Asia Retail Update - Fung Group

Asia Retail Update - Fung Group

Asia Retail Update - Fung Group

Issue 2 | October 2014 4 11 19 25 Issue 2 | October 2014 4 11 19 25 Issue 2 | October 2014 4 11 19 25

Asia Retail Update - Fung Group
Asia Retail Update - Fung Group

In this issue Asia Market Update  Issue 2  October 2014  p1 Taiwan Overview p4 In the news p6  Statistics p6 Real GDP growth registers 3.8 % yoy in 2Q14 CPI hits 18-month high in August 2014 Consumer confidence index goes up in September 2014 Retail sales grow by 4.5% yoy in August 2014  E-commerce p7 Fubon Multimedia establishes JV with TVD Momo launches Momomall PChome Online scales up PChomePay PChome teams up with Xiaomi Books’ self pick up services reach 7-Eleven Hong Kong TAITRA, Amazon ink MOU on partnership Yahoo! Taiwan overtakes Facebook as Taiwan’s top website Rakuten set to issue credit card in Taiwan New draft bill on regulating online payment services passed  Department stores p8 Eslite Spectrum to add more stores in Taiwan and China Pacific Department Store to expand in Taiwan and China Shin Kong ramps up China presence  Convenience stores p8 7-Eleven to reach over 5,000 outlets by end 2014 Sinopec to run 300 CVSs with Ruentex FamilyMart teams up with EasyCard  Accessories p9 Radley makes Asian debut in Taiwan Coccinelle adds stores in Taiwan  Apparel p9 Fast Retailing takes GU to Taiwan E-Land debuts in Taiwan  Beauty and personal care p9 Chlitina to reach a network of 5,000 outlets in China MedFirst adds six stores in 1Q14 Watson’s Taiwan launches online store Cosmed plans 10 new stores in 2014 Poya plans 25 new stores in 2015 Innisfree hits Taiwan  Consumer electronics p10 Asustek rolls out online store in Singapore Acer ties up with Gome Telkom enters Taiwan Foxconn to buy a stake in Asia Pacific Telecom  Food and beverage p10 CoCo makes debut in South Korea Tim Ho Wan debuts in Taiwan Quiznos debuts in Taiwan  Home products p10 Iittala debuts in Taiwan Thailand Overview p11 In the news p13  Statistics p13 GDP growth rebounds to positive in 2Q14 CPI further slides in August 2014 Consumer confidence index reaches a 13-month high in August 2014 Retail sales down by 6.2% yoy in June 2014  Retail in general p14 Thailand freezes prices of selected consumer goods for six months  E-commerce p14 Saha debuts on Tmall King Power opens on Tmall Priceza expands in Southeast Asia Berli Jucker to go online  Home shopping p14 TV Direct sets sights on Malaysia  Department stores p14 Robins enters Vietnam Robins plans six new stores in Thailand  Shopping malls p15 Platinum Group considers an IPO Siam Retail to add new malls and renovate existing malls  Supermarkets p15 Big C opens new DC for CVS business Foodland further expands in Thailand  Convenience stores p15 7-Eleven scales up in Thailand FamilyMart in rapid expansion Tesco launches CVS chain Berli Juker to add more CVS outlets in Vietnam In this issue Asia Market Update  Issue 2  October 2014  p1 Taiwan Overview p4 In the news p6  Statistics p6 Real GDP growth registers 3.8 % yoy in 2Q14 CPI hits 18-month high in August 2014 Consumer confidence index goes up in September 2014 Retail sales grow by 4.5% yoy in August 2014  E-commerce p7 Fubon Multimedia establishes JV with TVD Momo launches Momomall PChome Online scales up PChomePay PChome teams up with Xiaomi Books’ self pick up services reach 7-Eleven Hong Kong TAITRA, Amazon ink MOU on partnership Yahoo! Taiwan overtakes Facebook as Taiwan’s top website Rakuten set to issue credit card in Taiwan New draft bill on regulating online payment services passed  Department stores p8 Eslite Spectrum to add more stores in Taiwan and China Pacific Department Store to expand in Taiwan and China Shin Kong ramps up China presence  Convenience stores p8 7-Eleven to reach over 5,000 outlets by end 2014 Sinopec to run 300 CVSs with Ruentex FamilyMart teams up with EasyCard  Accessories p9 Radley makes Asian debut in Taiwan Coccinelle adds stores in Taiwan  Apparel p9 Fast Retailing takes GU to Taiwan E-Land debuts in Taiwan  Beauty and personal care p9 Chlitina to reach a network of 5,000 outlets in China MedFirst adds six stores in 1Q14 Watson’s Taiwan launches online store Cosmed plans 10 new stores in 2014 Poya plans 25 new stores in 2015 Innisfree hits Taiwan  Consumer electronics p10 Asustek rolls out online store in Singapore Acer ties up with Gome Telkom enters Taiwan Foxconn to buy a stake in Asia Pacific Telecom  Food and beverage p10 CoCo makes debut in South Korea Tim Ho Wan debuts in Taiwan Quiznos debuts in Taiwan  Home products p10 Iittala debuts in Taiwan Thailand Overview p11 In the news p13  Statistics p13 GDP growth rebounds to positive in 2Q14 CPI further slides in August 2014 Consumer confidence index reaches a 13-month high in August 2014 Retail sales down by 6.2% yoy in June 2014  Retail in general p14 Thailand freezes prices of selected consumer goods for six months  E-commerce p14 Saha debuts on Tmall King Power opens on Tmall Priceza expands in Southeast Asia Berli Jucker to go online  Home shopping p14 TV Direct sets sights on Malaysia  Department stores p14 Robins enters Vietnam Robins plans six new stores in Thailand  Shopping malls p15 Platinum Group considers an IPO Siam Retail to add new malls and renovate existing malls  Supermarkets p15 Big C opens new DC for CVS business Foodland further expands in Thailand  Convenience stores p15 7-Eleven scales up in Thailand FamilyMart in rapid expansion Tesco launches CVS chain Berli Juker to add more CVS outlets in Vietnam In this issue Asia Market Update  Issue 2  October 2014  p1 Taiwan Overview p4 In the news p6  Statistics p6 Real GDP growth registers 3.8 % yoy in 2Q14 CPI hits 18-month high in August 2014 Consumer confidence index goes up in September 2014 Retail sales grow by 4.5% yoy in August 2014  E-commerce p7 Fubon Multimedia establishes JV with TVD Momo launches Momomall PChome Online scales up PChomePay PChome teams up with Xiaomi Books’ self pick up services reach 7-Eleven Hong Kong TAITRA, Amazon ink MOU on partnership Yahoo! Taiwan overtakes Facebook as Taiwan’s top website Rakuten set to issue credit card in Taiwan New draft bill on regulating online payment services passed  Department stores p8 Eslite Spectrum to add more stores in Taiwan and China Pacific Department Store to expand in Taiwan and China Shin Kong ramps up China presence  Convenience stores p8 7-Eleven to reach over 5,000 outlets by end 2014 Sinopec to run 300 CVSs with Ruentex FamilyMart teams up with EasyCard  Accessories p9 Radley makes Asian debut in Taiwan Coccinelle adds stores in Taiwan  Apparel p9 Fast Retailing takes GU to Taiwan E-Land debuts in Taiwan  Beauty and personal care p9 Chlitina to reach a network of 5,000 outlets in China MedFirst adds six stores in 1Q14 Watson’s Taiwan launches online store Cosmed plans 10 new stores in 2014 Poya plans 25 new stores in 2015 Innisfree hits Taiwan  Consumer electronics p10 Asustek rolls out online store in Singapore Acer ties up with Gome Telkom enters Taiwan Foxconn to buy a stake in Asia Pacific Telecom  Food and beverage p10 CoCo makes debut in South Korea Tim Ho Wan debuts in Taiwan Quiznos debuts in Taiwan  Home products p10 Iittala debuts in Taiwan Thailand Overview p11 In the news p13  Statistics p13 GDP growth rebounds to positive in 2Q14 CPI further slides in August 2014 Consumer confidence index reaches a 13-month high in August 2014 Retail sales down by 6.2% yoy in June 2014  Retail in general p14 Thailand freezes prices of selected consumer goods for six months  E-commerce p14 Saha debuts on Tmall King Power opens on Tmall Priceza expands in Southeast Asia Berli Jucker to go online  Home shopping p14 TV Direct sets sights on Malaysia  Department stores p14 Robins enters Vietnam Robins plans six new stores in Thailand  Shopping malls p15 Platinum Group considers an IPO Siam Retail to add new malls and renovate existing malls  Supermarkets p15 Big C opens new DC for CVS business Foodland further expands in Thailand  Convenience stores p15 7-Eleven scales up in Thailand FamilyMart in rapid expansion Tesco launches CVS chain Berli Juker to add more CVS outlets in Vietnam

