General retail p1

China to improve policies on the import and export of consumer goods to

boost domestic consumption

China amends Food Safety Law to impose heavier punishments

Beijing to launch tax refund scheme for overseas visitors in 2015

Shanghai to promote brand building

E-commerce p2

Operation and management of online shopping platforms to be under

surveillance

Alibaba unveils “smart living” strategy to tap the smart home appliance

market

Alibaba teams up with China Telecom to sell “online shopping smartphones”

to rural customers

South Korea’s Lotte accepts Alipay to lure Chinese customers

7-Eleven in South Korea accepts offline payments by Alipay

JD.com to open its first smart experiential store

Supermarkets and hypermarkets p4

Yonghui Superstores to accept Suning’s online payment service “Yifubao”

CR Vanguard and Carrefour China accept Alipay payment

Better Life’s shopping platform to open first cross-border e-commerce O+O

experiential store

Department stores and shopping malls p5

Galeries Lafayette to open outlet in May 2015

Mopark Department Store opens O2O experiential store to tap e-commerce

business

24 April 2015 – 30 April 2015

Retail logistics p6

S. F. Express partners with Tian Ge Interactive to explore online distribution

China Retail Weekly Updates (24 April 2015 – 30 April 2015) 1

General retail

China to improve policies on the import and export of consumer goods to boost domestic consumption On 28 April, an executive meeting of the State Council, chaired by Premier Li Keqiang, decided to improve policies on the import and export of consumer goods, in a move to boost domestic demand and offer more consumption choice to domestic consumers. Trial reductions of import tariffs on certain products in high demand will be rolled out by the end of June, which will be extended gradually to more products. The consumption tax policy on mass consumer goods such as apparel and cosmetics will be revised along with tax reform. More duty-free shops will be set up at ports of entry, with increased variety of products and a higher purchasing cap. Easier customs clearance and tax rebate procedures for overseas tourists will be adopted. Moreover, the upgrading of Chinese brands will be accelerated. The development of offline stores will be supported, while online and offline integration will be encouraged.

China News, 28 April 2015

http://www.chinanews.com/gn/2015/04-28/7240686.shtml (in Chinese only)

Hong Kong Economic Journal, 28 April 2015

http://www2.hkej.com/instantnews/china/article/1041247/%E5%85%A7%E5%9C%B0%E9%83%A8%E7%BD%B2%E5%AE%8C%E5%96%84%E6%B6%88%E8%B2%BB%E5%93%81%E9%80%B2%E5%87%BA%E5%8F%A3%E7%9B%B8%E9%97%9C%E6%94%BF%E7%AD%96 (in Chinese only)

South China Morning Post, 29 April 2015

China amends Food Safety Law to impose heavier punishments The Standing Committee of China’s National People's Congress (NPC) has passed the amended Food Safety Law, which will go into effect on 1 October this year. The revised law has 154 articles, 50 more than the original law. It imposes harsher punishments on offenders and tightens regulations on baby milk formula and online shopping. Some amendments include: producers who add inedible substances to food will be subject to administrative detention for up to 15 days. Producers of baby milk formula are required to register their products with the food and drug authorities, and test every batch of their products. Shopping platforms are required to register the real identity of vendors and check their relevant certificates.

China Economic Net, 28 April 2015

http://big5.ce.cn/gate/big5/wap.ce.cn/fashion/201504/28/t20150428_5225105.html (in Chinese only)

Beijing to launch tax refund scheme for overseas visitors in 2015 Beijing vice mayor Cheng Hong announced earlier that Beijing will launch a tax refund scheme for overseas visitors by the end of 2015, in a move to boost tourism

China Retail Weekly Updates (24 April 2015 – 30 April 2015) 2

and consumption in the city, as well as to bring Beijing’s tourism more in line with international practice. According to the scheme, overseas visitors may receive a rebate of 11% of the total amount of money they spent at designated stores; the minimum purchase for a tax refund is 500 yuan at any one store in one day. Finance and revenue authorities are discussing the implementation details of the scheme and yet to finalize the tax rebate rate.

Ifeng.com, 27 April 2015

http://travel.ifeng.com/news/china/detail_2015_04/27/41024288_0.shtml (in Chinese only)

Xinhua Net, 25 April 2015

http://news.xinhuanet.com/english/2015-04/25/c_134183605.htm

Shanghai to promote brand building At the China Brand Economy (Shanghai) Forum 2015, speakers such as Shanghai officials stated that Shanghai will encourage companies to establish national and global brands, especially in apparel and mobile Internet industries. It is hoped that the development of “brand economy” will attract talent, capital and information resources from all over the world, which will also help Shanghai establish itself as a global technology-innovation centre. At the forum, the Shanghai city government and the China National Textile and Apparel Council also signed a couple of cooperation agreements on the development of the apparel industry and building apparel brands.

