Archive for the ‘Commercial Law’ Category

Sporting goods demand rises in China?

June 29th, 2010 Alexander No comments

According to recent news, there was a rise in domestic consumer demand and a rise in salaries that led to a rise of 18.7% in China’s retail sales. Due to recent sports activities getting more attention in China, it is estimated that this year’s sports shoe market in China may break 69 billion yuan.

In recent years, mainland China has increased the purchasing power of domestic consumers; especially of young adults. Well-known domestic sports goods maker  Li Ning and Anta in China posted a fourth quarter orders growth of 25% and 20%, respectively.

UBS data indicates that China’s sports shoe market is expected to reach 69 billion yuan this year, while the brand sports shoes market in 2020 could reach nearly 3,000 billion yuan.

Read more information about China’s domestic consumption.

Growth of China’s Domestic Needs for Office Goods

June 28th, 2010 Alexander No comments

One of the largest office appliance stores in Taiwan, AURORA GROUP, announced today that it plans to accelerate its transition to the “China concept” in the mainland.

Aurora Group owns 264 direct sales offices in China and expects to expand to 300 offices this year. Aiming to establish itself as a premier brand (B2B) in office furniture (copiers, business machines and other OA), it  has a long-term goal of opening up to 1,000 offices and to become the largest direct seller of OA (office appliance) and office furniture in China.
AURORA CEO Lin Leping pointed out that Taiwan’s office furniture market is already quite mature and Aurora is optimistic about the speed of the rise of its mainland enterprises.  He believes that  the first step is to build brand awareness.  This includes the construction of  an independent corporate pavilion wherein the overall cost of construction is approximately 100 million yuan.  Aurora Museum has attracted more than 520,000 visitors. Second, in July, the Aurora will be cooperating with CCTV to organize the Miss China event, which further expands Aurora’s mainland brand awareness.
Lin Leping said that the mainland has an office furniture market worth RMB 1,000 billion annually, of which the high-end section of the market where Aurora plans to focus on is worth 10 billion yuan.

Aurora’s business in Mainland China is divided into two parts: office furniture and OA (office appliance).

Aurora first established an electronics factory in 1995 in Shanghai, where it produced paper shredders, computer products, office furniture. Aurora now has a considerable reputation in the mainland. It has  51 branches on China’s southeastern coast. Since its entry into the OA business in China, it now has 264 branches.

I heard Best Buy is doing really well in China as well.

China’s domestic market is definitely the new wild western frontier for anyone who deals in consumer products or services.

Production Automation in China becoming the trend

June 17th, 2010 Alexander No comments

So here is a piece of the latest report I got from Guangdong, China.

It is reported that China is increasingly facing the issues of lack of workers and salary increases. Many labor-intensive industries have been under great pressure and in recent years began to think about the feasibility of moving the production plants to Southeast Asia.

However, Yang Jizheng, a general manager of shoe maker IMC has said that the Chinese labor force’s productivity is higher than the labor force of Southeast Asia.

Yang Jizheng said that China’s cheap labor resulted in all the companies being “inevitable short-sighted.” But now, faced rising wages and lack of work, most manufacturers are talking about automation.  “Automation is going to be the trend.”

In search of cheaper labor, Yang Jizheng also reflected that: “Now that we have gone to India, the next stop left is Africa. But then what is after that?”

Yang Jizheng thought that the value of moving to India or Africa cannot replace the high labor output value of China.

He pointed out that Chinese labor is relatively hard working, especially when compared to Southeast Asian labor. They are more willing to work hard in pursuit of a better life.  Thus, the labor efficiency of the Chinese people exceeds that of other Southeast Asian countries.

Yang Jizheng further said that, for example, labor efficiency output in India is only about 70% to that of China’s labor efficiency.

In addition, he believes that the large number of Chinese talent pool, both in production and management will not be replaced by other countries in the short term.

In my opinion, some plants will eventually move to India and Southeast Asia. But more likely than not, most plants will continue to stay in China due to the rising internal market demand. For that matter, automation in production plants will increasingly take place in the next few years to come.

Service Sector needs continue to surge in China!

June 16th, 2010 Alexander No comments

So I heard recently that China’s largest integrated private enterprise class Fosun International (0656 HK) has successfully acquired the French company operating the Mediterranean Resorts Resort (Club Med)’s 7.1% stake. In the process, it not only becomes its largest strategic investment partner, it also is the first direct equity participation of Chinese enterprises in listed companies in France.

Based on what I know, Fosun International owned medicine, real estate development, steel, mining, retail, business services and strategic investment last year. Its revenues reached 34.86 billion yuan, with a net profit reached 4.65 billion yuan. Guo Guangchang, chairman of the Fosun International, is one of the richest man in China. It is reported that the acquisition was worth around 233.8 million euros (about 915 million yuan NT).

Obviously Club Med’s leisure and entertainment services will attract a lot of affluent Chinese. Apparently Club Med plans to construct five Club Med resorts on the mainland, making China the company’s No.2 largest market.

So here is a little information about Club Med. It was founded in France in 1950 as the founder of the concept of tourism resorts. It is listed in Paris in 1966. Club Med currently is in 40 countries and has 80 resorts, with an annual income of more than 13 million euros (about 50 billion yuan NT).

Club Med plans to established the first ski resort in Harbin, China and it is expected to be put into operation at the end of this year. In addition, Club Med will be able to attract 5% to 10% of mainland Chinese tourists to its four-star and five-star resort, and is expected to attract more than 200,000 customers.

I can see how service sector is going to continue to expand in China as the wealth of the Chinese grows. While the rest of the world continues to suffer from slow economy, the demand for high value services in China keeps rising. People, this is not the old China that only exports anymore. Service sector within China is the next wave!

Read more about Fosun International.