In this issue Asia Market Update  Issue 2  October 2014  p2  Cash and carry p16 Marko sets for expansion spree Berli Juker acquires Metro Cash & Carry Vietnam  Accessories p16 Crumpler enters Thailand  Apparel p16 Antony Morato to expand in Thailand Toms makes debut in Thailand market  Beauty and personal care p16 Sephora to establish online presence in Thailand through ZALORA Watson’s to add new stores and new products The Face Shop sells Thai business Beauty Community further expands in Thailand Pena House taps cosmetics sector Bangkok Dusit Medical to take over Save Drug Center  Consumer electronics p17 PowerBuy further expands in Thailand  Food and beverage p17 Coffee Bean & Tea Leaf to further expand in Thailand Mister Donut scales up in Thailand Starbucks to double store count by 2018 Sub Sri Thai acquires Greyhound BreadTalk partners with Minor International for expansion Central Restaurants to add 75 new restaurants in 2014 MK Restaurant to reach 650 outlets by 2016 CP Foods marches into Australia market CP Foods ties up with Itochu True Coffee eyes Southeast Asian markets Teddy’s Bigger Burgers to enter Thailand TUF to acquire King Oscar and MerAlliance Ichitan to set up new plant in Indonesia Café Amazon plans Asean expansion  Home products p18 Chic Republic expands in Thailand Ikea strengthens presence in Thailand Malaysia Overview p19 In the news p21  Statistics p21 GDP growth registers 6.4% yoy in 2Q14 Retail sales up by 4.9% yoy in 1Q14 CPI climbs to 110.5 in August 2014 CSI rises to 100.1 in 2Q14  E-commerce p22 Malaysians are keen to shop online Huawei opens an online store Uniqlo goes online in Malaysia  Home shopping p22 TV Direct sets sights on Malaysia Astro to launch home shopping channel  Department stores p22 Parkson to buy 60% stake in Giftmate  Supermarkets p22 Mydin to open another 25 hypermarkets by 2018  Convenience stores p22 7-Eleven Malaysia lists in Malaysia 7-Eleven plans rapid rollout 7-Eleven launches new generation of CVS  Apparel p23 Parkson to buy 50% stake in Valino Monki makes Malaysian debut Padini further expands in Malaysia Bonia steps up overseas expansion  Consumer electronics p23 Courts plans expansion Challenger exits Malaysia Huawei in rapid expansion  Food and beverage p23 Asahi acquires Etika Dairies Parkson to acquire 60% stake in AUM MBG Fruits to double store count by 2017 Pie Face to hit Malaysia SugarBun enters Indonesia Fatburger debuts in Malaysia Marrybrown to scale up in India Starbucks sells its Malaysian business F&N to acquire Yoke Food Agrobazaar debuts in Singapore PastaMania sets foot in Malaysia  Home products p24 Spotlight opens in Malaysia Singapore Overview p25 In the news p27  Statistics p27 GDP growth registers 2.4% in 2Q14

In this issue Asia Market Update  Issue 2  October 2014  p3 Retail sales rise by 5.5% yoy in July 2014 CPI goes up by 0.9% yoy in August 2014 Consumer confidence index drops slightly in 2Q14  E-commerce p28 Alibaba buy 10.35% stake in Singapore Post  Supermarkets p28 Sheng Siong to tap China market NTUC FairPrice scales up online services NTUC Fairprice to build logistics center  Accessories p28 Ulysse Nardin opens largest Asian store in Singapore  Apparel p28 Tom Ford debuts in Singapore George to ramp up Singapore footprint Uniqlo rolls out e-commerce platforms in Singapore  Consumer electronics p28 Challenger exits Malaysia Asustek rolls out online store in Singapore Courts Asia to build 10-12 megastores in Indonesia in next five years  Food and beverage p29 Temasek invests in The Cocoa Trees LVMH acquires Crystal Jade PastaMania to expand China presence PastaMania sets foot in Malaysia Pie Face to hit Singapore Fatburger to enter Singapore Ya Kun hits Hong Kong Putien sets foot in Hong Kong Peninsula Boutique debuts in Singapore BreadTalk to further expand in Thailand Panasonic develops first indoor farm in Singapore Global Food acquires Wendys Agrobazaar debuts in Singapore F&N to acquire Yoke Food F&N to increase stake in Vietnam’s dairy giant Appendix – Asia Data Snapshots p31 References p32 Previous issue Issue 1 Asia at a Glance, China, Japan & South Korea (http://www.funggroup.com/eng/knowledge/ research/AsiaDistributionRetail_july14.pdf)

