Medici Opens Home Museum of Art In Qingdao

Qingdao Medici, a distributor of high-end Italian furniture brands, has opened their first Medici Home Museum of Art on Nanjing Road in Qingdao, with RMB120 million in funding from Fengniao Investments. Medici Home Museum of Art is a concept furniture store showcasing a variety of European living environments to display their thirty high-end Italian brands. Medici has also created the MediciInterior Design Studio, providing custom interior design service by veteran Italian designers. Mr. Cui, CEO of Fengniao Investments, stated that over the next fewyears Medici will open Home Museums of Art in five first tier cities.

+CW Analysis:

Three things.

First, we're trying to figure out what the "five first tier cities" are after Beijing, Shanghai, Guangzhou, and Shenzhen. Second, we think Medici will have their expansion work cut out for them, especially considering how Beijing Boloni has already done the exact same thing all across China in over 200 locations, and with Morgan Stanley and the Legend Group as investors. Third, didn't anyone at Midici watch the news this past summer when DaVinci, an expensive Italian furniture brand which is actually from Singapore, was exposed on CCTV for selling furniture that consumers were told was Italian made, but actually made in China? Their furniture was apparently shipped to a bonded zone before being stored in a Shanghai warehouse allowing it to be classified as imported. DiVinci really pooped in the pool on this one, closing down several of their own stores and creating a branding nightmare for all the other Italian furniture brands selling in China.

As 70% of Midici's brands are new to China, and after all the recent bad press, will consumers actually believe Medici's "100% guarantee on the origin of the packing listand customs declaration." We don't think so. And if all that is not enough, DaVinci just recently came out saying how they were blackmailed by the CCTV reporter for over $150,000. Here's a good NPR report on it.

Jinan Woman Learns That Online Crime Doesn't Pay

A Jinan woman was arrested for stealing branded clothing from department stores and selling them online via her Taobao shop. After questioning, police discovered the woman had committed over a hundred acts of shoplifting to stock her online store, with damages totaling an estimated RMB 200,000. Police responded to a call from a local Jinan adidas store reporting a theft of RMB 800 in stock. Police officers then discovered a photo on Taobao closely resembling the stolen merchandise, advertised as "genuine stock." They found that the store in question sold mostly brand-name clothing at half the retail price. Police then purchased an adidas item from the suspected store, and found a mall tag inside. Curiously, the seller's location was given as Qingdao, but the shipping documents showed a Jinan address. Police then tracked down the logistics company and identified the suspect's shipping address. Upon arresting the woman, police discovered over 400 pieces of stolen brand name clothing at her residence. The woman confessed that since 2009, she regularly visited large shopping malls to "stock" her Taobao store.

+CW Analysis:

We're surprised that more of this type of sticky finger activity is not reported. As an avid Taobao user we often wonder about the prices of some of the items and where they came from. Also, what were the Jinan police doing on Taobao? Regardless, kudos to the eagle-eyed police office who spotted the item which led to the arrest.

Better Life Having A Better Year

Better Life Commercial Chain Share Co., recently announced their 2012 expansion strategy, with a plan to open over 40 new hypermarket centers across county-level cities in Hunan. Better Life's Chairman, Wang Tian, stated that the company will focus on increasing county-level market share and introducing e-commerce into smaller towns. "During the Spring Festival spending season, do you know which stores had the best sales? Not Changsha, but the smaller cities such as Yongzhou, Chenzhou, Zhuzhou, Huarong, Yueyang, Shaoyang, and Changde," Wang said.

Better Life currently has stores in 90% of the county-level cities in Hunan province. However, this is clearly not enough, Wang emphasized. For 2012, Better Life has plans to open new centers in Zhangjiajie, Hengyang, Leiyang, and Yichun in Jiangxi Province, with a total retail size of over ​​250,000 sqm. In 2013, new centers will be opened in Chenzhou, Huaihua, and Ganzhou in Jiangxi province.

+CW Analysis:

You may not have heard of Better Life Commercial Chain Share Co., but you probably have one of their DVD players in your living room. Better Life, better known as Bubugao in Chinese, is synonymous with DVD players that will play anything you put in them.

