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South China Morning Post
18-05-2025
- Business
- South China Morning Post
Mainland Chinese retailers take advantage of falling rents to expand Hong Kong presence
Mainland Chinese retailers are stepping up their expansion in Hong Kong, taking advantage of falling rents to target value-seeking consumers, with analysts suggesting the city may serve as a launch pad for broader international ambitions. Brands from the mainland accounted for 35 per cent of the total number of firms entering Hong Kong so far this year, up from 29 per cent last year, according to Lawrence Wan, head of advisory and transaction services for retail at CBRE Hong Kong. 'For mainland brands, Hong Kong is a more easily accessible market in terms of language and familiarity,' Wan said. Analysts agreed that these brands see the city as a testing ground and a launch pad – part of a broader strategy to seek growth in overseas markets like Southeast Asia – amid weakening consumption at home. The mainland discount grocery chain HotMaxx debuted in the city in September last year. Photo: Connor Mycroft 'Mainland retailers are not looking to make a lot of money in Hong Kong; it's more about having a presence in the city,' said Richard Lin, chief consumer analyst at SPDB International, a Hong Kong-based investment bank. 'It's all about sending a signal to the market, saying, 'we're expanding'.'
South China Morning Post
11-05-2025
- Business
- South China Morning Post
Starbucks, Luckin get buzz from smaller-city coffee sales in China
As coffee chains in China struggle with a bitter combination of sluggish consumption and cutthroat pricing, Starbucks and Luckin Coffee regained momentum in the last quarter by focusing on lower-tier cities. Advertisement Same-store sales were flat for Starbucks' China operations in the quarter ended March 30, but a 4 per cent increase in transactions helped to offset a 4 per cent decline in the average tab, the company said last month. This came after the Seattle-based firm suffered an 8 per cent decline in comparable-store sales in the country in the year ended September 29. Operating revenue rose 5 per cent year on year to US$740 million in the quarter. The company said it added 665 stores in China over the past year, bringing its total to 7,758, second only to the US at 17,122, and covering more than 1,000 of China's county-level markets. 'The fact that Starbucks is trading a lower ticket size for better transaction volume is a positive sign,' said Richard Lin, chief consumer analyst at SPDB International, a Hong Kong-based investment bank. 'It shows that the company is making efforts to defend its market share in China as price competition persists.' However, Lin noted that it would also be important to monitor how much further Starbucks could expand beyond the wealthier cities, where customers could afford to pay for a premium brand. Advertisement A total of 66,920 coffee shops opened across China over the past year, according to a food and beverage data provider. Much of that growth was concentrated in second and 'new first-tier cities' – urban centres less globally connected than Beijing or Shanghai, but rising in population and economic power. For example, Chengdu, capital of southwestern Sichuan province, added 1,995 coffee shops over the past year, ranking third nationwide, while tech hub Hangzhou, capital of eastern Zhejiang province, ranked sixth with 1,725 new openings, data showed.