Taiwan Overview Asia Market Update  Issue 2  October 2014  p4 According to the Economist Intelligence Unit, Taiwan’s GDP amounted to US$489.1 billion in 2013, with a real growth rate of 2.1% year-on- year (yoy). Amid the developed economies’ moderate economic recovery, as in the U.S., Taiwan’s GDP is set to grow at an average rate of about 3% and reach US$595.1 billion by 20181. The Taiwanese are relatively affluent in terms of spending power when compared to other Asian markets. The spending power of Taiwanese consumers is expected to increase from US$324.1 billion in 2013 to US$370.0 billion in 2018, posting a compound annual growth rate (CAGR) of 2.2%2.

However, the government plans to increase the top rate of income tax from 40% to 45% early next year. This might impact wealthy individuals’ incentive to consume.

Taiwan’s retail sales stood at US$92.2 billion (NT$2,749.1 billion) in 2013, up by 2.7% yoy. According to Euromonitor International, retail sales will increase to US$98.3 billion (NT$2,938.5 billion) by 2018, with a CAGR of 1.3%3. One of the major drivers is the increase in numbers of visitors from the Chinese mainland since the Economic Cooperation Framework Agreement (ECFA) was signed in 2010, with travel restrictions eased for mainland visitors4. Major beneficiary segments in the retail sector include luxury goods, hotel and hospitality, and food and beverages.

Grocery retailers in Taiwan (such as convenience stores, hypermarkets and supermarkets) accounted for 41.3% of store- based retail sales in 2013, up by 1.3% yoy.

Among the grocery retailers, convenience stores (CVSs) performed strongly compared to others, with a yoy sales growth rate of 6.8%. By contrast, hypermarkets recorded a sales drop of 3.0%. Challenges from small-sized stores (including CVSs) and retailers like retail warehouse clubs offering bulk purchases at low prices are believed to have substantially hit supermarket sales5. Non-grocery retailers (such as department stores and specialist retailers) performed slightly better than their grocery sector counterparts, posting a yoy sales increase of 2.3%. Electronics and appliance specialist retailers were the top performer, growing at a rate of 7.0% yoy in 20136.

Retail warehouse club, a format accounting for a small fraction of Taiwan’s total retail sales, shows growing appeal. Costco, the only such retail warehouse club operator in Taiwan, is popular among Taiwanese consumers, offering low prices, exclusive imported products and a more appealing shopping environment. Broadband Internet penetration is high in Taiwan, supported by its excellent telecommunications infrastructure, availability of the latest technologies and an affluent and tech- savvy population. Euromonitor International reports the broadband Internet penetration rate at 68.0% in 2013; that is expected to climb to over 90% by 20307.

Internet sales in Taiwan were US$6.5 billion (NT$193.3 billion) in 20138 and sales are expected to increase to US$8.3 billion (NT$248.9 billion) in 20189. Market leaders include Yahoo!, PayEasy, PChome Online and Books. Convenience stores – the dominant retail format Taiwanese consumers prefer the CVS channel thanks to their relatively high disposable incomes, preferences for convenient shopping, as well as their recognition of CVSs’ competitive pricing strategies, innovative services and product offerings. In 2013, sales through CVSs reached Lying off the southeastern coast of China across the Taiwan Strait, Taiwan is an island on the western edge of the Pacific Ocean.

It comprises a population of 23 million in an area of about 36,000 square kilometres. Taiwan Overview Asia Market Update  Issue 2  October 2014  p4 According to the Economist Intelligence Unit, Taiwan’s GDP amounted to US$489.1 billion in 2013, with a real growth rate of 2.1% year-on- year (yoy). Amid the developed economies’ moderate economic recovery, as in the U.S., Taiwan’s GDP is set to grow at an average rate of about 3% and reach US$595.1 billion by 20181. The Taiwanese are relatively affluent in terms of spending power when compared to other Asian markets. The spending power of Taiwanese consumers is expected to increase from US$324.1 billion in 2013 to US$370.0 billion in 2018, posting a compound annual growth rate (CAGR) of 2.2%2.

However, the government plans to increase the top rate of income tax from 40% to 45% early next year. This might impact wealthy individuals’ incentive to consume.

Taiwan’s retail sales stood at US$92.2 billion (NT$2,749.1 billion) in 2013, up by 2.7% yoy. According to Euromonitor International, retail sales will increase to US$98.3 billion (NT$2,938.5 billion) by 2018, with a CAGR of 1.3%3. One of the major drivers is the increase in numbers of visitors from the Chinese mainland since the Economic Cooperation Framework Agreement (ECFA) was signed in 2010, with travel restrictions eased for mainland visitors4. Major beneficiary segments in the retail sector include luxury goods, hotel and hospitality, and food and beverages.

Grocery retailers in Taiwan (such as convenience stores, hypermarkets and supermarkets) accounted for 41.3% of store- based retail sales in 2013, up by 1.3% yoy.

Among the grocery retailers, convenience stores (CVSs) performed strongly compared to others, with a yoy sales growth rate of 6.8%. By contrast, hypermarkets recorded a sales drop of 3.0%. Challenges from small-sized stores (including CVSs) and retailers like retail warehouse clubs offering bulk purchases at low prices are believed to have substantially hit supermarket sales5. Non-grocery retailers (such as department stores and specialist retailers) performed slightly better than their grocery sector counterparts, posting a yoy sales increase of 2.3%. Electronics and appliance specialist retailers were the top performer, growing at a rate of 7.0% yoy in 20136.

Retail warehouse club, a format accounting for a small fraction of Taiwan’s total retail sales, shows growing appeal. Costco, the only such retail warehouse club operator in Taiwan, is popular among Taiwanese consumers, offering low prices, exclusive imported products and a more appealing shopping environment. Broadband Internet penetration is high in Taiwan, supported by its excellent telecommunications infrastructure, availability of the latest technologies and an affluent and tech- savvy population. Euromonitor International reports the broadband Internet penetration rate at 68.0% in 2013; that is expected to climb to over 90% by 20307.

