Itochu, Citic make e-commerce exclusive for China's wealthy
Website members are assured high-priced offerings are genuine
TOKYO -- Japanese trading house Itochu and China's Citic group will sell Japanese foods and other goods to wealthy Chinese customers through a members-only shopping site, connecting retailers in this country to a lucrative, fast-growing market.
The website begins a trial run Thursday, catering to the Citic group's estimated 10 million wealthy customers and business partners. The state-owned conglomerate includes Citic Securities, China's leading brokerage, as well as the country's seventh-largest bank. Customers at these institutions can already purchase financial products and real estate through a members-only site. Those in good standing will be invited to join the new site as well.
At the outset, the platform will feature about 3,000 products from 200 companies, including name-brand confections, beverages and region-specific seasonings sold in a Fukuoka shopping complex owned by Kyushu Railway and H2O Retailing's Hankyu chain of department stores. By July, the goal is to partner with four or five additional retailers from various regions in Japan and increase the number of offerings to 10,000.
Sales prices will include fees such as customs duties, making offerings around twice as expensive as in Japan. The goal is annual transactions of 30 billion yen ($261 million) in three years, once goods such as clothing and cosmetics are added to the site.
China's upper class is growing rapidly. Households where disposable income topped $35,000 numbered 39.11 million in 2016, according to British research firm Euromonitor International. This is 3.6 times the 2010 count, and could swell to around 90 million households by 2020.
Services such as Alibaba Group Holding's Taobao Marketplace dominate China's e-commerce sphere. While these sites feature Japanese goods, "fakes are mixed in with the real thing," a Chinese woman in her 20s said. Itochu hopes the sense of security a membership system provides will help bring in wealthy customers looking for an alternative.
In 2015, the Japanese trading house and Thai conglomerate Charoen Pokphand Group made a 50-50 joint investment in Hong Kong-listed Citic Ltd., acquiring a 20% stake for 80.3 billion Hong Kong dollars ($10.4 billion at the time). The three partners, together with mobile carrier China Mobile Communications and the municipally backed Shanghai Information Investment, launched an e-commerce joint venture that same year, though disagreements over the future of the project kept it from moving beyond the test-run stage.