South Korea Mall, Japan Mall, Australia Mall and New Zealand Mall. The Italy Mall is S.F. Express’s first mall for European countries. China Chain Store & Franchise Association, 16 September 2015 http://www.ccfa.org.cn/portal/cn/view.jsp?lt=2&id=421659 (in Chinese only)

Supermarkets and hypermarkets

Aeon to open five new shopping malls in 2015 to expand presence in China Aeon Mall will accelerate the construction of shopping malls to expand its presence in China market. It will open five new malls in China this year, including the newly

4 China Retail Weekly Updates (11 September 2015 – 17 September 2015)

opened Fengtai store in Beijing and Hudong store in Suzhou Industrial Park, as well as three new stores to be opened in November and December in Hangzhou, Guangzhou and Wuhan. Aeon said that it will strive to open a total of 40 shopping malls in China by 2020. Most of the shopping malls will be opened in tier 2 cities or new cities, so as to avoid competition in developed regions and save costs. Linkshop.com.cn, 15 September 2015 http://www.linkshop.com.cn/web/archives/2015/333619.shtml (in Chinese only)

Yonghui Superstores rolls out cross-border direct sales business in Chongqing to tap “haitao” market Yonghui Superstores opens its first cross-border direct sales experiential area in Chongqing. Located at a Yonghui supermarket on Beibin Road, it covers an area of nearly 500 sqm. It offers over 1,500 types of imported products from 36 countries and regions, including noodles, milk, beer and other popular items. Prices of most products are cheaper than the market prices by 15% to 20%. Chongqing Yonghui Superstores said that product category will reach 2,000 by year-end. China Chain Store & Franchise Association, 11 September 2015 http://www.ccfa.org.cn/portal/cn/view.jsp?lt=2&id=421577 (in Chinese only)

Chengdu Hongqi Chain rolls out WeChat micro store to promote O2O strategy Chengdu Hongqi Chain, a Shenzhen-listed Supermarket chain, has launched a WeChat micro store. In addition to a wide range of specialty products of Sichuan and Chongqing, it also offers food, apparel, toys and home appliances, etc. Consumers can access and make purchase in the WeChat micro store by following Hongqi Chain’s official account on WeChat (cdhqls). The products can be delivered nationwide. Besides, consumers in urban areas of Chengdu can choose self pick-up for orders above 100 yuan. Analysts pointed out that Hongqi Chain has been actively promoting is O2O strategy. The launch of the WeChat micro store is one of its initiatives to tap the mobile Internet business. ChinaSSPP.com, 11 September 2015 http://www.chinasspp.com/News/Detail/2015-9-11/203964.htm (in Chinese only)

Apparel

Trinity is licensed by David Beckham’s JV Seven Global for distribution of Kent & Curwen products Hong Kong-based Trinity Limited, a retailer of high-end menswear brands, announced that it has signed an exclusive five-year cooperation agreement with retired soccer star David Beckham. Seven Global LLP, a new joint venture (JV) set up by Global Brands Group Holding Limited and DB Ventures Limited (controlled by David Beckham and his business partner Simon Fuller), has agreed to grant to Trinity Limited the right to use the licensed property in the promotion, design, manufacture and distribution of certain products under its Kent & Curwen brand.

5 China Retail Weekly Updates (11 September 2015 – 17 September 2015)

Both the Trinity Limited and Global Brands Group Holding Limited are controlled by the Fung Group. Trinity Limited will have an exclusive right for the sale of Kent & Curwen products through the Kent & Curwen Retail Stores, and a non-exclusive right for the distribution of other David Beckham products through the Kent & Curwen Retail Stores. It will also have an exclusive right for the distribution of Kent & Curwen products through wholesale channels and e-commerce sites and other channels of distribution. Trinity’s plans also include the creation of new Kent & Curwen collections and marketing campaigns, as well as the opening of new flagship stores in China and other markets around the world, and the launch of an e-commerce site. Nofashion.cn, 16 September 2015 http://www.nofashion.cn/a/1442376010410.html (in Chinese only) PRNewswire, 16 September 2015 http://en.prnasia.com/story/131095-0.shtml

Inditex’s Oysho launches official website for China To tap China’s e-commerce market, Inditex’s lingerie brand Oysho launched an official website for China (www.oysho.cn), following the launch of its flagship store on Tmall. It is Oysho’s first self-operated online shop. The online shopping platform offers lingerie, sportswear, sleepwear, swimwear, accessories, footwear and so on. Oysho also plans to open two new physical stores in China by the end of September, bringing the total number of stores in China to 57. Winshang.com, 13 September, 2015 http://yn.winshang.com/news-524480.html (in Chinese only) FMAG, 10 September, 2015 http://au.fashionmag.com/news/Inditex-s-Oysho-launches-e-commerce-in-China,568017.html