Internet sales in Taiwan were US$6.5 billion (NT$193.3 billion) in 20138 and sales are expected to increase to US$8.3 billion (NT$248.9 billion) in 20189. Market leaders include Yahoo!, PayEasy, PChome Online and Books. Convenience stores – the dominant retail format Taiwanese consumers prefer the CVS channel thanks to their relatively high disposable incomes, preferences for convenient shopping, as well as their recognition of CVSs’ competitive pricing strategies, innovative services and product offerings. In 2013, sales through CVSs reached Lying off the southeastern coast of China across the Taiwan Strait, Taiwan is an island on the western edge of the Pacific Ocean.

It comprises a population of 23 million in an area of about 36,000 square kilometres. Taiwan Overview Asia Market Update  Issue 2  October 2014  p4 According to the Economist Intelligence Unit, Taiwan’s GDP amounted to US$489.1 billion in 2013, with a real growth rate of 2.1% year-on- year (yoy). Amid the developed economies’ moderate economic recovery, as in the U.S., Taiwan’s GDP is set to grow at an average rate of about 3% and reach US$595.1 billion by 20181. The Taiwanese are relatively affluent in terms of spending power when compared to other Asian markets. The spending power of Taiwanese consumers is expected to increase from US$324.1 billion in 2013 to US$370.0 billion in 2018, posting a compound annual growth rate (CAGR) of 2.2%2.

However, the government plans to increase the top rate of income tax from 40% to 45% early next year. This might impact wealthy individuals’ incentive to consume.

Taiwan’s retail sales stood at US$92.2 billion (NT$2,749.1 billion) in 2013, up by 2.7% yoy. According to Euromonitor International, retail sales will increase to US$98.3 billion (NT$2,938.5 billion) by 2018, with a CAGR of 1.3%3. One of the major drivers is the increase in numbers of visitors from the Chinese mainland since the Economic Cooperation Framework Agreement (ECFA) was signed in 2010, with travel restrictions eased for mainland visitors4. Major beneficiary segments in the retail sector include luxury goods, hotel and hospitality, and food and beverages.

Grocery retailers in Taiwan (such as convenience stores, hypermarkets and supermarkets) accounted for 41.3% of store- based retail sales in 2013, up by 1.3% yoy.

Among the grocery retailers, convenience stores (CVSs) performed strongly compared to others, with a yoy sales growth rate of 6.8%. By contrast, hypermarkets recorded a sales drop of 3.0%. Challenges from small-sized stores (including CVSs) and retailers like retail warehouse clubs offering bulk purchases at low prices are believed to have substantially hit supermarket sales5. Non-grocery retailers (such as department stores and specialist retailers) performed slightly better than their grocery sector counterparts, posting a yoy sales increase of 2.3%. Electronics and appliance specialist retailers were the top performer, growing at a rate of 7.0% yoy in 20136.

Retail warehouse club, a format accounting for a small fraction of Taiwan’s total retail sales, shows growing appeal. Costco, the only such retail warehouse club operator in Taiwan, is popular among Taiwanese consumers, offering low prices, exclusive imported products and a more appealing shopping environment. Broadband Internet penetration is high in Taiwan, supported by its excellent telecommunications infrastructure, availability of the latest technologies and an affluent and tech- savvy population. Euromonitor International reports the broadband Internet penetration rate at 68.0% in 2013; that is expected to climb to over 90% by 20307.

Internet sales in Taiwan were US$6.5 billion (NT$193.3 billion) in 20138 and sales are expected to increase to US$8.3 billion (NT$248.9 billion) in 20189. Market leaders include Yahoo!, PayEasy, PChome Online and Books. Convenience stores – the dominant retail format Taiwanese consumers prefer the CVS channel thanks to their relatively high disposable incomes, preferences for convenient shopping, as well as their recognition of CVSs’ competitive pricing strategies, innovative services and product offerings. In 2013, sales through CVSs reached Lying off the southeastern coast of China across the Taiwan Strait, Taiwan is an island on the western edge of the Pacific Ocean.

It comprises a population of 23 million in an area of about 36,000 square kilometres.

Taiwan Overview Asia Retail Update  Issue 2  October 2014  p5 US$7.3 billion (NT$219.5 billion), up by 6.8% yoy. CVS outlets numbered 10,030 in 2013, up slightly by 1.3% yoy. Euromonitor International forecasts that sales revenues and numbers of outlets will increase to US$8.2 billion (NT$244.5 billion) and 10,438, respectively, by 201810. Today, competition between CVSs and other retail formats goes beyond price. Indeed, CVSs focus increasingly on changing lifestyles and the evolving needs of consumers. Tellingly, photocopying/ faxing and ATM machines can all be found in a CVS. There are also indoor and outdoor seating and public toilet facilities.

In terms of products, CVS operators now offer more ready-to-eat choices; examples include freshly brewed coffee and bakeries. With the rapid development of e-commerce in Taiwan, some CVSs offer pick up services as well. 7-Eleven, FamilyMart, Hi Life and OK Mart are the leading chains in Taiwan.

7-Eleven, operated by President Chain Store, is the most significant player in terms of store network, market share and innovative business strategies. As at the end of 2013, 7-Eleven operated 4,900 CVS outlets, accounting for 48.9% of the national total. The chain recorded US$4.6 billion (NT$138.7 billion) in sales revenue in 2013, representing 63.2% of the industry total11. Additionally, 7-Eleven is well known for its innovative strategies in terms of marketing, product and services offerings. To provide customers with a more convenient shopping environment, 7-Eleven was the first to offer freshly brewed coffee, introduce new ranges of ready-to-eat foods and provide on-site catering in many of its outlets.

Some rivals are following suit in view of its success12. 7-Eleven’s loyalty programme is also very popular. Points earned can be redeemed through 7-Eleven’s product purchases, but also by buying products offered through President Chain Store’s affiliated brands, such as Starbucks.

While traditional retailers have been hit hard by rising online retailing, 7-Eleven actually makes the most of it. It takes commissions if buyers and sellers pick up or deliver orders to its stores13. Thanks to its unrivalled network, 7-Eleven is invariably the first point of reference for buyers and sellers and the chain’s commissions have been rising rapidly with the growth of Internet sales.