Better Life is certainly doing well. Established in 2003, the group now has a dozen subsidiaries, over 100 supermarkets, and 17 department stores. In 2011, Better Life's hypermarket sales increased 10%, department store sales increased over 20%, and their home appliance sales have reached nearly RMB 1 billion, with group sales topping RMB 13 billion.

They've also recently announced a cooperation with President Chain Store Corporation, who operates over 4,800 7-Elevens in Taiwan, for a hypermarket joint venture in Sichuan. The Taiwanese have proven themselves adept at the end game. In Better Life's circle, just look at RT-Mart and Trustmart. RT-Mart is roaring along after their recently IPO, while Trustmart is two thirds the way of being fully acquired by Wal-Mart. We think this Sichuan venture is something the international players should definitely keep their eyes on.

Nemow - A Chinese Love Story

Nemow (南梦) is a women's leisure brand catering to office women 25-35 years old, which was started by Hu Hong Zhi (胡红智), a Sichuan native who wanted to build a brand with a flair for "neo-romanticism." The story behind Nemow is just that.

Hu graduated from China-West Medical University, and took a teaching position there where he met Ms. Wei, a TCM doctor six years his senior. After a short romance they married and left the university to volunteer together in Tibet. Two years later, the couple decided to move to Hainan where with RMB 150,000 investment from a classmate, they started the Nemow brand. The Hu's small fashion brand launched in 1992, and their business finally began to take off in 1999. Hu felt he needed a professional designer, so began interviewing candidates, and found a young, bright, and talented designer, whom he promptly fell in love. She was twelve years younger than Hu, and things soon got complicated.

Hu divorced his doctor wife/partner, and focused his attentions on his new designer girlfriend. The couple soon married, but Hu had to reconcile his growing business with his ex-wife, Ms. Wei, and his new wife, Ms. Wang. Hu resolved this by giving a 50% share of Nemow to his first wife, and launching another brand for his second wife. After a few years of multi-branding, Hu realized he needed Ms. Wang's help to support the Nemow brand. Hu was struck by her new designs, which introduced a younger, more colorful, European fashion sense to Nemow, which originally was designed by Ms. Wei, and targeting middle aged women. Customers responded well to the new youthful style, and sales were up, so Hu promoted Ms. Wang to head up the design department which was once led by Ms. Wei.

This complicated love triangle has seemingly turned out well for Hu. With it's romantic sensibility and a price point of around RMB 500, Nemow currently has grown to more than 200 stores across China with sales of approximately RMB 200 million annually.

News

HK New World Department Store Announces Yantai Store

Hong Kong New World Department Store recently announced an agreement with Xianglong Wanxiang Plaza in Yantai's Laishan District to open a 55,000 sqm department store and manage an additional 46,000 sqm of shopping mall. The 101,000 sqm project is expected to open in 2014, making it one of New World's largest to date. Total investment is estimated at $250 million. The entire Xianglong Wanxiang Plaza complex will be approximately 1.63 million sqm in size, with a retail area of 350,000 sqm, and a total investment of $1.28 billion.

+CW Analysis:

NWDS is really on a roll. Last year's revenues increased 46.8%. They now have 37 stores under the "New World" and "Ba Li Chun Tian" brands across 17 cities in China, a total GFA of 1.27 million sqm, zero debt, and $540 million in cash. If any mall owners out there are listening - department stores are killing it.

NWDS is smart and serious. They've quickly expanded from 1st and 2nd tier cities to where the action is - lower tier cities. They see what's happening in the LTCs and are making a move to increase market share by adding another 25 self-owned stores by 2016.

A quick revenue analysis shows some interesting things. NWDS tenant's gross sales are up 66.2%, and rental income is up 77.6%. So while the brands are really selling, NWDS is still making another 11% on top of that bump. This is most likely due to their deliberate rebranding and renovation activities. They've brought in newer brands, improved their F&B and entertainment offerings, and focused more attention on female services, all of which keep people in their stores longer. In store traffic is up 8% as a result.

On top of all this, what we find most impressive is what NWDS has done with their loyalty programs. VIP club members have grown 118%. NWDS now has 2.16 million VIP members. These members contributed to an astounding 46% of their sales.

