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Wumei to buy stake in B&Q China

Pedestrians walk past a B&Q store near Tiantongyuan, a residential community in Beijing.

Kingfisher, the United Kingdom-based home improvements retailer, said on Monday that it had agreed to sell a 70 percent stake in its loss-making B&Q China business to Wumei Holdings Inc for 140 million pounds ($219 million), a move that is expected to boost Wumei’s retail presence.

The agreement follows Kingfisher’s announcement in March of its plans to look for a strategic partner to help develop its B&Q business in China, which is made up of 39 stores and employs 3,000.

“I am delighted to have found a strong retail partner who will help us realize the financial value of our business in China,” said Véronique Laury, chief executive of Kingfisher. The transaction will enable Kingfisher to focus on its main businesses in Europe, including the UK market leader B&Q and Castorama in France, said Laury.

Kingfisher, which has B&Q and Screwfix in the UK and Castorama and Brico Depot in France, is Europe’s biggest home improvement retailer.

Beijing-based Wumei, the leading retail chain store operator, has a retail network of about 650 supermarkets under the brand of Wumart and 10 department stores in northern, eastern and western China.

The deal is subject to approval by the Ministry of Commerce, and if approved, is likely to be completed during the first half of next year.

Jason Yu, general manager of Kantar Worldpanel China, a global consumer information provider, said the bold step will help Wumart move into the highly fragmented and competitive home improvement sector. “But Wumart will have to learn how to survive in the challenging home improvement sector,” he said.

Wumart had a 6.7 percent value share in the North China region’s grocery retailing sector, Kantar Worldpanel said, adding that the year-on-year growth trend was more or less flat, despite it being the top retailer in the region.

As one of the key local players in the China grocery sector, Wumart has faced several challenges, including cutthroat competition from the e-commerce sector.

Yu said such deals are common in the retail sector. “B&Q may be able to leverage on the local market expertise of Wumart,” he said. “The combined group will have larger scale as well as a stronger eco-system, a shopping center with both Wumart hypermarket as well as B&Q store, and better negotiation power and property portfolio. It will also allow Wumart to expand their business in regions where they do not currently have a presence.”

In 2012, Home Depot Inc, the largest home-improvement retailer in the United States, closed its remaining seven big box stores in China after it decided to shift its focus to specialty and online outlets in China.

Yu said Western home improvement retailers rely very much on the do-it-yourself concept?consumers buy the raw material and do the home improvement at home. However this does not work well in China as consumers typically rely on home improvement specialists to do the work.

Though B&Q and some other Western retailers started to offer these kind of services at their stores, it was not as competitive as other players. Most of the Western retailers had fewer stores and relatively weaker negotiation power with suppliers. As a result, they are also not able to offer advantageous prices, Yu said.

He said the recent cooling down of the real-estate market has led to weaker demand for home improvement-related work. Within the home improvement sector, the only successful example is Sweden’s Ikea that really wins based on the unique customer experiences it creates, he said.

Macao sees more hotel employees in Q3

The number of full-time hotel employees in China’s Macao Special Administrative Region reached 45,584 at the end of the third quarter of 2014, up 2.6 percent year-on-year, official figures showed on Thursday.[Special coverage]

According to the Statistics and Census Service, the average earnings of the hotel employees in September rose by 10.7 percent year-on-year to 15,750 patacas (1,972 US dollars).

Restaurants in the region registered 23,831 full-time employees at the end of September, up 9.3 percent, with their average earnings growing 8.4 percent year-on-year.

The number of employees of the financial sector stood at 6,530 full-time employees at the end of the third quarter, an increase of 2.7 percent.

Experts say the increase of employees in the non-gaming sectors could be seen as an indicator of Macao’s efforts to diversify its gambling-dominated economy.0 In the region with a population of around 630,000, the gaming industry accounts for about 80 percent of its revenue.

Asia to become world’s largest e-commerce market: EIU

Asia is set to surpass North America and snatch the title of the world’s largest e-commerce market this year, said the Economist Intelligence Unit (EIU).