Taiwan In the news Asia Market Update  Issue 2  October 2014  p6 Statistics Real GDP growth registers 3.8% yoy in 2Q14 Taiwan’s real GDP growth was 3.8% yoy in 2Q14, the highest level since the 4Q12, owing to the moderate growth of exports and private consumption14  See Exhibit 1.

Exhibit 1 | Real GDP growth of Taiwan, 2Q13-2Q14 Source: National Statistics of Taiwan CPI hits 18-month high in August 2014 The consumer price index in Taiwan grew by 2.07% yoy in August 201415, an 18-month record high, due mainly to higher food prices16.  See Exhibit 2.

Exhibit 2 | Consumer price index growth in Taiwan, Sep 2013 - Aug 2014 Source: Directorate General of Budget, Accounting & Statistics of Taiwan Consumer confidence index goes up in September 2014 Taiwan’s consumer confidence index climbed to 83.16 in September 2014 from 83.06 in August 201417, showing that the economy continues to recover18.  See Exhibit 3. Exhibit 3 | Consumer confidence index in Taiwan, Oct 2013 – Sep 2014 Source: Research Center for Taiwan Economic Development 2.7% 1.3% 2.9% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 2Q13 3Q 4Q 1Q14 Taiwan In the news Asia Market Update  Issue 2  October 2014  p6 Statistics Real GDP growth registers 3.8% yoy in 2Q14 Taiwan’s real GDP growth was 3.8% yoy in 2Q14, the highest level since the 4Q12, owing to the moderate growth of exports and private consumption14  See Exhibit 1.

Exhibit 1 | Real GDP growth of Taiwan, 2Q13-2Q14 Source: National Statistics of Taiwan CPI hits 18-month high in August 2014 The consumer price index in Taiwan grew by 2.07% yoy in August 201415, an 18-month record high, due mainly to higher food prices16.  See Exhibit 2.

Exhibit 2 | Consumer price index growth in Taiwan, Sep 2013 - Aug 2014 Source: Directorate General of Budget, Accounting & Statistics of Taiwan Consumer confidence index goes up in September 2014 Taiwan’s consumer confidence index climbed to 83.16 in September 2014 from 83.06 in August 201417, showing that the economy continues to recover18.  See Exhibit 3. Exhibit 3 | Consumer confidence index in Taiwan, Oct 2013 – Sep 2014 Source: Research Center for Taiwan Economic Development 3.1% 3.8% 1Q14 2Q 0.84% 0.64% 0.68% 0.34% 0.83% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 78.47 78.4378.22 80.83 82.93 80.96 83.73 72.0 74.0 76.0 78.0 80.0 82.0 84.0 86.0 88.0 90.0 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Taiwan In the news Asia Market Update  Issue 2  October 2014  p6 Statistics Real GDP growth registers 3.8% yoy in 2Q14 Taiwan’s real GDP growth was 3.8% yoy in 2Q14, the highest level since the 4Q12, owing to the moderate growth of exports and private consumption14  See Exhibit 1.

Exhibit 1 | Real GDP growth of Taiwan, 2Q13-2Q14 Source: National Statistics of Taiwan CPI hits 18-month high in August 2014 The consumer price index in Taiwan grew by 2.07% yoy in August 201415, an 18-month record high, due mainly to higher food prices16.  See Exhibit 2.

Exhibit 2 | Consumer price index growth in Taiwan, Sep 2013 - Aug 2014 Source: Directorate General of Budget, Accounting & Statistics of Taiwan Consumer confidence index goes up in September 2014 Taiwan’s consumer confidence index climbed to 83.16 in September 2014 from 83.06 in August 201417, showing that the economy continues to recover18.  See Exhibit 3. Exhibit 3 | Consumer confidence index in Taiwan, Oct 2013 – Sep 2014 Source: Research Center for Taiwan Economic Development 0.34% 0.83% -0.04% 1.61% 1.66% 1.62% 1.64% 1.75% 2.07% Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 80.96 83.73 85.59 87.58 88.17 83.06 83.16 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14

Taiwan In the news Asia Market Update  Issue 2  October 2014  p7 Retail sales grow by 4.5% yoy in August 2014 Taiwan’s retail sales rose by 4.5% yoy to NT$330.8 billion in August 201419, as consumers increased spending during the 3-day Mid-Autumn Festival20.  See Exhibit 4. E-commerce Fubon Multimedia establishes JV with TVD Fubon Multimedia, a Taiwanese company offering TV shopping and catalogue shopping services, set up a joint-venture company (JV)21 with TV Direct (TVD), a Thailand-based company distributing products and services via multichannel marketing, in March 2014. The JV kicked start TV shopping business in June 2014 in Thailand22 .

Momo launches Momomall Momo, an affiliate of Fubon Multimedia, introduced a new B2B2C online shopping platform “Momomall” in July 2014. Momomall currently pairs up with over 1,200 retailers to offer about 100,000 items. Almost 60% of the items are fashion products targeted at young people. Momo also filed for Taiwan IPO in February 2014 and is expected to go public in 201523 . PChome Online scales up PChomePay PChome Online, a leading web portal in Taiwan, plans to roll out its third party payment service PChomePay to PChomeStore, its shopping platform in Taiwan and PChome US24, its online marketplace in the U.S., in 3Q14.

It also hopes to introduce PChomePay to external online shopping platforms and third party payment companies to boost cross border trade25. PChome teams up with Xiaomi PChome Online paired up with Xiaomi, a fast growing Chinese budget smartphone maker, in June 2014 to sell Xiaomi handsets in Taiwan. PChome is Xiaomi’s first overseas official e- commerce partner to promote its handsets26. The debut batch of 10,000 enhanced version of the Redmi Note handsets were sold out in Taiwan via PChome Online in one single second27. Books’ self pick up services reach 7- Eleven Hong Kong Books, Taiwan’s largest online book store, announced the expansion of its self pick up services to 7-Eleven Hong Kong in April 2014.

The expansion of self pick up services marks Books’ first foray into overseas markets. Offering up to 1.5 million copies of books in over 250,000 categories, Books aims to become Hong Kong’s largest online book store28 .