So maybe NWDS is onto something, that the customer is king.

Five-Star Public Toilets For Karamay

The sanitation bureau of Karamay, Xinjiang recently announced that twelve 5-star mobile public toilets are being installed around the city, including Black Oil Hill, and in crowded downtown areas. The 5-star toilets come equipped with a mirror, coat hook, paper towels, ashtray, diaper changing area, exhaust fan, emergency button, and stainless steel sink and countertop. Soothing music will be played while the door is closed, and all lighting, exhaust, and flushing are automated.

According to Karamay sanitation bureau director Ms. Zhang Huixia, "People's happiness is not measured only by food, clothing, and shelter, but also convenience and a sense of dignity."

+CW Analysis:

First, we had to actually look this place up on the map. Sorry, but we haven't done any retail analysis here yet. From what we know, there are around 300k people, and a hill that oozes oil.

Second, we have to marvel at how the fiscal stimulus money from a few years ago has now trickled down to even the sanitation bureau of Karamay. The fact that there's any money left is remarkable let alone that it's being spent on toilets. As any informed corporate or socialist bureaucrat knows, you need to use it or lose it when it comes to your annual budget.

Third, "crowded downtown areas?"

Dongguan Gets Italian Luxury Mattresses

Italian mattress brand Dorelan recently entered the China market, selecting Dongguan for their first store. CEO Cristian Bergamaschi indicated the importance of the China market at a press conference held in the first floor lobby of Xinghe Furniture City.

+CW Analysis:

We had to giggle when we heard this because selling mattresses in a city with the highest concentration of brothels in China is kind of funny. Selling luxury mattresses is even funnier because we have to assume there is also a huge ernai population in Dongguan requiring that suitors provide the best mattresses money can buy for their mistresses.

Entering China is a complicated affair. A brand needs to decide on the right city, the right partners, and fully understand the local market in order to be successful. Many foreign brand entry stories begin in Shanghai or Beijing and result in an unhappy ending. In this particular China entry case, we think Dorelan has chosen the perfect market - a city that appreciates a good mattress, with the high probability of a happy ending.

News

Water Water Everywhere

Legend Holdings Group, along with three major real estate developers, Dalian Wanda, China Asia Standard, and Dalian Yifang, have announced that they will jointly invest RMB 11 billion ($1.7 billion) into China's largest high-end mineral water project. The project will be located in the Changbai mountain region of Jilin province bordering North Korea. The investment is expected to generate over 10 million tons of high quality mineral water per year by the time the project is completed in 2020.

+CW Analysis:

This is an interesting deal. First of all, Legend is the mother company of Lenovo. Their chairman, Liu Chuanzhi, has already said he wants to make investments into food and agriculture, and they've already ventured into liquor distilling in Hunan and Hebei. Imagine Apple coming out and saying they're launching iWater.

If you don't know who Liu is, now's the time. There's been all this talk about the next Steve Jobs coming from China. Liu already owns that story. In 1984, with a RMB200,000 ($31,000) loan, Liu started Legend out of a one room office in Beijing, and turned it into the second largest PC manufacturer in the world. That's pretty cool for a guy who doesn't wear black turtlenecks, but does probably dye his hair black.

Then there's the other guys, or should I say other really rich guys? Wanda's chairman Wang Jianlin last year gave away RMB1.28 billion ($200 million). Asia Standard Group's chairman Lu Zhiqiang is worth an estimated RMB 16 billion ($2.5 billion), and Yifang's Sun Xishuang rounds out the gang with RMB 3.7 billion ($585 million).
This sounds like it's going to be some expensive water. What happened to the glorious days when comrades just carried around an old Nestle coffee jar filled with boiled tap water?

How's this for a killer sales pitch? "Around 70 percent of the rivers have been polluted. And the pollution isn't getting any better. Water sources that haven't been contaminated are very scarce, which are usually located in remote areas," says Liao Lei, the secretary-general of the natural mineral water committee.