According to a report published on Tuesday in Beijing by the EIU, an advisory company under the Economist Group, it is estimated that retail sales in Asia will grow by an average 4.6 percent on a volume basis to 7.6 trillion U.S. dollars, compared with 2.5 percent in North America and 0.8 percent in Europe in 2015.

Report editor Laurel West said that the Asian consumer market was largely driven by the rising independence and economic power of Asia’s women, and female consumers in Asia are showing an unprecedented enthusiasm for online shopping.

The report is based on a survey of 5,500 women across major cities on the Chinese mainland, Hong Kong, Taiwan and Macao, as well as countries including India, Japan, Singapore and the Republic of Korea. Among the survey respondents, 43 percent were in managerial, executive or professional services jobs.

Nearly half of the women agreed or strongly agreed that they preferred online- to in-store shopping. The proportion on the Chinese mainland was as much as 69 percent. Sixty-three percent of those polled browsed the Internet at least once a day for products and services, with nearly 30 percent doing so twice or more per day.

When choosing an online retailer, price and quality were the main factors considered, followed by genuine products and convenience.

Volvo to launch online car sales in global marketing strategy shift

Volvo Car Corp said it will start selling vehicles online as it rolls out new models to compete with German luxury rivals such as BMW.

The Swedish carmaker, controlled by Zhejiang Geely Holding Group, will gradually introduce Web sales and spend more on digital advertising, it said as it outlined changes to its global marketing strategy on Monday.

Volvo raised its 2014 sales goal in August as it launched a revamped XC90 crossover, the first vehicle developed under Geely’s ownership.

“The plan is to have all our car lines in all our markets offered digitally,” Volvo sales chief Alain Visser said in an interview.

Few manufacturers have tried selling directly online. A notable exception is Tesla, whose electric car sales have cut out traditional dealers, leading to conflict and effective exclusion from parts of the US.

But Volvo has assured its 2,000 global dealerships, half of which are in Europe, that it has no such plans.

“If you say the word e-commerce, initially dealers get nervous,” Visser said.

“We don’t see a car distribution network without dealers in the foreseeable future,” he said, adding that vehicles sold online “will still pass through the dealer network” for delivery.

The Swedish carmaker plans to withdraw from all but one motor show per year in each of three regions – Europe, North America and Asia – and stage its own global event instead.

Volvo also said it would not follow rivals into city-center boutique dealerships of the kind increasingly used by BMW, Mercedes-Benz and Audi.

“We’re a different brand with limited financial means,” Visser said. “We don’t believe in building these big palaces.”

Some 80 percent of Volvo customers already shop online for other goods, the sales chief added, and research suggests many will do the same for cars in future.

But some analysts such as Stuart Pearson of Exane BNP Paribas remain skeptical, citing weak orders from experimental online sales of BMW’s i8 hybrid sports car.

“BMW has tried it in Germany, but they really haven’t had a huge amount of volume,” Pearson said. “People still want to go into dealers.”

Economic growth may slow to 7.1%

China’s economic growth could slow to 7.1 percent in 2015 from an expected 7.4 percent this year, held back by a sagging property sector, the central bank said in a research report on Friday.

Stronger global demand could boost exports, but not by enough to counteract the impact from weakening property investment, according to the report published on its website.

China’s exports are likely to grow 6.9 percent in 2015, quickening from this year’s 6.1 percent rise, while import growth is seen accelerating to 5.1 percent in 2015 from this year’s 1.9 percent, it said.

The report warned that the US Federal Reserve’s expected move to raise interest rates sometime next year could hit emerging market economies.

Fixed-assets investment growth may slow to 12.8 percent in 2015 from this year’s 15.5 percent, while retail sales growth may quicken to 12.2 percent from 12 percent, it said.

Consumer inflation may hold largely steady in 2015, at 2.2 percent, the report noted.

