Young Chinese shopping obsession driving investment in online retail

I am in Singapore this week visiting the Singapore-based analysts who compile all the Asia Pac deal data for Zephyr. I love coming to Asia and I would say that my favorite pastime when I am over here is eating. The variety of food available is immense and I always struggle to exercise restraint, which no doubt underpins the reason I struggle to enjoy what seems to be the second most popular Asian pastime: shopping.

Shopping in Singapore is easy, there are many malls, open long hours and catering to all budgets and tastes. But to me it does appear that there is a lot of repetition; every new mall that opens has the same shops as the existing malls and I am convinced that Singapore must have the greatest density of high-end luxury shops within its shopping malls than any other country.

When we compare and contrast the shopping options available in Singapore with say mainland China, the desire to shop is prevalent in both countries, the luxury goods are readily available in both countries, but the sheer size of China can genuinely have an impact upon the ability to go and shop in person. This is simply not the case in Singapore where the total size of the island is 268 sq miles.

That’s why it was fascinating to see in the last couple of weeks the first significant (US$ 1.7m) venture capital investment into a company that is purely an online retailer via the hugely popular Chinese online shopping site Taoboa.com. The investment into Fontbleau was made by investors from the Zhejiang Province, East China and is a clear indication that these astute investors recognise the potential of their new portfolio company. The potential growth opportunities for Fontbleau are huge. Taobao.com, where Fontbleau trades from, is the biggest C2C/B2C platform in China. Its online transactions reached US$ 29b in 2009 alone.

It’s therefore no surprise to see stories circulating that Taobao.com itself is considering an IPO soon too. Demonstrating and I quote from one of our Chinese analysts: “That’s how much the young Chinese love to shop online now.”
 

Filed under: online, retail, Singapore, China