{"text":[[{"start":11.05,"text":"More than a century after its founding as a dairy farm operator in Hong Kong, DFI Retail Group Holdings Ltd. (D01.SI) has been busy trimming assets across its 10,000-strong retail network in Asia as it tries to make its sprawling empire more efficient. But it was the company’s recent decision to call it quits in Mainland China that caught everyone’s attention, making it the latest foreign retailer to withdraw from the market."}],[{"start":46.34,"text":"The decision wasn’t a huge surprise for company watchers. Between 2023 and 2024 the company closed 92 of its Mainland outlets, leaving only 16 at the start of the year. Even so, the Dec. 17 announcement on the Mannings China WeChat channel still came as a surprise. The post said Mannings would shutter its remaining Mainland operations by mid-January, leaving only an asset-light cross-border business allowing Mainland customers to buy from its Hong Kong stores."}],[{"start":88.37,"text":"The move made Mannings the second of Hong Kong’s “big three” personal care and beauty retailers to call it quits in China, following a similar shuttering of its Mainland brick-and-mortar presence by Sa Sa International (0178.HK), operator of the Sasa chain, in April. That leaves just Watsons as the sole representative of that trio still operating offline stores on the Mainland."}],[{"start":116.92,"text":"Mannings opened its first Mainland Chinese store in Guangzhou in October 2004, and had over 200 stores in the market at its height in 2011. But its expansion slowed after 2015, and its parent said it was reassessing the business as early as 2018. DFI hinted at the China exit in its annual report for 2024, saying declining revenues of Mannings China as more local consumers shopped online would involve the closure of “the majority” of its offline network."}],[{"start":157.02,"text":"DFI’s China retrenchment has not been limited to Mannings. Between 2023 and 2024 it also closed 186 stores in its Mainland supermarket holdings. And in September 2024, it sold its stake in supermarket operator Yonghui (601933.SS) to retailer Miniso (9896.HK, MNSO.US) for 4.5 billion yuan ($640 million). The company has also been disposing of similar underperforming assets in other Asian markets, including Singapore and the Philippines."}],[{"start":203.86,"text":"Hong Kong retail brands, including Mannings, Sasa and Watsons, began entering China in big numbers the mid-2000s, initially stocking international products that were otherwise hard to get. They appealed to local consumers by banking on the glamor associated with Hong Kong in a country just entering hyper-growth mode after its accession to the WTO in 2001."}],[{"start":231.71,"text":"But just a decade later, the Mainland retail universe had already begun to change notably with the rise of social media, online influencers, and e-commerce. To survive, traditional retailers needed both a massive internet presence and scale in their brick-and-mortar store operations to provide consumers with greater choice and convenience."}],[{"start":258.75,"text":"That proved to be a difficult transition for the Hong Kong brands, which were firmly rooted in brick-and-mortar retailing in Hong Kong and were slow to build online presences using internet-based apps and storefronts on different platforms that have become ubiquitous in China."}],[{"start":279.88,"text":"Fading Hong Kong brand"}],[{"start":282.52,"text":"Equally challenging, Hong Kong’s “brand” has been rapidly fading in the eyes of many Chinese consumers, no longer carrying the same cachet it once did. These days, homegrown Chinese retailers have become just as savvy, and are more aggressive in their marketing, using local online influencers on popular social media sites like Douyin and RedNote. The rise of cross-border e-commerce has also taken away the edge Hong Kong stores once had with imported products."}],[{"start":320.21,"text":"More than six months before Mannings formally called it quits in China, Sa Sa said it would close its remaining 18 brick-and-mortar Mainland stores by June 30. It cited intense competition and “a shakedown period” in the beauty retail sector as the main reasons for its problems, as it reported its revenue slipped 9.7% and its profit tumbled 65% in 2024."}],[{"start":353.09999999999997,"text":"Both Mannings and Sa Sa have said they will pivot to cross-border retail focusing on South China’s Guangdong and Hainan provinces, using bonded warehouses and capitalizing on the launch of Hainan’s free trade zone on Dec. 18. Smaller Hong Kong health and beauty retailer, Bonjour Holdings (0653.HK) has also been steadily closing brick-and-mortar stores since its peak in 2018, and on Dec. 11 announced a new cross-border retail joint venture with medical device maker Ziyuanyuan (8223.HK)."}],[{"start":396.65,"text":"Mannings’ 200 Mainland stores at its height, and Sa Sa’s high of 77 in 2022, both trail far behind AS Watson Group, the world’s largest health and beauty group, which opened its first Mainland Watsons store back in April 1989 in Beijing’s Palace Hotel."}],[{"start":417.28999999999996,"text":"Watsons, which began as a Hong Kong pharmacy in 1856 and is owned by CK Hutchison Holdings (0001.HK), had 3,630 stores in Mainland China as of June 30 this year, out of 16,935 worldwide. Like the others, the company is also seeing weakness in its Mainland health and beauty segment, which reported declines of 3% in revenue and 1% in same-store sales during the first half of this year. It closed 145 Mainland stores over the last year."}],[{"start":461.11999999999995,"text":"CK Hutchison’s H&B China division was the only region that reported a decline in its global retail business in the first half of this year. While the division’s overall revenue rose 8% year-on-year to HK$98.8 billion ($12.7 billion), the company said the unit was hit by “adverse” performance of its China operation, which is taking a hit from weak consumer spending amid a prolonged economic slowdown."}],[{"start":493.84999999999997,"text":"CK Hutchison is reportedly considering a $2 billion IPO in Hong Kong for AS Watson in 2026, as the city experiences one of its hottest markets for new listings in years. But weakness in China may be a barrier for the unit. Considering the scale of its China network and the company’s frequent statements about its commitment to its China roots, Watsons is unlikely to pull out of the Mainland market anytime soon."}],[{"start":527.73,"text":"But it faces the same pressures as its Hong Kong peers navigating that retail landscape, as retailers explore new ways of integrating online and offline business with social media and cope with razor-thin margins and weak consumer sentiment."}],[{"start":547.53,"text":"Overall retail sales in China grew only 1.3% from a year earlier in the first 11 months of this year, according to official data. Homegrown Mainland retailers aren’t faring any better than their Hong Kong peers. “It doesn’t matter whether it’s a local, international or Hong Kong retailer, everyone is struggling,” Carrie Yu, the China consumer markets industry leader at PwC, told the South China Morning Post."}],[{"start":592.2499999999999,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1766989301_4188.mp3"}