Asia's Retail Revolution
Did you know that Chinese online shoppers spent about US $5.7 billion on a single day in November last year? That more and more well-heeled Indian consumers prefer to buy their tea from a pharmacy? That urban Thais visit a hypermarket at least once a week and spend around half their monthly bills on groceries?
For most of us this is the sort of random information usually reserved for trivia, but for fund managers these are valuable insights into consumer behavior that reflect some of the changes that have occurred in Asia over recent years.
China’s meteoric rise has changed the world from the price we pay for consumer goods to the global demand for natural resources, and even the flow of international capital. Much has been written about how Chinese policymakers are promoting domestic consumption as a future driver of growth, but in fact, the nation’s consumers have been flexing their muscles for some time.
E-commerce crazy China also happens to be the world’s biggest smartphone market with some 98.8 million shipped in the first three months of this year alone. The country is the world’s biggest car market and, with India, vies for the title of the world’s biggest market for gold.
Market Realist – While the world markets (FCO)(ACWX) continue to grapple with a period of slow global growth, consumer spending in Asia (FAX)(AIA) continues to rise steadily, giving rise to many opportunities in the retail and consumables sector.
China’s meteoric rise (GCH)(ASHR) as a consumer of resources has given it prime importance in the global context. According to statistics by eMarketer, almost $6 out of every $10 dollars spent online come from Chinese consumers.
November 11—or China’s Singles Day, as it’s more popularly known—has overtaken both Black Friday and Cyber Monday in terms of online sales. Alibaba (BABA) reinvented Bachelor’s Day as Singles Day in 2009, offering deep discounts to consumers in the week leading up to November 11. According to estimates from the group, in 2014, Alibaba reaped $2 billion in app sales within the very first hour of the sale. The cumulative sales for the whole day came in at a whopping $9 billion. The graph above compares online sales on Black Friday, Cyber Monday, and Singles Day for the past three years. China’s Singles Day comes up aces in all three years!
China is the world’s largest smartphone market, making up almost ~30% of the global market share. Apple (AAPL) is increasingly dependent on China for sales. According to estimates from the tech giant and BofA Merrill Lynch, 26.4% of iPhone sales came from China in Q2 2015. According to data from RedTech Advisors/Talking Data, China accounts for ~22% of estimated global Apple Watch sales. Other Chinese smartphone companies like Huawei, Xiaomi, and Lenovo (LNVGY) are becoming tough competitors too.
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