WEBVTT - China's Shopping Apps Are Shaking Up Global Retail 0:00:00.520 --> 0:00:05.000 You're listening to Asia Centric from Bloomberg Intelligence, the podcast 0:00:05.040 --> 0:00:08.119 that pulls back the curtain no global business so you 0:00:08.240 --> 0:00:12.440 can invest better across the Pacific rim. I'm Tom Corbett 0:00:12.480 --> 0:00:13.480 in Hong Kong. 0:00:13.680 --> 0:00:17.120 And I'm John Lee. Chinese shopping apps are shaking up 0:00:17.160 --> 0:00:21.880 online retail, with upstarts Sheen and Timu emerging as two 0:00:21.920 --> 0:00:23.720 of this She's Hottest success stories. 0:00:24.200 --> 0:00:28.520 Sheen has powered past into textas Zara and h and 0:00:28.960 --> 0:00:32.960 M to become the world's largest online fashion retailer. 0:00:33.560 --> 0:00:37.840 Meanwhile, Timu has exploded into a viral sensation with an 0:00:37.880 --> 0:00:41.440 app surpasting one hundred million US downloads in just the 0:00:41.479 --> 0:00:42.040 past year. 0:00:42.520 --> 0:00:46.040 Their success has come at breakneck speed, powered by a 0:00:46.120 --> 0:00:52.280 mix of flashy websites, fast fashion bargain buys, savvy social 0:00:52.360 --> 0:00:55.520 media strategies, and relentless marketing. 0:00:56.160 --> 0:00:59.680 Could Timu be the killer app that drives Amazon from dominance? 0:01:00.160 --> 0:01:04.000 What explains she AND's sudden success and can both Chinese 0:01:04.040 --> 0:01:07.000 apps keep winning the hearts of gen Z consumers. 0:01:07.600 --> 0:01:12.720 Let's click by now with Katherine Lim, Asia research director 0:01:12.760 --> 0:01:15.000 at Bloomberg Intelligence. 0:01:14.880 --> 0:01:19.200 And Tatiana Lisitsina, Bloomberg Intelligence e commerce analyst. 0:01:19.760 --> 0:01:24.160 Katherine joins us from Singapore. Tatiana is in Milan, Italy. 0:01:24.360 --> 0:01:28.000 Both of you welcome, Thank you, Tom, Katherine. 0:01:28.200 --> 0:01:31.000 Timu made a huge splash in this year's Super Bowl, 0:01:31.280 --> 0:01:35.360 where it spent almost fourteen million US dollars to feature 0:01:35.400 --> 0:01:38.880 its ad shop like a Billionaire, and sales have gone 0:01:38.959 --> 0:01:44.000 viral ever since. How has Timu become so successful so quickly? 0:01:44.880 --> 0:01:49.320 Right, John, It's all about prizing, free shopping and zero 0:01:49.520 --> 0:01:54.320 cost returns. That's what Timu is offering the US shoppers 0:01:54.440 --> 0:01:58.640 right now, and we did our comparison. They are literally 0:01:59.000 --> 0:02:03.440 giving very attractive offers to the US shoppers to buy 0:02:03.560 --> 0:02:07.840 on their platform and no minimum spend required. So that's 0:02:07.920 --> 0:02:11.400 how you know. Timu has gone from just three percent 0:02:11.880 --> 0:02:15.360 of Amazon's am US at the beginning of the year 0:02:15.800 --> 0:02:17.519 right now to thirty six. 0:02:17.360 --> 0:02:21.880 Percent, Catherine Tachiana. If you look at Timu's website, it 0:02:22.000 --> 0:02:25.919 reads as though it's a Boston based startup. There's very 0:02:26.040 --> 0:02:29.760 little mention of the fact that it's part of PDD 0:02:30.240 --> 0:02:34.880 Holdings and backed by Pinduo Duo, the Chinese retailer. Is 0:02:34.919 --> 0:02:37.519 that an accident or is that part of their strategy? 0:02:38.160 --> 0:02:40.840 Well, I would say that that's part of their strategy. 0:02:41.320 --> 0:02:45.080 And really, I think when you actually go into a 0:02:45.520 --> 0:02:49.560 different market such as US itself, it's better to be 0:02:49.760 --> 0:02:54.320 closer and you know, more direct with the customers without 0:02:54.360 --> 0:02:58.040 emphasizing too much on where your products are coming from, 0:02:58.320 --> 0:03:01.480 because all you want is shoppers to focus on is 0:03:01.520 --> 0:03:05.000 the low price proposition that you're offering and the value 0:03:05.040 --> 0:03:08.240 for money products that they are able to get when 0:03:08.320 --> 0:03:09.200 they shop with you. 0:03:09.960 --> 0:03:13.360 Hey, Catherine, how much cheaper is Team? Then say you 0:03:13.400 --> 0:03:16.560 know comparable websites like maybe Amazon? 0:03:17.200 --> 0:03:20.120 Right, I'll give you a few numbers, John, we just 0:03:20.200 --> 0:03:22.920 did our mets just two days ago. And if you 0:03:23.040 --> 0:03:26.720 buy a pair of flip flops on Amazon's you are 0:03:26.840 --> 0:03:32.320 gonna pay sixty seven percent more on Amazon versus when 0:03:32.360 --> 0:03:36.480 you buy for a similar product on TMU. And guess what, 0:03:37.000 --> 0:03:41.520 tm is not expecting you to actually join any memberships. 