China’s economic growth weakened to 7.3 percent in the third quarter of 2014, and November’s soft factory and investment figures suggest full-year growth will miss the central government’s 7.5 percent target and mark the weakest expansion in 24 years.

Economists who advise the government have recommended that China lower its growth target to around 7 percent in 2015.

China’s employment situation is likely to hold up well next year due to faster expansion of the services sector, despite slower economic growth, said the report.

Tencent’s private bank to open soon

First of a group of firms to start banking operations

Internet giant Tencent Holdings will be the first among a batch of private companies to start its banking business soon after getting approval from the banking regulator, which analysts said Sunday will help finance the country’s cash-starved small businesses.

China Banking Regulatory Commission (CBRC), the country’s top banking regulator, said in a statement on Friday that it has granted approval to Tencent, China’s largest Internet company by market value, to start its banking operations.

WeBank, founded by Tencent, Shenzhen Baiyeyuan Investment Co and Shenzhen Liye Group, is the first one among five private banks that had been approved by the CBRC in the second half of 2014 to open its door to clients.

Financial news portal caixin.com reported on Friday that WeBank would start its operations on December 28.

WeBank, with a registered capital of 3 billion yuan ($490 million), has a business scope that includes personal banking, corporate banking and international banking.

WeBank would focus on serving individuals as well as small and medium-sized enterprises with innovative financial products based on its social networking platform WeChat, Xu Hongcai, director of the Department of Information under the China Center for International Economic Exchanges, a Beijing-based think tank, told the Global Times on Sunday.

Tencent, the operator of -China’s most popular instant messaging app WeChat with over 468 million monthly active users by the end of September, has advantages in online payment, experts said.

Given the firm’s large number of users, WeBank is expected to abandon the traditional way of accepting money deposits by setting up branches, Xu said.

The country’s cash-starved small businesses, which find it hard to get loans from existing commercial banks, could enjoy more flexible online financial services offered by banks such as WeBank, he noted.

Analysts expect that following the launch of Tencent’s bank, reforms in China’s banking industry will be accelerated in 2015 to promote the process of opening China’s banking sector to private capital.

On November 30, the Legislative Affairs Office of China’s State Council issued draft regulations containing 23 articles on the standardized deposit insurance system to solicit public opinions.

Yin Zhongli, a researcher at the Chinese Academy of Social Sciences, told the Global Times on Sunday the deposit insurance system will be established in China for the first time starting in 2015 to guarantee the safety of private bank deposits and set up a bankruptcy mechanism for commercial banks.

In addition, ramped-up reforms in the finance sector that involve interest rate liberalization will also be improved next year to support the development of private banks, Guo Tianyong, a finance professor at the Central University of Finance and Economics, told the Global Times on Sunday.

Jack Ma becomes richest person in Asia

Jack Ma, founder and executive chairman of China’s Alibaba Group, has become the richest person in Asia.

The 50-year-old founder of China’s biggest e-commerce company surpassed Li Ka-shing, the Hong Kong property tycoon who has held the top spot in Asia since April 5, 2012, according to the Bloomberg Billionaires Index.

He has a $28.6 billion fortune, according to the Bloomberg ranking. Li has a net worth of $28.3 billion.

Ma has added $25 billion to his fortune this year riding a 54 percent surge in the company’s shares since its September initial public offering on the New York Stock Exchange. At that scale, Alibaba is on the verge of becoming one of the 10 most valuable companies in the world.

Alibaba, whose online marketplaces?Taobao and Tmall?had 307 million active buyers in China as of September, saw revenue rise to 16.8 billion yuan ($2.74 billion) between July and September, according to Bloomberg.

Chinese social networking company Momo debuts on Nasdaq

Yan Tang (C, front), founder and chief executive officer of China’s mobile social networking platform Momo Inc. attends the ceremony of ringing the opening bell at the NASDAQ in New York, the United States, on Dec 11, 2014.

China’s mobile social networking platform Momo Inc. listed its shares Thursday on the NASDAQ global select market.