Yes, the people need Changbai Mountain Spring Water! But let's look at this a little closer. These investors, three of them major real estate players, are going to set up China's largest mineral water project in an area that already has seven brands selling Changbai Mountain Spring Water: Quanyangquan, Nongfu Spring, Kangshifu, Xinglongquan, Jiyuan, Tianchishui, and Sanjiang Changbaishan.

Will Wanda water taste better?

Keep in mind that a plain old bottle of water costs about RMB 1.50 on the streets of Shanghai while a premium bottled water can cost upwards of RMB 60 in a restaurant.

Sounds like they'll need to create some serious brand image in order to get that luxury margin.

So why are four really rich guys jumping into the water all at once? Well, this past June the high-end mineral water company Tibet 5100 raised $170 million in their HK IPO. That will make you thirsty. Tibet 5100's profits are also up 232% YoY, selling 28,000 tons of water the first half of this year. With growth like this, establishing a brand and building some market share before it's too late sounds like a good idea, especially with companies like Kunlun Mountain Spring Water and Aershan Mineral Water from Inner Mongolia also entering the market.

Currently, the majority of the China premium bottled water market (defined by Euromonitor as having a retail price higher than RMB 5 per 500ml bottle) is still held by Western companies. As of 2010, Groupe Danone, who sells Evian, Volvic, and Badoit, led the market with a 26.9% share, and Nestle S.A., who sells Perrier, San Pelligrino, Vittel, Acqua Panna, and Contrex had a 4.9% share. Tibet 5100 states in their prospectus that they are the market leaders with a 28.5% share, but when you look closely at the fine print you learn that "Sales volume in 2008, 2009 and 2010 includes volume provided to CRE, its largest customer, for free under a buy-one-get-one-free arrangement entered into in 2008. CRE is a logistics company and an enterprise subordinate to and acting as a procurement agent on behalf of the Ministry of Railways (MOR) in purchasing bottled mineral water from Tibet 5100 Spring. The volume of bottled water provided for free to CRE is in turn distributed by CRE to train operators under the MOR, who serve the bottled water to ticketed passengers on high-speed trains, inter-provincial CRH trains and certain other CRH trains. The volume of bottled water delivered to CRE accounted for approximately 90.9%, 89.7% and 89.5% of Tibet 5100 Spring's sales volume in 2008, 2009 and 2010."

Still, regardless of how much water Tibet 5100 actually gave away (89.5%), or how quickly the premium bottled water market has grown since 2005 (21.2%), or what percentage this segment accounts for of the total retail value of the bottled water market (45.3%) - this still sounds like a real estate play. Why?

Back in 2009, a consortium which included the Dalian Wanda, China Asia Standard, and Dalian Yifang agreed to build China's largest tourist investment project, a ski resort in, you guessed it, the Changbai mountains. With an investment of RMB 20 billion, the Changbai International Tourist Resort will have 43 ski runs covering an area of 30 square kilometers, making it the largest ski resort in Asia.

Women Hold Up Half The Sky Except After Divorce

The first lawsuit following the implementation of China's new Marriage Law was announced in Shijiazhuang, Hebei. The new marriage law has changed the way property disputes are handled after a divorce. A disgruntled Mrs. Sun handed a petition to the court asking for a divorce from her estranged husband. Mrs. Sun asked that the court split 50% ownership of their house between them. However, according to the judicial interpretation of the new marriage law announced in August, their house was purchased before the marriage and paid for by their parents, therefore Mrs. Sun is not entitled to any ownership claim on the property.

+CW Analysis:

It's fairly common practice in Chinese marriages that the groom's family provide a house for the bride, and the bride's family buys the home appliances or a car. This gets the newlyweds started with their life. The husband works and the wife raises the family and takes care of the home. The house typically belongs to both of them. If things go south, the wife still has part of the house as leverage.

Now, with the new interpretation of China's marriage laws, a house purchased by parents and registered under their child's name remains the personal property of the child (traditionally the groom) after the child gets married. A house purchased by a mortgage prior to marriage, is considered the personal property of the registered owner, rather than the joint estate of the couple.

This means that after a divorce, the wife, typically not the breadwinner, and therefore typically not the registered owner, has zero rights to the house. Think of the chaos this will create. Property offices across China are filled with wives demanding that they be added to the deed, families are bickering over ownership, and brides are upping the ante for their jump into domestication by demanding cash up front.