Exhibit 4 | Total retail sales in Taiwan, Sep 2013 – Aug 2014 Source: Ministry of Economic Affairs of Taiwan 4.6% 4.3% 5.9% 2.8% 7.6% -2.8% 4.3% 4.1% 4.4% 5.5% 5.5% 4.5% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 260.0 270.0 280.0 290.0 300.0 310.0 320.0 330.0 340.0 350.0 360.0 370.0 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Retail sales (NT$ billion) yoy change (%)

Taiwan In the news Asia Market Update  Issue 2  October 2014  p8 TAITRA, Amazon ink MOU on partnership The Taiwan External Trade Development Council (TAITRA), Taiwan’s major trade promotion organisation, has signed a memorandum of understanding (MOU) with Amazon, the world’s largest online retailer, to promote Taiwan-made products in overseas markets.

TAITRA will screen potential sellers and quality made-in-Taiwan products will be available on Amazon website later29. Yahoo! Taiwan overtakes Facebook as Taiwan’s top website Yahoo! Taiwan, known for its search engine and web portal, came first in Taiwan’s top 100 websites in 2014, followed by Facebook, a U.S.- based online social media network, and YouTube, a video sharing website based in the U.S. This is the eighth annual survey conducted by Business Next Publishing, which Facebook ranked the first in the previous three years30 .

Rakuten set to issue credit card in Taiwan Rakuten Card Co, a subsidiary of Japan’s leading online retailer Rakuten, has gained approval from the Taiwan government authorities to issue credit cards in Taiwan. The credit card issuance is part of Rakuten’s plans to raise the proportion of revenue generated in Taiwan31. New draft bill on regulating online payment services passed The Taiwan government passed a new draft bill in September 2014 on regulating online third party payment services. The draft bill allows service providers to offer virtual accounts in which customers can store a maximum of NT$30,000 for online transactions.

The minimum capital required for every third party payment service provider is NT$300 million32.

Department stores Eslite Spectrum to add more stores in Taiwan and China Eslite Spectrum, a chain department store operator in Taiwan, will add two new stores in Taoyuan and Tainan in late 2014. The company is also working on the Jingji Lake project in Suzhou and the Shanghai Center in China, both of which will commence operation in 201533 . Pacific Department Store to expand in Taiwan and China Pacific Department Store, a chain department store in Taiwan, is set to add a new store in Taiwan and another one in Beijing, China. The operator currently operates two stores in Taiwan and one store in Beijing, China34.

Shin Kong ramps up China presence Shin Kong, a leading department store chain in Taiwan, plans to increase its footprint in China. The retailer will add a store in Suzhou in Jiangsu in 1Q15, another in Chengdu in Sichuan in 2Q15 and another in Chongqing in 3Q16. The retailer has realised US$1.5 billion sales in Taiwan for the first eight months of 201435.

Convenience stores 7-Eleven to reach over 5,000 outlets by end 2014 7-Eleven added 46 stores in Taiwan in 1Q14, making the total number of stores to 4,966. It plans to create a network of over 5,000 outlets by the end of this year. 7-Eleven, operated by the President Chain Store, is now the largest CVS chain in Taiwan36 . Sinopec to run 300 CVSs with Ruentex Sinopec, China’s state-owned oil giant who also owns a CVS chain Easy Joy, has reached an agreement with Ruentex, Taiwan’s conglomerate who operates hypermarket chain RT-Mart, to jointly operate 300 of its Easy Joy stores in China37 . The two parties seek to lower sourcing costs by joint procurement as well as explore e- commerce and online-to-offline business opportunities together38 .

FamilyMart teams up with EasyCard FamilyMart, the second largest CVS chain in Taiwan, has teamed up with EasyCard, a smart card system operator based in Taiwan, to develop a reward point system to boost shoppers’ loyalty.

Taiwan In the news Asia Market Update  Issue 2  October 2014  p9 FamilyMart currently operates some 3,000 CVSs in Taiwan39 . Accessories Radley makes Asian debut in Taiwan Radley, a British handbag brand, opened its first Asian outlet in Taiwan in June 2014. The brand, planning to expand overseas, will open a total of ten stores in Asia, Australia and the Middle East by 201540.

Coccinelle adds stores in Taiwan Coccinelle, an Italian accessories brand, added four new stores in Taiwan in 3Q14. Together with the new store openings in the Philippines in 3Q14, the brand has built a stronger foothold in Asia41. Apparel Fast Retailing takes GU to Taiwan Fast Retailing, the fourth largest apparel retailer in the world, took one of its brands, GU, to Taiwan in September 201442. Taiwan will be GU’s second overseas market, after the debut in China in 2013. The Japanese retailer regards Taiwan as a springboard to expand to other Asian countries in future. The brand also plans to enter the U.S.

and Europe within several years43.

E-Land debuts in Taiwan E-Land, a leading fashion retail group in South Korea, opened its first store in Taiwan in September 201444. The group will open the second store in 2015. The company expects the turnover in Taiwan to reach NT$15 billion by 202045. Beauty and personal care Chlitina to reach a network of 5,000 outlets in China Chlitina, a cosmetics brand under Kelti International, a cosmetics manufacturer and distributor based in Taiwan, aims to increase its store number in China to 5,000 over the next few years. The company currently operates 3,100 stores across 334 cities in China, on top of 127 stores in Taiwan46.

MedFirst adds six stores in 1Q14 MedFirst, a chain retailer specialising in medical and health care products in Taiwan, opened six new stores in 1Q14. The firm is expected to add a total of 10 new stores in Taiwan by the end of 201447, with expansion plans focusing on hospitals and their nearby commercial areas. MedFirst currently operates almost 200 stores in Taiwan. It has also established a presence in China48. Watson’s Taiwan launches online store Watson’s Personal Care Stores, the largest beauty and personal care chain in Asia, rolled out its online store in Taiwan in April 2014. The company is the first cosmetics and drugstore operator to set up a self-operated online shop in Taiwan.

It expects the online sales to rise 200% over the next three years. Watson’s operated a total of 471 physical outlets in Taiwan as of end 2013 and the store count will increase to 500 by end 201449.

Cosmed plans 10 new stores in 2014 Cosmed, the second largest drugstore chain in Taiwan, will add 10 stores in Taiwan in 2014, bringing its total number of outlets to 372 by end 2014. The firm said it currently has no plans to launch a self-operated online shop50. Poya plans 25 new stores in 2015 Poya, the largest specialty chain specialising in accessories and FMCG products in Taiwan, plans to add 25 new stores in 2015. According to the management, Poya plans to increase the number of stores to 185 by 2017, 275 by 2020 and 400 by 202351. As of 2Q14, Poya operated 97 stores in Taiwan52.

