China Insights
English
English

Aldi enters China through e-Commerce

Sherry Zhu

Senior Analyst

Retail 03.05.2017 / 18:00

JD Logo 2 col

Leading German retailer enters China through a partnership with Alibaba.

Germany's leading retailer Aldi has entered Alibaba's Tmall.hk, the international site of Tmall, as its strategy to expand in China.

In addition, Aldi has held a launch ceremony for its Tmall overseas flagship store in Shanghai on April 25 as its official debut in the Chinese market.

Tmall is the exclusive partner of Aldi in China and it is the first time for Aldi to enter a new geographic market via an online platform. With this move, Aldi will operate businesses in 10 countries around the world, serving millions of consumers.

Aldi will first launch a series of selected products, including wine, snacks, breakfast products, and imported milk powder. Aldi's products sold in China will be directly supplied by Aldi's suppliers in Australia.

Christoph Schwaiger, executive president of Aldi China, said that for centuries, Aldi has been known for its self-owned brand. They believe that the company will also provide low-price and high-quality imported products to Chinese consumers.

JD.com Sets Up Logistics Business Group

On April 25, JD.com announced the establishment of JD Logistics, a new business group under JD.com, which will leverage the company's advanced technology and logistics expertise to provide smart supply chain and logistics services to businesses across a wide range of industries. Zhenhui Wang, Senior Vice President of JD.com and Head of Fulfilment Operations, will serve as CEO of JD Logistics, reporting directly to Richard Liu, Chairman and CEO of JD.com.

"In the 10 years since JD.com launched China's first B2C logistics network, we have redefined what consumers expect from an eCommerce experience," said Mr. Liu. "We hope JD Logistics can revolutionize China's commercial infrastructure and become the global model for smart supply chain solutions."

JD Logistics will provide business partners with comprehensive supply chain solutions, including warehousing, transportation, delivery, after-sales service, as well as logistics services, including smart and cross-border logistics, among others.

JD.com has one of the largest fulfilment infrastructure of any e-Commerce company in the world. As of the end of 2016, JD.com operated seven "Asia No.1" projects, which are among the largest and most automated smart fulfilment centres in Asia. JD.com also operates 256 warehouses, as well as 6,906 delivery stations and pickup stations across China, which are staffed by its professionally trained employees, providing nationwide last-mile delivery service.

Alibaba’s Ant Financial Invests in Chinese Bike-sharing Start-up Unicorn Ofo

Ofo, the Chinese bike-sharing start-up that recently claimed unicorn status, announced this weekend that it has added Ant Financial as an investor. In a statement posted to its Weibo account, Ofo said that it will work with Ant Financial, an Alibaba affiliate, on Internet and credit card payments and its international expansion plan.

The amount of Ofo’s new funding from Ant Financial was not disclosed. Just two months ago, Ofo closed a $450 million Series D that it claims raised its valuation to more than a billion dollars. That round was led by DST Global, Matrix China, CITIC, and Didi Chuxing, the largest car-hailing app in China.

Ant Financial - the maker of Alipay, China’s largest online payment platform—was already one of Ofo’s strategic partners. In March, Ofo started using Ant Financial’s credit-rating system, called Sesame Credit, to allow users with qualifying scores to rent bikes without having to make a deposit.

Having Ant Financial as an ally strengthens Ofo’s position against its chief rival Mobike. Both companies are eager to expand beyond China and have been busy lining up strategic partners and investors. Mobike’s backers include Tencent, one of Alibaba’s biggest competitors, and tech manufacturing giant Foxconn. Tencent makes WeChat Pay, which lags behind Alipay in market share but enjoys the advantage of being integrated into WeChat, the messaging app that is almost ubiquitous among Chinese smartphone users.

In its statement, Ofo says it wants to be the world’s largest bike rental platform and that it plans to work with Ant Financial to expand into new countries. TechCrunch has contacted both companies for more details.

E-mart Seems to Exit China

Shinsegae may be attempting to shut down its E-mart discount chains in China by the end of 2017 at the earliest, due to rising deficits over the past few years.

When it opened its first store in Shanghai in 1997, Shinsegae set the grand goal of operating 1,000 stores in the world's most populous country. The pioneer of the Chinese market opened 27 stores there by 2010.

But Shinsegae, which has chalked up great success here, did not get similar results there - the retail giant failed to take root in China over high rents, unfavourable locations and a slump in the Chinese economy.

E-mart outlets in China posted over 100 billion won ($88 million) in losses in 2011, and their accumulated deficit reached 150 billion won over the past four years.

On top of the worsening profitability and growth, anti-Korea sentiments among Chinese consumers over the deployment of a U.S. anti-missile system here appears to have been negatively affecting the conglomerate's performance.

The company did not renew a rental contract for its Shanghai Laoximen store and is reportedly considering closing its other six outlets as soon as it resolves problems with rent payment and local staff employment.

According to a Shinsegae official, it is true that E-mart posted 21.6 billion won in operating losses last year in China, but one or two stores will continue to remain there as a test bed.

But E-mart is highly expected to bet on the newly rising Southeast Asian markets rather than the unprofitable Chinese market. Other Korean companies have also briskly tapped into Southeast Asia of late after China took retaliatory measures against Korean brands.

 

Source: Kantar Retail

Editor's notes

* This article is based on Kantar Retail China Insight team's weekly newsletter (April 28). If you would like to receive Kantar Retail Newsletter, please send your email address to Bill.Li@kantarretail.com .

Latest Stories

Since November, 2017, Chinese visitors have had the option to purchase goods with the mobile payment platform WeChat Pay at Camden Market in London.

In the three months by October, the top five brands – Huawei (including Honor), Xiaomi, Apple, Vivo and OPPO – make up 91% of sales in urban China, compared to 79% a year earlier.

P&G, Yili and Mengniu bought by over 150 million Chinese families.

The power of WeChat is so strong that doctors install fewer medical apps, because they find subscribing to medical accounts is enough.

Related Content
Social Network