We thought that under socialism everyone got a place to live. This new marriage law sure turns that concept upside down.

Brand

I'Happy Celebrates Opening Of 1000th Store

Leisure fashion brand I'Happy (海贝服饰) recently invited Taiwanese singer Wu Pei Ci to commemorate the opening of their 1000th store in Zhengzhou.

I'Happy focuses mainly on female fashion, combining Korean styling with young office chic. Price points range from RMB 150 - 400 and customers are typically in their twenties. The brand has also recently launched a stylish children's line. I'Happy encourages customers to bring home an "extraordinary quality of life, fashion, love, and happiness" with every purchase.

I'Happy is the brainchild of Fang Le Ming, a serial entrepreneur with humble beginnings. Fang comes from a small village in Jiangxi, one of China's poorest provinces, and was orphaned at the age of eight. Attending university wasn't an option for Fang who nonetheless has started two successful businesses - I'Happy, and a high-tech integrated circuit design company called Chipjet which develops and manufactures chips for printers.

+CW Analysis:

This is just another example of the amazing initiative you see in so many Chinese entrepreneurs. It's also a huge wake up call for any brand entering China. Most likely you've never heard of I'Happy, yet they have 1000 shops throughout China. Most likely you don't know who Wu Pei Ci is either (she's not that great of a singer), but she is quite popular. So here's a brand you haven't heard of flying a singer you haven't heard of to a place you haven't heard of. Sounds a bit like that philosophical tree in the forest, but in China there's no time to sit around and think about it.

How is a new Western brand going to compete in a market where there are so many brands already out there? Think about how few Western fashion brands have 1000 stores in China, who they are, how long it took, and what it cost. Then think again about Fang Le Ming and his achievement. As always we're blown away when we look at the scope and size of the China retail market - and all the things we don't know.

News

Move Over Phantom, Chairman Mao Hits The Stage

Chairman Mao's hometown in Hunan province recently announced plans that they will invest RMB 500 million into a world class theater production entitled "China Has Mao Zedong."

The city of Xiangtan plans to promote "red revolution tourism" by depicting the thirty some years of history from 1921, when the Communist Party of China was founded, to 1949, when the New China was established. The production will be held in the Shaoshan Mountain scenic area in cooperation with three companies jointly investing 500 million into the project - the first stage of a bid to build a new town with cultural and historic sites and destinations.

Xiangtan Radio and Television Secretary, Xiong Xing Bao, said that Hollywood film director James Cameron of Titanic and Avatar fame, along with a number of famous Chinese directors will be invited to contribute to the show. The city though is still trying to reach Cameron, and just last month posted a request on weibo.com asking for his contact information.

+CW Analysis:

A bit of a ripple effect going on here with this red revolution theme. There was some global press a few months ago when Bo Xilai had residents in Chongqing gather and sing revolutionary songs. TV and radio broadcast the songs, newspapers printed the lyrics, and people gathered in large groups to sing songs such as Love of the Red Flag and Good Men Should Become Soldiers.

With Mao meets Avatar, it might be a bandwagon effect, but we think that whatever happens, whether Cameron is ever contacted via weibo, whether the show is ever produced, whether 500 million is ever invested, in the end, somehow, this will most likely be a real estate play. Property in Changsha and neighboring Xiangtan is booming, and with the new high speed rail line now linking Guangzhou to Changsha/Xiangtan in a little over two hours, people from Guangzhou can enjoy a nice weekend in a town filled with spicy food, raucous night life, and continue the party in a spacious villa purchased for about RMB 12,000 psm. Oh yes, and catch a showing of Mao meets Avatar too.

But back to Bo. We think Bo is the main character here. He's the brand maker. He certainly understands positioning and how to get his brand message across.

Take this quote for example from a Beijing political analyst Russell Leigh Moses: "Bo's campaign is multidimensional, but its primary objective seems to be trying to redefine local affairs as mass politics. [It] is not about policy as much as it is about a new communist theology that is nostalgic and not like anyone else's."