Shanghai Daily, 27 April 2015

http://www.shanghaidaily.com/business/it/Shanghai-to-promote-fashion-branding/shdaily.shtml

E-commerce

Operation and management of online shopping platforms to be under surveillance Recently, the State Administration for Industry and Commerce (SAIC), Beijing Administration for Industry and Commerce (BAIC) have signed a contract with the Renmin University of China Law School to conduct a research on the regulation of online shopping platforms (e.g. Taobao and Tmall). It will evaluate five major types of regulations, namely online shop management, transaction services, transaction management, protection of consumer rights, as well as information disclosure. The Renmin University of China Law School will announce the research result in early July. The industry and commerce authorities will further formulate and modify rules and normative documents regarding online transactions and management based on the findings of the study. All operation and management regulations of online shopping platforms related to market order and public interests will be under surveillance.

Beijing Times, 27 April, 2015

http://epaper.jinghua.cn/html/2015-04/27/content_193547.htm (in Chinese only)

China Retail Weekly Updates (24 April 2015 – 30 April 2015) 3

Alibaba unveils “smart living” strategy to tap the smart home appliance market Alibaba unveiled its smart business strategy at its headquarters in Hangzhou on 26 April, with the aim of tapping the smart home appliance market. According to the company’s plan, AliCloud (Aliyun) will offer cloud-based storage service, Alibaba’s Baichuan program will help with software development, and Tmall’s electronics platform (http://3c.tmall.com) will be the main sales channel, while Taobao Crowdfunding will provide funds. Coupled with the help of Ant Financial Services and logistics unit Cainiao Network, Alibaba Group will go all out to tap the smart home appliance market. Alibaba has also tied up with a dozen domestic home appliance makers, including Haier and Midea, to build the largest smart home appliance online distribution platform to meet the rising demand from consumers. Alibaba will also work with these home appliance makers on the exchange and analysis of user data.

eBrun, 27 April 2015

http://www.ebrun.com/20150427/132489.shtml (in Chinese only)

Shanghai Daily, 28 April 2015

http://www.shanghaidaily.com/business/it/Alibaba-to-tap-smart-furniture-market/shdaily.shtml

Alibaba teams up with China Telecom to sell “online shopping smartphones” to rural customers Alibaba, in partnership with China Telecom, released the “Tianyi Taobao Shopping Handsets”, which are made especially for online shopping, in Beijing on 25 April. These smartphones, priced between 299 to 699 yuan, are targeted at customers in rural areas and small cities. Alibaba has also teamed up with domestic smartphone producers to develop a number of products loaded with the YunOS mobile operating system developed by Alibaba, including eight smartphone models. This helps boost the market share of the YunOS system.

eBrun, 27 April 2015

http://www.ebrun.com/20150427/132397.shtml (in Chinese only)

Cnmo.com, 24 April 2015

http://www.cnmo.com/news/488784.html (in Chinese only)

South Korea’s Lotte accepts Alipay to lure Chinese customers South Korea’s Lotte Department Store said that seven of its stores, including its Myeongdong main store, Avenuel World Tower store, Busan main store and the Outlet at Seoul station, has accepted Alipay since 27 April. These seven stores are frequented by Chinese tourists. Lotte Department Store is the first department store in South Korea to accept Alipay. Customers can simply show the Alipay payment codes on their smartphones in front of a barcode scanner to make payment. Lotte said the acceptance of Alipay enables a swift and more convenient transaction, as well as simpler tax rebate procedures for Chinese customers.

ChinaSSPP.com, 28 April 2015

China Retail Weekly Updates (24 April 2015 – 30 April 2015) 4

http://www.chinasspp.com/News/Detail/2015-4-28/195550.htm (in Chinese only)

7-Eleven in South Korea accepts offline payments by Alipay 7-Eleven in South Korea announced on 23 April that it has accepted offline payments by Alibaba’s Alipay. The service will first be introduced in 10 of its convenience stores located at Myeong-dong of Seoul, Jeju Island and the International Airport, which have more Chinese tourists. Starting in May, the service will gradually be extended to all 7-Eleven convenience stores in South Korea.

Longsok.com, 24 April 2015

http://www.longsok.com/yetai/convenience/2015/0424/8337.html (in Chinese only)

JD.com to open its first smart experiential store” JD.com will open its first smart experiential store, JD SPACE, in Beijing’s Solana Lifestyle Shopping Park on 1 May 1. According to JD.com, the opening of JD SPACE is part of the company’s O2O strategy in 2015; it plans to open a number of similar stores across the country in the coming future. JD SPACE will display smart hardware devices, audio visual devices, etc, and provide interactive gaming service. Consumers will be able to try on and experiment the products in-store and make online purchase (via JD.com) by scanning the QR codes on the products.

