China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>We anticipate that the major swing factor of global e-commerce platform is the global expansion of Chinese e-commerce companies, including Shein, Temu, AliExpress, and TikTok Shop (or ‘STAT’).</li>
<li>The Japanese market is a good example. We upgraded Mercari to BUY because we believe that its second-hand eCommerce model addresses the issue of product supply.</li>
<li>We downgraded Z-Holdings to SELL as its B2C model lacks an advantage in product supply and has already lost market share.</li>
</ul>


We anticipate that the major swing factor of global e-commerce platform is the global expansion of Chinese e-commerce companies, including Shein, Temu, AliExpress, and TikTok Shop (or ‘STAT’).
The Japanese market is a good example. We upgraded Mercari to BUY because we believe that its second-hand eCommerce model addresses the issue of product supply.
We downgraded Z-Holdings to SELL as its B2C model lacks an advantage in product supply and has already lost market share.


[Blue Lotus Japanese E-Commerce Sector Update]: Facing the Competition from Chinese ECommerce STAT

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

<ul>
<li>After the accelerated transition to digital channels during Covid, the fashion sector had a calmer year in 2022 although GTVs still grew around 10%. </li>
<li>Most retailers spent the time investing in more seamless and coherent omnichannel models, and in making the best use of stores and staff in online promotions.</li>
<li>This shift to omnichannel is also leading to changing merchandising, including pre-selling inventory, while others are turning their online stores into malls. </li>
</ul>


After the accelerated transition to digital channels during Covid, the fashion sector had a calmer year in 2022 although GTVs still grew around 10%. 
Most retailers spent the time investing in more seamless and coherent omnichannel models, and in making the best use of stores and staff in online promotions.
This shift to omnichannel is also leading to changing merchandising, including pre-selling inventory, while others are turning their online stores into malls. 


Japan's Fashion E-Commerce Evolving into Dynamic and Seamless Omnichannel, Winners Will Take All

<ul>
<li>After stellar growth in 2020, the e-commerce market grew much slower in 2021 but still outpaced all other channels and set the second highest increase in four years.</li>
<li>At this rate, by 2025 e-commerce should become the largest retail channel, overtaking chain stores.</li>
<li>Japan’s easy access to retail stores means shops aren’t about to disappear anytime soon and Japan will become a model for omnichannel retailing with stores still playing a key role.</li>
</ul>


After stellar growth in 2020, the e-commerce market grew much slower in 2021 but still outpaced all other channels and set the second highest increase in four years.
At this rate, by 2025 e-commerce should become the largest retail channel, overtaking chain stores.
Japan’s easy access to retail stores means shops aren’t about to disappear anytime soon and Japan will become a model for omnichannel retailing with stores still playing a key role.


Japanese E-Commerce Big Review: Still Taking Market Share as Omnichannel Becomes the Norm

<ul>
<li>The apparel/fashion sector made a partial recovery last year but was still down on 2019. 2022 looks a lot brighter with customers now back in stores including even inbound tourists. </li>
<li>The same challenges that the sector faced before Covid remain but there is plenty of room to grow by taking share from the less innovative competitors – i.e. more consolidation.</li>
<li>The sector saw the highest fall in store numbers in its history last year, but there was more investment in creating a compelling omnichannel model suited to Japan’s particular market.</li>
</ul>


The apparel/fashion sector made a partial recovery last year but was still down on 2019. 2022 looks a lot brighter with customers now back in stores including even inbound tourists. 
The same challenges that the sector faced before Covid remain but there is plenty of room to grow by taking share from the less innovative competitors – i.e. more consolidation.
The sector saw the highest fall in store numbers in its history last year, but there was more investment in creating a compelling omnichannel model suited to Japan’s particular market.


Japan's Apparel/Fashion Sector Big Review: Momentum Builds for Full Recovery

Telco/Internet specialist

Kirk Boodry

Redex Research

<ul>
<li>The Japan telecom and Internet companies in our coverage universe held ¥1,253bn in public equities as of Q2(Sep) largely built through capital alliances tied to business collaboration</li>
<li>NTT has the largest portfolio at c. ¥958bn (7% of market cap) followed by KDDI. Toyota (¥354bn) and JTower (three strategic telcos) are the largest and most widely held </li>
<li>The P&amp;L impact of valuation changes in Q2 should be muted. We have included tables for all the companies in our coverage</li>
</ul>


The Japan telecom and Internet companies in our coverage universe held ¥1,253bn in public equities as of Q2(Sep) largely built through capital alliances tied to business collaboration
NTT has the largest portfolio at c. ¥958bn (7% of market cap) followed by KDDI. Toyota (¥354bn) and JTower (three strategic telcos) are the largest and most widely held 
The P&amp;L impact of valuation changes in Q2 should be muted. We have included tables for all the companies in our coverage


Japan Telecoms/Internet - A Quick Look at Public Equity Portfolios

Japan

ZOZO Inc operates internet shopping sites for apparel.  The Company also provides communication services relating to apparel such as blogs by fashion moguls and internet chat room for users.

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ZOZO Inc (3092 JP)

[Blue Lotus Japanese E-Commerce Sector Update]: Facing the Competition from Chinese ECommerce STAT

We anticipate that the major swing factor of global e-commerce platform is the global expansion of Chinese e-commerce companies, including Shein,...

Blue Lotus Research Institute

Japan's Fashion E-Commerce Evolving into Dynamic and Seamless Omnichannel, Winners Will Take All

Japan's fashion e-commerce sector offers major growth stories among both online malls and physical retailers making a successful transition to...

Michael Causton

Japan's Apparel/Fashion Sector Big Review: Momentum Builds for Full Recovery

Japan's fashion and apparel sector was severely hit by the pandemic and the loss of tourism. With wallets full, Japanese are now spending again...

Michael Causton

Japan Telecoms/Internet - A Quick Look at Public Equity Portfolios

Public equity portfolios in our coverage represent 3% of total market cap, driven by capital alliances tied to business collaboration. We thought...

Kirk Boodry

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Blue Lotus Japanese E-Commerce Sector Update]: Facing the Competition from Chinese ECommerce STAT

We anticipate that the major swing factor of global e-commerce platform is the global expansion of Chinese e-commerce companies, including Shein,...

Blue Lotus Research Institute

Japan's Fashion E-Commerce Evolving into Dynamic and Seamless Omnichannel, Winners Will Take All

Japan's fashion e-commerce sector offers major growth stories among both online malls and physical retailers making a successful transition to...

Michael Causton

Japanese E-Commerce Big Review: Still Taking Market Share as Omnichannel Becomes the Norm

Japanese e-commerce continues to take more share from other retail channels but Japan is developing a sophisticated omnichannel model where stores...

Michael Causton

Japan's Apparel/Fashion Sector Big Review: Momentum Builds for Full Recovery

Japan's fashion and apparel sector was severely hit by the pandemic and the loss of tourism. With wallets full, Japanese are now spending again...

Michael Causton

Japan Telecoms/Internet - A Quick Look at Public Equity Portfolios

Public equity portfolios in our coverage represent 3% of total market cap, driven by capital alliances tied to business collaboration. We thought...

Kirk Boodry