Replace "affairs" with "style", "politics" with "media", and "policy" with "fashion" and you have a well crafted branding statement that could have been written by any top ad agency for any global fashion brand.

Pass The Popcorn In Linyi

Six-hundred seat Dongfanghong Theater is the only place to watch a movie in Linyi, a southern Shandong town of approximately 1.8 million people. But that's all about to change. Following Linyi's fast paced development, five national theater chains are now under construction. A year from now moviegoers will have more than thirty screens to choose from.

Poly International Studios, Happiness Blue Ocean Studios, Wanda International Cinema, Jinyi Cinema, and Xingmei Theater are all 5-star theaters bringing a new movie going experience to Linyi's audiences.

With movie tickets costing RMB 50-60, many people choose to watch on Tuesdays - 50% discount night. Still, theater revenues have exceeded RMB 1 million.

+CW Analysis:

If you haven't been to the movies recently, you're in for a surprise. The China movie theater business is on fire. China currently has approximately 1,800 cinemas with about 6,200 screens. Compare that to the North American market, which has around 5,400 cinemas with 39,000 screens. Think 100+ new multiplexes being built each year. That equates to 10,000 screens in five years and 15,000 screens in ten years. Every new mall we visit seems to have a movie theater anchor on the top floor.

There's plenty of room for growth here as well which is why cities such as Linyi are building five new theaters. It's not that one billion Chinese suddenly decided to go see a movie, it's more about giving people new options to spend their extra pocket money. If you've got RMB 100 in your pocket and you're on a date in Linyi - where do you go?

This amazing growth has turned the heads of movie executives everywhere. Last year's box office in China grew by 61% making it the third-largest box-office market in the world, behind Japan and the U.S. In dollars that a cool $1.5 billion. These numbers are impressive, but for Hollywood there's still a strict quota on foreign movies. Chinese theaters are required to devote two-thirds of screen time to domestic films, and only 20 foreign films a year can share in domestic box office. Of this, the foreign studios receive about 15% of gross receipts. So even though the market is booming, Hollywood isn't cashing in just yet.

Aokang Shoes Planning IPO to Not Make Shoes

The China Securities Regulatory Commission is examining Aokang Shoes recent IPO application. Aokang, based in Wenzhou, and one of China's largest shoe manufacturers, plans to use the IPO proceeds to purchase prime retail locations in major cities throughout China. According to their analysts, investing in real estate will produce higher returns than investing in the brand.

Aokang is a major leather shoes producer and retailer in China with three production bases, two research centers and over 3,000 retail stores. The brand is estimated to be worth RMB 8 billion.

The IPO issuance is for 81 million new shares, increasing Aokang's total outstanding shares to 401 million.

+CW Analysis:

Looking through the Aokang prospectus, it outlines that Aokang plans to invest RMB 870 million for property. This includes 12 new flagship stores, 38 concept stores, 120 stand alone stores, and 180 shop-in-shops. RMB 96 million will be invested in IT upgrades, and RMB 50 million will go into R&D.

This is a bit like Nike issuing a statement that says, "Dear Investors, We don't really believe in the value of our brand, but we know that if we buy a lot of property, we will make more money."

Let's look at the boardroom logic behind this.

As of the end of 2010, Aokang had a total of 3869 retail shoe shops, with about 10% directly operated, the rest being franchisees. Although two thirds of their revenue comes from the franchisees, the average income of their directly operated stores was RMB 1.2 million per store. With a gross margin of 44%, the average direct store has a profit of RMB 530,000. Franchises on the other hand bring a gross margin of 32%, with an average profit of RMB132,000 per store. Since self operated stores obviously make more money, why not invest in more self operated stores?

So Aokang's thinking goes like this: "Dear Investors, We will focus our resources on the 10% of our sales network that makes up 30% of our revenue, and forget about the 90% that makes all the rest."

News

Zhengzhou Gets Their Caffeine Fix

Starbucks joins the likes of other international retailers such as ZARA, H&M, Uniqlo, C&A, and Muji, with their first store opening at the Zhengzhou 360 Mall scheduled for October. The coffee chain has announced plans to open five more stores in the near future.