The Star
26-04-2025
- Business
- The Star
China's Pop Mart exercises pricing power as Labubu popularity surges abroad
Chinese trend-toy maker Pop Mart is hiking prices on its popular Labubu character in the US and shifting more production to Vietnam, as the tariff war between the world's two largest economies weighs on its profit margins. The Beijing-based company will introduce Labubu 3.0, a colourful set of seven figurines from the Norse mythology-inspired 'The Monsters' series, globally on Thursday. Items in the new collection will be priced at 99 yuan (US$13.50) in mainland China, on par with the current resale price of previous iterations. Meanwhile, US consumers will see a notable price bump to US$28, up from US$22 for the previous series, as the company seeks to protect its margins, according to a Wednesday report by Jefferies. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. 'Pop Mart is already positioned as a high-end toy brand overseas and primarily targets adult buyers,' said Richard Lin, chief consumer analyst at SPDB International, a Hong Kong-based investment bank. 'So given this context, it has a lot of say when it comes to determining its prices.' Lin added that Pop Mart could also raise the prices of existing collections later if the tariffs have a significant impact. 'Otherwise, the company won't be able to cover the additional costs,' he said. Pop Mart is making efforts to diversify its supply chain, moving more production to Vietnam to skirt heightened US tariffs on Chinese goods. Those tariffs now stand at 145 per cent, although US President Donald Trump said on Tuesday in Washington that tariffs on China will 'come down substantially, but it won't be zero'. Pop Mart's Vietnam site already manufactured 10 per cent of its total output as of the end of 2024, according to Jefferies, and the toymaker is planning to have all US products made there by the end of this year. Vietnam was one of the hardest-hit Asian countries under Trump's trade restrictions, slapped with a 46 per cent 'reciprocal tariff' earlier this month. But the measure was quickly rolled back as part of a 90-day tariff pause on all US trade partners except China. Still, analysts projected some pressure on Pop Mart's margins. 'We slightly trim our margin assumption, considering possibly higher supply-chain-management pressure and product return rate in a hyper-growth period and short-term damage from US tariff hikes,' wrote Jessie Xu, who leads China consumer discretionary research at Deutsche Bank. The price increase and supply-chain adjustments are far from a threat to the company's global expansion, as Pop Mart's popularity continues to grow in every market where it has a presence. Its Labubu toy – an elfin character with a mischievous grin – took the Asia market by storm last year and won over high-profile followers including K-pop star Lisa of Blackpink and members of the Thai royal family. Now, it is gaining favour in the US and Europe as well. The company's first-quarter sales surged up to 900 per cent year on year in the US and 605 per cent in Europe, far outpacing the 350 per cent growth in Asia and 100 per cent growth at home, according to the company's latest unaudited results on Tuesday. 'Fan effect is emerging in the US and Europe as more celebrities and influencers are becoming obsessed with Pop Mart's toys since just late 2024,' Deutsche Bank's Xu said in a report. 'The 'kidadult' trend and plushies are quickly gaining popularity amid a much wider group of consumers (from teenagers to those in their 50s and the super-wealthy), leading to a much larger total addressable market for Pop Mart.' Deutsche Bank raised the revenue forecast of the Hong Kong-listed company for the next two years by up to 30 per cent, and expected China and overseas markets to grow 56 per cent and 180 per cent year on year in 2025, respectively. Meanwhile, Jefferies projected that Pop Mart's sales abroad could hit 13 billion yuan (US$1.8 billion) this year, up from 5.1 billion yuan in 2024 and matching last year's global total. Overseas revenue now accounts for close to 40 per cent of the company's total, CEO Wang Ning said in a memo this month, where he also announced a management revamp in a bid to accelerate the brand's international expansion. Former senior-vice president Justin Moon will join Sid Si as co-chief operating officers, while regional headquarters will also be set up for Greater China, the Americas, Asia-Pacific and Europe, according to an organisational chart seen by the Post. Shares in Pop Mart have risen more than 95 per cent so far this year, following a 370 per cent surge in 2024. More from South China Morning Post: For the latest news from the South China Morning Post download our mobile app. Copyright 2025.
South China Morning Post
24-04-2025
- Business
- South China Morning Post
China's Pop Mart exercises pricing power as Labubu popularity surges abroad
Chinese trend-toy maker Pop Mart is hiking prices on its popular Labubu character in the US and shifting more production to Vietnam, as the tariff war between the world's two largest economies weighs on its profit margins. Advertisement The Beijing-based company will introduce Labubu 3.0, a colourful set of seven figurines from the Norse mythology-inspired 'The Monsters' series, globally on Thursday. Items in the new collection will be priced at 99 yuan (US$13.50) in mainland China, on par with the current resale price of previous iterations. Meanwhile, US consumers will see a notable price bump to US$28, up from US$22 for the previous series, as the company seeks to protect its margins, according to a Wednesday report by Jefferies. 'Pop Mart is already positioned as a high-end toy brand overseas and primarily targets adult buyers,' said Richard Lin, chief consumer analyst at SPDB International, a Hong Kong-based investment bank. 'So given this context, it has a lot of say when it comes to determining its prices.' Labubu items are displayed at a Pop Mart store in Jakarta, Indonesia, on September 20, 2024. Photo: Shutterstock Lin added that Pop Mart could also raise the prices of existing collections later if the tariffs have a significant impact. 'Otherwise, the company won't be able to cover the additional costs,' he said.