Ebrun, 29 April, 2015 http://www.ebrun.com/20150429/132649.shtml

Supermarkets and hypermarkets

Yonghui Superstores to accept Suning’s online payment service “Yifubao” Yonghui Superstores is to accept “Yifubao”, an online payment service offered by Suning Finance, in May. It will be the third-largest online payment service accepted by Yonghui Superstores after Alipay and WeChat Payment. Yifubao will first be introduced in Yonghui’s supermarkets in Fuzhou, Beijing and Nanjing as a trial run, after which it will be extended to all of Yonghui’s supermarkets and convenience stores across the country.

ChinaSSPP.com, 29 April 2015

http://www.chinasspp.com/News/Detail/2015-4-29/195666.htm (in Chinese only)

CR Vanguard and Carrefour China accept Alipay payment

Alibaba’s finance subsidiary Ant Financial Services announced that Alipay Wallet has teamed up with leading hypermarket and supermarket players CR Vanguard and Carrefour China Inc. All of CR Vanguard’s supermarket brands will accept mobile payment by Alipay, and over 1,000 supermarkets and convenience stores in Jiangsu Province, Jiangxi Province and Zhejiang Province have already accepted

China Retail Weekly Updates (24 April 2015 – 30 April 2015) 5

Alipay payment. Meanwhile, all Carrefour stores in Beijing, Shanghai and Hangzhou have also accepted Alipay payment.

Sina TechNews, 28 April 2015

http://tech.sina.com.cn/i/2015-04-28/doc-iavxeafs6442320.shtml (in Chinese only)

Better Life’s shopping platform to open first cross-border e-commerce “O+O experiential store” On 28 April, Better Life Commercial Chain’s cross-border e-commerce site, yunhou.com, launched its first “O+O (online and offline) experiential store” in Xiangtan BBG Shopping Plaza. The store covers an area of 60 sqm, displaying over 200 types of items such as maternal and child products and health products. In addition, over 800 types of items are displayed virtually through various means such as QR code walls and videos. Customers can place orders for overseas products through scanning the QR codes via their smartphones.

Linkshop.com.cn, 28 April 2015

http://www.linkshop.com.cn/web/archives/2015/322997.shtml (in Chinese only)

Department stores and shopping malls

Galeries Lafayette to open outlet in May 2015 Galeries Lafayette, a French luxury department store, will open an outlet in Surprise Outlets in Beijing in May 2015, covering an area of around 540 sqm. It is Galeries Lafayette’s second store in Beijing since it re-entered the China market in 2013. Analysts said that the outlet aims mainly to clear excessive inventory. Earlier, Galeries Lafayette has already made its online outlet channel available on discount e-commerce platform Glamour Sales (Mei.com).

ChinaSSPP.com, 29 April 2015

http://www.chinasspp.com/News/Detail/2015-4-29/195618.htm (in Chinese only)

Mopark Department Store opens O2O experiential store to tap e-commerce business Guangzhou-based Mopark Department Store opened an O2O experiential store on 28 April. Mopark is the first department store in Guangzhou as well as the Guangdong Province to run the cross-border e-commerce business. Located on the seventh floor of the Mopark Department Store in Gangding, the O2O experiential store covers an area of about 300 sqm. There are designated areas for maternal and child products, food and health products, beauty and cosmetic products, etc., displaying over 1,000 types of products. Consumers can place orders online and have their products delivered to home. Top Ideal Logistics, a Guangzhou-based logistics company, will handle logistics, customs clearance and inspection for the overseas products sold in Mopark’s O2O experiential store.

eBrun, 28 April 2015

China Retail Weekly Updates (24 April 2015 – 30 April 2015) 6

http://www.ebrun.com/20150428/132525.shtml (in Chinese only)

Retail logistics

S. F. Express partners with Tian Ge Interactive to explore online distribution S. F. Express, China’s leading express delivery company, has forged a strategic partnership with China’s largest live social video platform “Tian Ge Interactive”. S. F. Express will leverage the huge traffic flows of Tian Ge Interactive (both PC and mobile terminals) to bring in target customers to its e-commerce platform. Moreover, the two companies will explore various distribution models for their “weidians” (micro shops). The products being distributed will include those that are sold on sfbest.com, S. F. Express’s self-operated online shopping platform, and Heike community service stores. S. F. Express will also provide logistics solutions for Tian Ge Interactive’s weidian business.

China Chain Store & Franchise Association, 27 April 2015

http://www.ebrun.com/20150427/132397.shtml (in Chinese only)

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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