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  • Monday, 28 Mar 2016

China couriers boosted by e-commerce

Online shopping has delivered a windfall to Chinese couriers. YTO Express, backed by e-commerce behemoth Alibaba, will list in Shanghai at a valuation of US$2.7bil.

YTO is going public by exchanging shares with Dalian Dayang Trands, a clothing maker listed in Shanghai. At the same time, the company is raising 2.3 billion yuan through a private placement, and transferring the clothing business to two of YTO’s existing shareholders, including a fund backed by Alibaba chairman Jack Ma.

The backdoor listing comes as China’s 688 million web users increasingly turn to the likes of Alibaba and to buy goods from electronics to groceries. Chinese couriers dropped off a total of 20.7 billion packages last year, 48% more than in 2014.

YTO expects revenue this year to soar by a further 56% to 18.9 billion yuan.

But costs are rising as wages increase. Most Chinese logistics companies rely on local franchisees to deliver parcels. Last year, YTO paid out 4.2 billion yuan in fees to these independent companies, an increase of 62%.

Pressure to improve efficiency by consolidating may be another reason delivery firms are seeking outside investors: rival STO Express obtained a Shenzhen listing through a US$2.6bil reverse takeover last December. Another logistics company, ZTO Express, is planning a US$1bil IPO in Hong Kong this year.

Impact of GST to decline

The impact of the Goods and Services Tax (GST) is expected to decline as continued income growth and stable job market conditions provide fundamental support to household spending, says Bank Negara Malaysia (BNM).

“It is envisaged that private consumption will grow in the near to medium term, albeit at a more moderate rate compared to the average growth of 7.1% for the past five years,” BNM said in its 2015 Annual Report.

However, the central bank said, the introduction of GST at a standard rate of 6% on April 1, 2015, has led to a temporary change in household spending patterns and the post-GST period has seen a downward adjustment in consumer spending.

“This period of adjustment could be prolonged than earlier anticipated, following additional shocks to the economy due to a more subdued global growth environment, fall in commodity prices and depreciation of the ringgit exchange rate,” it said.

“Household spending moderated in the second quarter of 2015 to 6.4% and reached a trough of 4.1% in the third quarter, before recovering to 4.9% in the fourth quarter of the year,” it said.

Screening Room divides filmmakers

Inception and The Dark Knight director Christopher Nolan has come out against Screening Room, the controversial start-up trying to release movies in the home on the same day they hit theaters.

A divide appears to be forming within the filmmaking community, as Nolan aligns himself with James Cameron and his producing partner Jon Landau in opposition to the proposal.

On the other side, Steven Spielberg, Martin Scorsese, Brian Grazer, Ron Howard, J.J. Abrams and Peter Jackson support the technology and have become stakeholders in the company. They maintain that Screening Room could grow overall revenues for the business by targeting movie watchers who do not regularly see films in a theater.

AMC is believed to be close to a deal with Screening Room, and several studios are studying the proposal.

“It would be hard to express the great importance of exclusive theatrical presentation to our industry more compellingly than Jon Landau and James Cameron did,” Nolan wrote in an email.

Landau had said: “Both Jim and I remain committed to the sanctity of the in-theater experience. For us, from both a creative and financial standpoint, it is essential for movies to be offered exclusively in theaters for their initial release. We don’t understand why the industry would want to provide audiences an incentive to skip the best form to experience the art that we work so hard to create.”

Variety first reported last week that Sean Parker, of Facebook and Napster fame, and his partner Prem Akkaraju, formerly of the electronic music company SFX Entertainment, had developed a plan to offer new releases for US$50 per 48-hour view. Customers would also pay US$150 for access to the technology, which is said to be piracy-proof.

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Business , Central Region , briefs , March 28


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