Yahoo
03-03-2025
- Business
- Yahoo
Chinese consumer stocks are back in favour as Mixue rides Hong Kong IPO revival
Consumer stocks are making a comeback in Hong Kong after the city's initial public offering (IPO) market recovered from a multi-year slump and stocks gained a valuation upgrade induced by DeepSeek's breakthroughs. Mixue's IPO attracted a record HK$1.8 trillion (US$231 billion) of orders from retail investors before the Chinese fresh drinks chain started trading on Monday. Cosmetics producer Mao Geping gained 153 per cent since December, while jewellery maker Laopu Gold has risen more than 1,000 per cent since its debut in June. Toymaker Pop Mart has soared 442 per cent over the past 12 months as sales gained momentum in overseas markets, while peer Bloks Group, whose retail portion of IPO was 6,000 times subscribed, has advanced 36 per cent since its first day of trading last month. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. "Retail investors' enthusiasm is rooted in the fact that sizeable consumer companies with solid fundamentals and sector tailwinds have finally emerged after a lull," said Richard Lin, chief consumer analyst at Shanghai-based investment bank SPDB International. "If you're a market leader and your valuation is cheap enough, people are going to clamour for you." Consumer discretionary stocks within the Hang Seng Composite Index have risen 23 per cent this year, outpacing the 17 per cent gain of the benchmark Hang Seng Index. Part of the run-up was fuelled by improved sentiment, after DeepSeek sparked a bull run in technology stocks and the broader market. Meanwhile, some analysts said consumer stocks may fail to live up to expectations if Beijing holds back on injecting further economic stimulus in the forthcoming two sessions later this month, said Ivan Su, a senior equity analyst for Morningstar. "If no major stimulus is introduced, growth for the remainder of 2025 is likely to remain at current levels," he said. While this might initially be viewed negatively by the market, many Chinese consumer stocks - particularly those with strong shareholder distribution policies - still present forcing value." For now, investors are indeed looking at the brighter side of the story. Mixue's IPO subscription ratio, for one, reflects their confidence in the size of its business, its brand power and its appealing stock valuation despite the cutthroat competition in the bubble-tea sector. Customers waiting to place their orders at a Mixue bubble-tea store in Beijing in September 2024. Photo: Reuters alt=Customers waiting to place their orders at a Mixue bubble-tea store in Beijing in September 2024. Photo: Reuters> Other consumer-focused companies appear to be making a beeline for IPOs in Hong Kong, after the China Securities Regulatory Commission and bourse operator Hong Kong Exchanges and Clearing both pledged to help more Chinese companies raise funds in the city, which is Asia's third-biggest stock market. Jiangxi Aimei Culture and Technology, which operates a chain of 800-odd Mei KTV karaoke outlets in mainland China, announced plans last month to list its shares in Hong Kong, after opening its first outlet in Lan Kwai Fong. Shanghai-listed Anjoy Foods Group, which sells frozen hotpot ingredients, submitted its IPO application in January. Other notable companies in the pipeline include Fashion Momentum group, the owner of fast-fashion brand Urban Revivo, which was reported to be planning a US$100 million IPO. Chagee, another mainland bubble-tea chain operator, was said to be seeking US$300 million in a New York listing. "More discretionary categories like sportswear have yet to show an acceleration in sales" with the first-quarter numbers largely in line with the preceding quarter, Morningstar's Su said. "That said, the absence of further deterioration supports our positive long-term theses for these companies." This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved. Sign in to access your portfolio