+CW Analysis:

It's well known that walking around carrying a paper cup with a round green logo on it is a status symbol for upwardly mobile Chinese in cities like Shanghai and Beijing. Besides being a go-to meeting place, a check out scene, a sleeping area, and a clean bathroom, Starbucks has successfully introduced the Western social habit of waiting in line to order an expensive coffee then sitting around staring at your notebook while watching other people sit around staring at their notebooks.

Starbucks is not the first mover in Zhengzhou. Established chains such as Dio, SBC, and Jin Di as well as several independents have already established a cafe culture. Starbucks enters a lower tier market once there's some existing traction, and ups the game with nicer design, proven SOPs, quality assurance, and working air condition. For this you pay the equivalent of five Chinese breakfasts for a cup of coffee. Is the strategy viable? Yes it is, as long as they maintain strong recruiting and training practices. In most lower tier retail centers, Starbucks is often an anchor tenant. Getting a Starbucks into your center lifts your rent roll a notch or two. It's good for Starbucks, it's good for the center. As long as this relationship continues, Starbucks can continue to roll out the mermaid logo, their signature lattes, and those clean toilets.

What is interesting to note is that tea is slowly taking up more space on the menu. Is this a new strategy to widen the Starbucks offering, or a realization that Chinese are already used to paying for expensive tea?

Prada Opens First Zhejiang Store In Wenzhou

Prada's 14th China flagship store will soon open in Wenzhou's Fortune Shopping Center next to Gucci, Burberry, Cartier, and Zegna. Discriminating shoppers will be treated to a special offering of ten limited edition Prada bags and a RMB 270,000 alligator purse.

+CW Analysis:

But of course. Where else in China would a RMB 270,000 alligator purse actually be sold? Here's a video of a wedding party motorcade in Wenzhou to drive the point home. 10 Bentleys, 8 Rolls Royces, 4 Lamborghinis, and 4 Ferraris. Someone at that wedding needs that purse!

Taiyuan Airport Hits A Record Two Hundred Daily Flights

Taiyuan International Airport reports they have reached a record two hundred flights in one day. On August 10th, 10,934 flyers recently came in and out of Taiyuan, the largest city in Shanxi province with about 4 million residents. Taiyuan serves twenty plus destinations across China and recently celebrated their first international flight - to Incheon, South Korea in May. They are now truly an international airport.

+CW Analysis:

Taiyuan supplies half of China's coal. That's a lot of coal. Last year China consumed about 3.2 billion metric tons of coal. Selling for around $130 per ton, Taiyuan produced the equivalent street value of over US$200 billion in coal.

These figures indicate that rich coal miner's daughter will still have their choice of LV, Coach, or Burberry bags, and dad can pick up a couple Swiss watches with names that even Westerners can't pronounce correctly. The glow in the dark model might be particularly useful since pollution is so bad in Taiyuan you can't tell what time it is.

So what exactly does 200 flights a day mean? For Brits, think Newcastle International over Christmas. For Americans, an average day at Indianapolis International Airport. Neither of these cities can possibly compare to the spending power of a "little" coal mining town in northern China with only four million people. Here are a few other cities you don't hear that much about with the same air traffic as Taiyuan - Hohhot, Fuzhou, Guiyang, and Zhengzhou. Guess which one doesn't have LV yet? Hint: It's the one with "expensive" in it's name.

Brand Of The Month

BBLLUUEE 粉蓝

BBLLUUEE is a local Chinese brand started by former Changsha area VJ and piano teacher, Lee Fei Yue. Lee knew early in his career that he wanted to be involved in fashion, and at thirty-five, with just four years apparel experience, he launched BBLLUUEE, targeting fashion conscious city ladies aged 25-35. In six short years BBLLUUEE has now grown to 560 employees and has over 300 shops across 20 provinces. Lee is BBLLUUEE's general manager as well as chief designer, and has developed his own aesthetic and brand style combining leisure and office wear by blending feminine elements, soft lines, and simple styling. Price points range from RMB400 - 1200 for the Spring/Summer collection, and up to RMB1800 for the Autumn/Winter collection.

Recent Entries

• The Lower Tier Times - Vol 5
• The Lower Tier Times - Vol 4
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