0:03:41.880 --> 0:03:45.520 You don't have to be an Amazon Prime members to 0:03:45.840 --> 0:03:52.440 enjoy free deliveries as well as you know the returns guarantees. Now, 0:03:52.640 --> 0:03:56.920 one little upset. If you are in urgent need of 0:03:56.960 --> 0:03:59.960 your flip flops, then you might still want to concern 0:04:00.120 --> 0:04:03.800 Amazon because it will just take you five days versus 0:04:03.920 --> 0:04:06.680 up to twelve days for t MoU slippers to be 0:04:06.760 --> 0:04:09.480 delivered to you. So that's the only downside. 0:04:10.080 --> 0:04:14.800 You know, both of these retailers have fairly substantial AD budgets. 0:04:14.920 --> 0:04:18.320 I've read that Temu has an annual AD budget of 0:04:18.400 --> 0:04:23.039 one point four billion dollars. Obviously there's a lot of 0:04:23.040 --> 0:04:25.520 aggressive marketing. So how do they make money? 0:04:26.080 --> 0:04:28.800 Well, you know, the one point four billion budget that 0:04:28.880 --> 0:04:33.360 they have allocated to expand their reach to more consumers. 0:04:33.680 --> 0:04:35.880 We don't know at this point in time how it's 0:04:35.920 --> 0:04:40.480 being allocated. Part of it will likely go to merchants, 0:04:40.880 --> 0:04:43.279 part of it will go to shoppers in the form 0:04:43.360 --> 0:04:48.920 of coupon's rebates as well as discounts. But key question 0:04:49.160 --> 0:04:53.240 is are they gonna spend everything this year? No, it 0:04:53.320 --> 0:04:56.200 is likely that they will be spending this one point 0:04:56.200 --> 0:05:00.040 four billion in stages and as far as we I 0:05:00.120 --> 0:05:03.600 can see right now from pdd's number, which is the 0:05:03.720 --> 0:05:07.039 parent of Temu, it seems like, you know, the expenses 0:05:07.080 --> 0:05:08.920 are still fairly under control. 0:05:09.520 --> 0:05:11.599 And Catherine, I know you mentioned that there's definitely a 0:05:11.640 --> 0:05:14.560 pricing advantage, but when I go to the Temu site, 0:05:14.920 --> 0:05:17.040 it just seems a lot more fun than say, like 0:05:17.120 --> 0:05:19.560 an Amazon. Like I went in there and there was 0:05:19.600 --> 0:05:21.920 this like wheel that was spinning around and I won 0:05:22.000 --> 0:05:25.560 one hundred dollars coupon if I signed up. Like that's 0:05:25.600 --> 0:05:27.080 pretty successful. 0:05:26.560 --> 0:05:29.960 Right right, Lucky you, John. And you know, watch out 0:05:30.000 --> 0:05:33.560 for more of these online games that will come through 0:05:33.680 --> 0:05:37.600 as we go into Black Friday, because Black Friday Sale 0:05:37.680 --> 0:05:42.640 will be something that you will see TEAMU Shin coming 0:05:42.680 --> 0:05:47.320 in very aggressively to try and secure more spending from 0:05:47.360 --> 0:05:50.839 the US shoppers in particular into the holiday season. 0:05:52.120 --> 0:05:57.760 Tatiana Lisit Sina in Milan, Shean and Temu were relatively 0:05:57.880 --> 0:06:01.200 unknown until maybe a short time ago, a couple of 0:06:01.320 --> 0:06:04.720 years ago. What explains their rapid rise and how did 0:06:04.800 --> 0:06:09.240 they manage to get such traction in global retail so quickly? 0:06:09.279 --> 0:06:10.400 What are your thoughts? 0:06:11.680 --> 0:06:15.440 Thanks Tom Well. I think she In in particular has 0:06:15.480 --> 0:06:20.200 three key competitive advantages. One of course, low prices. They're 0:06:20.279 --> 0:06:23.400 very competitive on that, and this is helped by the 0:06:23.480 --> 0:06:27.040 tax advantages from shipping to the end consumer directly from China. 0:06:27.440 --> 0:06:29.839 The low prices of the goods allow for the parcels 0:06:29.839 --> 0:06:33.200 to be treated as individual imports to avoid import duties 0:06:33.480 --> 0:06:35.680 as long as the value is below a certain threshold. 