Cosmetics Estée Lauder plans for expansion in Tmall business and China market Cosmetics giant Estée Lauder Companies Inc. said that it will continue to view China as one of its biggest markets with long-term growth opportunities, given its rapidly expanding middle class. The company will also further expand its business on the Tmall platform during the current fiscal year. Estée Lauder believed that it will have more opportunities in the China market in the future, as it only sells less than half of its brands in China at present. Estée Lauder has sales point in about 100 cities in China. It sees the potential for opening physical stores in at least 300 cities. Ebrun, 11 September 2015 http://www.ebrun.com/20150911/148496.shtml (in Chinese only)

Consumer electronics

6 China Retail Weekly Updates (11 September 2015 – 17 September 2015)

Xiaomi opens first physical store in Beijing Xiaomi has opened its first physical store in Beijing Modern Plaza. The stores offers a number of special services for the first time, including “face-to-face” maintenance, provision of a full line of products for on-site trial and purchase, and offline debut of new products. Large orders will be delivered by express companies after payment is made. Xiaomi said that it will make new attempts at offline experiential stores in the future. Yesky.com, 14 September, 2015 http://news.yesky.com/210/97497710.shtml (in Chinese only) Android Headlines, 15 September, 2015 http://www.androidheadlines.com/2015/09/xiaomi-opened-companys-first-retail-store-beijing.html

Home products

Luolai Home Textile to form a JV with Japan-based Uchino Lifestyle Designing Luolai Home Textile Co. has reached a cooperation agreement with Japanese towel brand Uchino Lifestyle Designing. Lavie Home, a subsidiary of Luolai Home Textile Co., will set up a joint venture (JV) with Shanghai Uchino Trading Co. Ltd. (the only trading company of Uchino Lifestyle Designing in China). The two companies are aiming for an annual growth target of 30% to 50%. They are still in talks about specific cooperation arrangements, but the focus is on expanding product offerings and sales network. Luolai Home Textile Co. said that the cooperation aims to promote the transformation and upgrade of the company. This includes moving towards home furniture from home textile and improving its high-end product lines. Ebrun, 10 September 2015 http://www.ebrun.com/20150910/148336.shtml (in Chinese only)

Ikea enjoys rapid growth in China; to open 16 stores over next five years Ikea Group has announced its financial statements for financial year 2014-2015 ended 31 August. Sales totaled 31.9 billion euro (equivalent to 227.6 billion yuan), up 11.2% year-on-year (yoy). Same-store sales increased by 5.1%. Ikea said that the good performance is attributable to the strong growth in the China market, as China is the company’s fastest growing market in the world. Sales in China reached 8.8 billion yuan in financial year 2014-2015, up 25% yoy. Ikea said that it will continue its expansion plan in China in the coming financial year. It plans to open stores in Guangzhou, Suzhou and Chengdu, bringing the number of stores in China to 21. The figure will reach 34 by 2020. ChinaSSPP.com, 11 September 2015 http://www.chinasspp.com/News/Detail/2015-9-11/203962.htm (in Chinese only)

Retail logistics

7 China Retail Weekly Updates (11 September 2015 – 17 September 2015)

S.F. Express, STO Express and six other express delivery companies join hands with Jiangxi Branch of China Post Group Recently, the Jiangxi Branch of China Post Group has signed a strategic cooperation agreement with the Jiangxi subsidiaries of eight express delivery companies including S.F. Express, STO Express, YTO Express, ZTO Express, Best Express, Yunda Express, TTK Express and UC Express. They will jointly promote the development of the rural express delivery service system in 22 counties in Jiangxi Province. It is hoped that the express delivery network will cover all townships and villages in Jiangxi Province by 2017. The post offices will leverage the existing rural service points to open express supermarkets and conduct express items pick-up business; build county-level distribution and processing centres for express items to ensure timely distribution and delivery; speed up the capacity-building of rural distribution platform and upgrade the distribution sites in towns and townships. Ebrun, 17 September 2015 http://www.ebrun.com/20150917/149221.shtml (in Chinese only)

Cainiao teams up with the US Postal Service Cainiao, Alibaba Group’s logistics affiliate, has recently teamed up with the US Postal Service (USPS). Cainiao and the USPS will collaborate on the development of enhanced shipping solutions for cross-border e-commerce. In addition to helping provide more efficient shipping channels into the US for Chinese merchants and manufacturers selling on Alibaba’s AliExpress global-shopping website, the USPS will also work with Cainiao to expand its worldwide shipping capabilities, especially in South America. Ebrun, 16 September 2015 http://www.ebrun.com/20150916/149147.shtml (in Chinese only) Inside Retail, 17 September 2015 https://insideretail.asia/2015/09/17/alibaba-promises-faster-deliveries-to-us/

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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