The company announced that its initial public offering of 16 million American depositary shares (ADSs) was priced at 13.5 US dollars per ADS for a total offering size of 216 million dollars.

Momo’s shares opened trading at 14.25 dollars a share under the ticker symbol “MOMO”.

Morgan Stanley, Credit Suisse, J.P. Morgan, and China Renaissance Securities are acting as joint bookrunners for the offering.

The company has granted the underwriters an option, exercisable within 30 days from the date of the final prospectus, to purchase up to 2.4 million additional ADSs at the price of 13.5 dollars.

Yan Tang, founder and chief executive officer of the company, said: “Momo was established in 2011. It’s still a very young company. We are caught in the era of rapid spread of mobile Internet in China, and have correct positioning for our products.”

“Funds raised will be used for research and development, marketing and downstream industries for equity acquisitions,” Tang said.

Momo connects people in a personal and lively way through a mobile-based social networking platform. With precise location- based features, Momo enables users to connect with each other and expand relationships from online to offline.

Momo’s platform includes the Momo mobile application and a variety of related features, functionalities, tools and services that it provides to users, customers and platform partners.

According to the company, Momo had 60.2 million active monthly users and an average of 25.5 million daily active users in September.

Alipay bill brings memories and booming business

Yvonne Fang could not believe her eyes when she saw a total transaction volume of 500,000 yuan (81,000 US dollars) on Alipay over the past 10 years.

“I hope my husband never sees the bill,” she joked.

Alipay, an online payment platform launched by Alibaba in 2004, sent reports to its 300 million users on Monday detailing their spending over the past ten years.

The reports showed spending and investment through Alipay, together with an estimate of the users’ assets in another 10 years judging from the spending and investment history.

Reviewing her spending since 2007, Fang, 30, found the first item she bought online was a blouse for only 69 yuan, one third of the tag price. “I even showed it off to my foreign colleague and recommended she turn to online shopping,” recalled Fang, who now works at an international public relations company.

During her time spending online, she has grown from a fresh graduate into the mother of a two-year-old girl. The items she bought have also changed from clothes for her and her boyfriend, to furniture for their home, to baby things. “How time flies,” she said.

The record not only brought a lot of memories, but exposed just how big the e-payment business has become in China.

According to the overall report, also released on Monday, the number of Alipay transactions reached 42.3 billion, with Guangdong, Zhejiang, Shanghai, Beijing and Jiangsu the top five regions.

Apart from online shopping, the report also included payments for mobiles, electricity and gas, credit card payments and fund transfers; services that Alipay offers free of charge.

Mobile payments accounted for over 50 percent of total online payments in 2014. The less developed regions in the west grew much faster than the developed east.

The regions with the highest percentage of mobile payments in 2014 were autonomous regions of Tibet — where mobile payments were almost 63 of the total — Ningxia and Inner Mongolia, and Shaanxi Province.

Chen Jin, director of the research center of modern services with the University of International Business and Economics, said mobile payments in sparsely populated western regions with poor transportation, have grown rapidly in recent years because of the popularity of smartphones and mobile Internet.

Following Alibaba’s 25 billion dollar New York IPO in September, founder and board chairman of Alibaba Jack Ma told state media that Alipay will also go public someday, hopefully on the A-share market.

To that end, Alipay has started working with hospitals, stores and supermarkets, offering doctors appointments and payment services.

In Beijing, supermarkets such as Wu-Mart and Merry Mart are offering 10 percent discounts to encourage customers to pay their bills with their mobiles through Alipay.

Chen said Alipay, usually engaged in micropayment, has had to expand their community services with the “online to offline”, O2O, and provide convenience to compete with UnionPay.

“With no more card swiping and signature needed, I’d rather use Alipay for convenience,” said Cao Peng, a customer who paid his bill at a Merry Mart outlet in Beijing, adding that all he needed to do was to scan the bill code to make the payment with his smartphone.