Innisfree hits Taiwan Amore Pacific, a cosmetics giant in South Korea, opened the first outlet of its organic cosmetics brand, Innisfree, in April 201453.

The second outlet was launched in May 2014 and the third one will likely commerce operation by the end of this year. Amore Pacific looks to grow Innisfree to

Taiwan In the news Asia Market Update  Issue 2  October 2014  p10 the biggest South Korean skin care and cosmetics brand in Taiwan in terms of market share54. Consumer electronics Asustek rolls out online store in Singapore Asustek, a leading PC vendor in Taiwan, debuted its official online store in Singapore in July 201455. The online store in Singapore merely sells smartphone products for the time being. The PC vendor also plans to open online stores in other Southeast Asian markets by end 2014, including Hong Kong, Malaysia, Thailand, Indonesia, Vietnam and the Philippines56. Acer ties up with Gome Acer, a leading PC and notebook computer producer in Taiwan, has teamed up with Gome, a consumer electronics retailer in China, to sell Acer desktops, notebooks, tablets, all-in-one PCs and projectors in Gome retail stores.

Both companies have set a three-year revenues target of 6 billion yuan (US$974 million)57. Telkom enters Taiwan PT Telekomunikasi Indonesia (Telkom), Indonesia’s state-owned telecommunications service provider, has recently opened a branch in Taiwan in cooperation with Far EasTone Telecommunications and Taiwan Mobile, two leading telecommunications companies in Taiwan. The Taiwan branch focuses on retail businesses such as international remittance business. Telkom has already branched out into Hong Kong, East Timor, Australia, Myanmar, Malaysia, Singapore and the U.S.58 Foxconn to buy a stake in Asia Pacific Telecom Foxconn, the world’s largest electronics components maker, agreed to acquire shares worth NT$11.6 billion (US$390 million) from Taiwan’s mobile telecom operator Asia Pacific Telecom in May 2014.

The deal bodes well for Foxconn’s plans to tap the 4G telecom market in Taiwan59.

Food and beverage CoCo makes debut in South Korea CoCo, a beverage brand in Taiwan, opened its first outlet in South Korea in May 201460. The company is expected to increase its outlet number to 50 over the next two years. The company also plans to expand its global network to 2,000 stores within this year by adding 500 new outlets61. Tim Ho Wan debuts in Taiwan Tim Ho Wan, a Hong Kong-based dim sum restaurant chain, opened its first outlet in Taipei, Taiwan in July 2014. The dim sum chain plans to set up 10 outlets in Taiwan within five years. Taiwan is the third overseas market, after Singapore and the Philippines62.

Quiznos debuts in Taiwan Quiznos, an American sandwich brand, opened its first outlet in Taiwan in September 2014. The brand plans to open 100 outlets across Taiwan by 202463. The restaurant chain currently operates in over 30 countries worldwide64. Home products Iittala debuts in Taiwan Iittala, a Finnish home décor brand specialising in tableware and cookware, opened its debut store in Taiwan in June 201465. Fiskars, Iittala’s parent company, considers bringing Iittala to South Korea in the near future66.

Thailand Overview Asia Market Update  Issue 2  October 2014  p11 Thailand is the second largest economy in Southeast Asia, behind Indonesia. The country’s GDP stood at US$387.3 billion in 201367, with a real year-on-year (yoy) growth rate of 2.9%, down by 3.6 percentage points when compared to 201268. The decline was largely attributed to a weakened economy brought about by political unrest69 since late 201370. According to Siam Commercial Bank’s Economic Intelligence Center, the Thai economy will expand by just 1.6% in 2014 due to the country’s prolonged political impasse. With signs of economic recovery seen over the past few months, the economy is set to stabilise and grow at around 3.5%-4% over the next five years (2015-2019)71.

The political unrest since late 2013 has taken its toll on the country’s economy and on all industries, including the retail sector. According to the Bank of Thailand, retail sales have experienced sharp negative yoy growth (lower than -5%) since September 201372. Euromonitor International predicts that Thailand’s retail sales will pick up over the coming few years and rise to US$96.8 billion (3,140.2 billion baht) in 2018 from US$80.8 billion (2,644.1 billion baht) in 2013, with a compound annual growth rate (CAGR) of 3.5%73. Thailand’s grocery retailing accounted for 62.3% of total sales in 2013.

In particular, store- based grocery retailers (such as convenience stores, hypermarkets and supermarkets) recorded sales of US$51.8 billion (1,678.8 billion baht), up by 5.6% yoy74. The supermarket sector was the best performer, posting a yoy sales growth rate of 13.5%75.

Non-grocery retailers (such as department stores and specialist retailers) performed better than the grocery sector in terms of growth - a yoy increase of 6.3%. Home and garden specialist retailers constituted the top performer, advancing at a rate of 7.0% yoy in 201376. The broadband Internet penetration rate in Thailand stood at 14.6% in 2013. This is relatively low compared to other ASEAN countries such as Singapore (88.1%) and Malaysia (61.1%)77. According to Euromonitor International, the rate is expected to increase to 37.6% by 203078. The total value of Internet sales in Thailand amounted to US$0.8 billion (27.3 billion baht) in 2013.

By category, consumer electronics and video game hardware was the most popular, accounting for 33.2% of the total. Internet sales are set to increase to US$1.5 billion (49.9 billion baht) by 2018, with a CAGR of 12.8%79. Thailand is one of the most popular tourist destinations in the world and tourism is a major contributor to economic growth. In 2013, travel and tourism directly contributed 9.0% of the nation’s GDP and supported 6.6% of national employment80. However, tourism, especially for Bangkok, has been adversely affected by the ongoing political turbulence. According to the Ministry of Tourism and Sports of Thailand, international arrivals in the country from January to August 2014 stood at 15,703,373, demonstrating a yoy decrease of 10.7%81.

Political unrest to bottom out? The political unrest since last November82 has resulted in considerable economic losses. GDP growth in 1Q14 dropped below zero, recording a rate of -0.5% yoy83. Domestic consumption slowed and fewer tourists have been travelling to the country, especially to Bangkok. Total retail sales have experienced yoy decreases since September 201384.

Set in the middle of mainland Southeast Asia, Thailand borders the Gulf of Thailand in the east and the Andaman Sea in the west. With a land mass of about 514,000 square kilometres, the country has a population of over 67 million. Thailand Overview Asia Market Update  Issue 2  October 2014  p11 Thailand is the second largest economy in Southeast Asia, behind Indonesia. The country’s GDP stood at US$387.3 billion in 201367, with a real year-on-year (yoy) growth rate of 2.9%, down by 3.6 percentage points when compared to 201268. The decline was largely attributed to a weakened economy brought about by political unrest69 since late 201370.

