Bottom line: Kingfisher’s sale of control of its China home improvement chain to a local partner will produce an uneasy alliance that will ultimately see the UK retailer withdraw its B&Q name from the market.
Kingfisher hands over B&Q China to Wumart
Just weeks after US electronics retailing giant Best Buy (NYSE: BBY) made a final retreat from China, British rival Kingfisher (London: KGF) is making a similar move with word that it’s selling control of its China B&Q store operations to a local buyer. These 2 deals mark an interesting twist on a trend that has seen other global retailers like Home Depot (NYSE: HD) and Germany’s Metro (Frankfurt: MEO) also abandon the tough China market. Whereas the earlier cases saw companies simply close down their China operations and leave, this new wave of deals has firms selling their operations to eager Chinese buyers. Read Full Post…
Bottom line: Best Buy’s sale of its Five Star chain represents a long-overdue withdrawal from traditional retailing in China, and it would be wise to consider an e-commerce option if it tries to return later.
Best Buy sells Five Star chain
Some might see retailing giant Best Buy’s (NYSE: BBY) newly announced sale of its Five Star electronics chain as a retreat from China, but I would personally congratulate the company for a shrewd move that was long overdue. That’s because traditional retailing is rapidly dying in China, as shoppers opt for the convenience, better selection and lower prices of e-commerce. What’s more, the traditional electronics retailing sector is already overcrowded and highly competitive, dominated by big national chains led by Suning (Shenzhen: 002024) and Gome (HKEx: 493) Read Full Post…
Bottom line: Foreign-owned meat companies could lose their premium image over Chinese rivals after a Shanghai-based scandal over the summer, as foreign firms remain vulnerable to high scrutiny.
Tyson China expansion on hold
Just yesterday I wrote how foreign food makers generally enjoy a better reputation in China over their domestic rivals, but one glaring exception to that rule is the processed meat industry. The meat processors also used to enjoy a strong reputation, until a major food safety scandal erupted over the summer involving Husi Food, a unit of US meat processor OSI Group. Now the latest headlines are quoting OSI saying 6 of its China workers have been arrested in connection with the scandal. It has also confirmed layoffs of most workers at its Shanghai plant that has been idled since the scandal first broke. Read Full Post…
Bottom line: Wal-Mart’s new layoffs underscore the intense competition in China’s retail market, which could cause it to miss its new store target, while Heinz’s expansion reflects the big potential for big global food brands.
Heinz opens major new China plant
Two new stories are casting a spotlight on diverging trends in the retail and consumer space for major multinationals, with retailing giant Wal-Mart (NYSE: WMT) making big new cuts in its China operations even as US food maker Heinz launches a massive new China factory. Wal-Mart’s move highlights the intense competition that has gripped China’s retail sector over the last 3 years, forcing several major players to leave the market or consider doing so. At the same time, there’s still huge opportunity for makers of quality food and other consumer products, especially from major foreign brands that are generally more trusted by Chinese buyers than domestic names. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 3. To view a full article or story, click on the link next to the headline.
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Wanda Group In Talks to Buy Lions Gate (NYSE: LGF), MGM in Hollywood Push (English article)
21Vianet (Nasdaq: VNET) Gets $296 Mln From Kingsoft, Xiaomi and Temasek (Globe Newswire)
Wal-Mart (NYSE: WMT) Cuts Another 250 China Jobs, Shuts Dalian Office (English article)
The following press releases and media reports about Chinese companies were carried on November 27. To view a full article or story, click on the link next to the headline.
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Wal-Mart (NYSE: WMT) Dismisses 30 China Executives In Restructuring (English article)
Shanda Interactive Sells Controlling Interest In Shanda Games (Nasdaq: GAME) (PRNewswire)
China Widens ‘Tax-Evasion’ Net Amid Microsoft (Nasdaq: MSFT) Case (English article)
Two of the world’s biggest retailers are in the e-commerce headlines, led by a move into Shanghai’s new pilot free trade zone by global giant Amazon (Nasdaq: AMZN). At the same time, Wal-Mart-controlled (NYSE: WMT) Yhd has become China’s first e-commerce firm licensed to operate online drugstores, giving it a potential edge over other rivals also eying the space. Both of these stories highlight how the big international names are trying to use their clout and global connections to carve out a space in China’s fast growing but highly competitive e-commerce space, which is now dominated by the domestic pair of Alibaba and JD.com (Nasdaq: JD). Read Full Post…
The recent wave of labor unrest at big multinational factories has taken a step into China’s heartland, with word that hundreds of workers at a Shanghai plant operated by toilet giant Toto (Tokyo: 5332) went on strike last week. But the unrest was reportedly short lived, with the strike lasting just 3 days before the workers agreed to go return to their jobs. The strike and its rapid resolution reflects growing boldness among workers to demand better working conditions, which looks worrisome not only to employers but also to Chinese officials obsessed with maintaining public order. Read Full Post…
There’s a flurry of news out today on China’s 2 leading e-commerce firms, led by a new IPO filing and major boardroom adjustment at JD.com as the nation’s second largest player prepares to raise up to $1.5 billion through a New York listing. Meantime, industry leader Alibaba has reported impressive earnings for the fourth quarter of 2013, as it also heads towards a major New York listing as soon as later this year. JD’s boardroom change looks most interesting to me, as it’s a bit unusual to see such major movement in a company’s top ranks so close to an IPO. That leads me to wonder if this is the first in a series of moves leading to the eventual marginalization of JD founder and CEO Liu Qiangdong. Read Full Post…
The list of traditional retailers suffering from the e-commerce challenge has gained a new member, with domestic giant Wumart (HKEx: 1025) reporting its profit for 2013 fell for the first time in 5 years. It’s noteworthy to point out the last time Wumart’s profit fell was at the height of the global financial crisis in 2008, when the reasons for the downturn were sudden and severe but also relatively short-term. This time the reasons are much more gradual and signal a longer term decline for traditional retailers like Wumart, which are facing an unprecedented challenge from big e-commerce names like Alibaba, JD.com and Amazon China (Nasdaq: AMZN). Read Full Post…
I wrote yesterday that China’s big e-commerce names are showing no signs of easing up their fierce battle for market share (previous post), and today we’re getting news bites from industry giant Jingdong Mall and global retail titan Wal-Mart (NYSE: WMT) that indicate the situation could get considerably worse before it starts to improve. Leading the news today are the latest comments from Jingdong Mall’s talkative CEO Liu Qiangdong, who has suddenly decided that profits aren’t important for his recently established electronics business, at least not for the next 3 years. (English article; Chinese article) Meantime, in separate news Wal-Mart has won approval from China’s regulator for its previously announced plan to boost its minority share in e-commerce firm Yihaodian to a majority stake, meaning we could soon see a major new offensive from Yihaodian in this already crowded and massively money-losing market. (Chinese article)