According to Siam Commercial Bank’s Economic Intelligence Center, the Thai economy will expand by just 1.6% in 2014 due to the country’s prolonged political impasse. With signs of economic recovery seen over the past few months, the economy is set to stabilise and grow at around 3.5%-4% over the next five years (2015-2019)71. The political unrest since late 2013 has taken its toll on the country’s economy and on all industries, including the retail sector. According to the Bank of Thailand, retail sales have experienced sharp negative yoy growth (lower than -5%) since September 201372. Euromonitor International predicts that Thailand’s retail sales will pick up over the coming few years and rise to US$96.8 billion (3,140.2 billion baht) in 2018 from US$80.8 billion (2,644.1 billion baht) in 2013, with a compound annual growth rate (CAGR) of 3.5%73.

Thailand’s grocery retailing accounted for 62.3% of total sales in 2013. In particular, store- based grocery retailers (such as convenience stores, hypermarkets and supermarkets) recorded sales of US$51.8 billion (1,678.8 billion baht), up by 5.6% yoy74. The supermarket sector was the best performer, posting a yoy sales growth rate of 13.5%75.

Non-grocery retailers (such as department stores and specialist retailers) performed better than the grocery sector in terms of growth - a yoy increase of 6.3%. Home and garden specialist retailers constituted the top performer, advancing at a rate of 7.0% yoy in 201376. The broadband Internet penetration rate in Thailand stood at 14.6% in 2013. This is relatively low compared to other ASEAN countries such as Singapore (88.1%) and Malaysia (61.1%)77. According to Euromonitor International, the rate is expected to increase to 37.6% by 203078. The total value of Internet sales in Thailand amounted to US$0.8 billion (27.3 billion baht) in 2013.

By category, consumer electronics and video game hardware was the most popular, accounting for 33.2% of the total. Internet sales are set to increase to US$1.5 billion (49.9 billion baht) by 2018, with a CAGR of 12.8%79. Thailand is one of the most popular tourist destinations in the world and tourism is a major contributor to economic growth. In 2013, travel and tourism directly contributed 9.0% of the nation’s GDP and supported 6.6% of national employment80. However, tourism, especially for Bangkok, has been adversely affected by the ongoing political turbulence. According to the Ministry of Tourism and Sports of Thailand, international arrivals in the country from January to August 2014 stood at 15,703,373, demonstrating a yoy decrease of 10.7%81.

Political unrest to bottom out? The political unrest since last November82 has resulted in considerable economic losses. GDP growth in 1Q14 dropped below zero, recording a rate of -0.5% yoy83. Domestic consumption slowed and fewer tourists have been travelling to the country, especially to Bangkok. Total retail sales have experienced yoy decreases since September 201384.

Set in the middle of mainland Southeast Asia, Thailand borders the Gulf of Thailand in the east and the Andaman Sea in the west. With a land mass of about 514,000 square kilometres, the country has a population of over 67 million. Thailand Overview Asia Market Update  Issue 2  October 2014  p11 Thailand is the second largest economy in Southeast Asia, behind Indonesia. The country’s GDP stood at US$387.3 billion in 201367, with a real year-on-year (yoy) growth rate of 2.9%, down by 3.6 percentage points when compared to 201268. The decline was largely attributed to a weakened economy brought about by political unrest69 since late 201370.

According to Siam Commercial Bank’s Economic Intelligence Center, the Thai economy will expand by just 1.6% in 2014 due to the country’s prolonged political impasse. With signs of economic recovery seen over the past few months, the economy is set to stabilise and grow at around 3.5%-4% over the next five years (2015-2019)71. The political unrest since late 2013 has taken its toll on the country’s economy and on all industries, including the retail sector. According to the Bank of Thailand, retail sales have experienced sharp negative yoy growth (lower than -5%) since September 201372. Euromonitor International predicts that Thailand’s retail sales will pick up over the coming few years and rise to US$96.8 billion (3,140.2 billion baht) in 2018 from US$80.8 billion (2,644.1 billion baht) in 2013, with a compound annual growth rate (CAGR) of 3.5%73.

Thailand’s grocery retailing accounted for 62.3% of total sales in 2013. In particular, store- based grocery retailers (such as convenience stores, hypermarkets and supermarkets) recorded sales of US$51.8 billion (1,678.8 billion baht), up by 5.6% yoy74. The supermarket sector was the best performer, posting a yoy sales growth rate of 13.5%75.

Non-grocery retailers (such as department stores and specialist retailers) performed better than the grocery sector in terms of growth - a yoy increase of 6.3%. Home and garden specialist retailers constituted the top performer, advancing at a rate of 7.0% yoy in 201376. The broadband Internet penetration rate in Thailand stood at 14.6% in 2013. This is relatively low compared to other ASEAN countries such as Singapore (88.1%) and Malaysia (61.1%)77. According to Euromonitor International, the rate is expected to increase to 37.6% by 203078. The total value of Internet sales in Thailand amounted to US$0.8 billion (27.3 billion baht) in 2013.

By category, consumer electronics and video game hardware was the most popular, accounting for 33.2% of the total. Internet sales are set to increase to US$1.5 billion (49.9 billion baht) by 2018, with a CAGR of 12.8%79. Thailand is one of the most popular tourist destinations in the world and tourism is a major contributor to economic growth. In 2013, travel and tourism directly contributed 9.0% of the nation’s GDP and supported 6.6% of national employment80. However, tourism, especially for Bangkok, has been adversely affected by the ongoing political turbulence. According to the Ministry of Tourism and Sports of Thailand, international arrivals in the country from January to August 2014 stood at 15,703,373, demonstrating a yoy decrease of 10.7%81.

Political unrest to bottom out? The political unrest since last November82 has resulted in considerable economic losses. GDP growth in 1Q14 dropped below zero, recording a rate of -0.5% yoy83. Domestic consumption slowed and fewer tourists have been travelling to the country, especially to Bangkok. Total retail sales have experienced yoy decreases since September 201384.

Set in the middle of mainland Southeast Asia, Thailand borders the Gulf of Thailand in the east and the Andaman Sea in the west. With a land mass of about 514,000 square kilometres, the country has a population of over 67 million.

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