0:06:35.760 --> 0:06:38.080 And in the EU, for example, it's one hundred and 0:06:38.080 --> 0:06:44.200 fifty euros. So this gives them the price advantage. Number two, 0:06:44.240 --> 0:06:47.880 they have a very wide choice. She In has a 0:06:48.000 --> 0:06:51.760 very short and efficient supply chain with a data driven planning, 0:06:51.880 --> 0:06:56.239 design and demand forecasting function. That means that they produce 0:06:56.520 --> 0:07:00.240 styles in small batches of maybe a couple of hundred items, 0:07:00.800 --> 0:07:05.679 they test that demand for a few weeks for those styles, 0:07:05.680 --> 0:07:09.400 and then they repeat the popular designs in much larger quantities. 0:07:09.640 --> 0:07:12.080 And this allows Shean to have a very large choice 0:07:12.120 --> 0:07:15.120 of items on their websites. That's six hundred to seven 0:07:15.160 --> 0:07:19.120 hundred thousand stock keeping units versus, for example, only thirty 0:07:19.160 --> 0:07:23.080 five thousand at Boohu, and that also allows them to 0:07:23.160 --> 0:07:25.040 launch styles more frequently. 0:07:25.600 --> 0:07:27.600 So do they compete on price or do they compete 0:07:27.640 --> 0:07:28.600 on differentiation? 0:07:28.800 --> 0:07:33.600 Then I would say it's a mixture of everything. Price 0:07:33.680 --> 0:07:38.800 is not their only advantage. The differentiating factor is also 0:07:38.840 --> 0:07:43.640 the amount of choice items that they have and the 0:07:45.560 --> 0:07:49.720 frequency that those items get updated. And then a third 0:07:49.720 --> 0:07:53.200 point is also their strong social media following, particularly among 0:07:53.280 --> 0:07:57.560 young consumers. Agen zs with user engagement on TikTok ahead 0:07:57.560 --> 0:08:00.840 of any other brand, even Nike, and they seem to 0:08:00.920 --> 0:08:03.720 use also social media, not just for marketing but also 0:08:03.720 --> 0:08:05.600 to test what consumers want. 0:08:05.880 --> 0:08:10.800 So yeah, and Tatiana, you know, Shean's rise was accompanied 0:08:10.840 --> 0:08:14.080 also by the rise of TikTok, and you know you 0:08:14.120 --> 0:08:16.240 saw these ads like you know, I guess like a 0:08:16.520 --> 0:08:19.560 Shean hall. Is that what you're talking about? The close 0:08:19.680 --> 0:08:21.760 relationship between both platforms. 0:08:23.080 --> 0:08:25.720 Yeah, I mean, I think Shean is the most popular 0:08:25.720 --> 0:08:29.920 brand on TikTok. It has the hashtag Shean has over 0:08:30.000 --> 0:08:34.640 seventy five billion cumulative use versus only twenty four billion 0:08:34.679 --> 0:08:38.520 for Zara and two billion on eight Parrass for example, 0:08:38.600 --> 0:08:42.920 So that gives you an idea. It's less dominant on Instagram. 0:08:43.400 --> 0:08:47.880 I think it has half the following of Zara, for example. 0:08:48.600 --> 0:08:51.600 But the key difference is that on Instagram the content 0:08:51.640 --> 0:08:55.040 is mainly driven by the brands themselves or by influencers maybe, 0:08:55.160 --> 0:08:58.240 but on TikTok, most of the engagement is usually driven 0:08:58.280 --> 0:09:02.680 by the user, so they're following has grown much faster 0:09:02.920 --> 0:09:07.480 and much more organically. TikTok users are younger, They're similar 0:09:07.520 --> 0:09:11.040 to Sheen customers. Content is more video driven, which I 0:09:11.040 --> 0:09:13.680 guess is sort of a trend now and turns of 0:09:13.880 --> 0:09:18.199 how people interact with content, and what is very popular 0:09:18.200 --> 0:09:21.800 on TikTok are those sheen halls. So you can imagine 0:09:21.800 --> 0:09:25.320 like an influencer buying huge amount of clothes and showing 0:09:25.360 --> 0:09:30.600 them off, reviewing them in videos, and the lower the prices, 0:09:30.640 --> 0:09:33.440 the bigger those holes are. And this is driving also 0:09:33.480 --> 0:09:36.640 a lot of the engagement. I can tell you she 0:09:36.800 --> 0:09:40.600 Hall has, for example, thirteen billion cumulative views on TikTok 0:09:40.720 --> 0:09:44.200 right now versus Bizara Hall with only eight billion. 0:09:45.240 --> 0:09:48.800 Catherine, how big can team become in the US? 0:09:49.160 --> 0:09:53.480 Right That's a good question. Do you know, bearing bearing 0:09:54.160 --> 0:09:57.560 unforeseen circumstances whereby do you know we're they actually heard 0:09:57.600 --> 0:10:04.199 about ongoing lawsuits, discussions about you know, potential violations of 0:10:04.360 --> 0:10:08.360 certain policies, etc. Not to go into the details, John, 0:10:08.760 --> 0:10:12.360 but you know, assuming that they are able to operate 0:10:12.520 --> 0:10:15.840 in an open market like any other players in US, 0:10:16.760 --> 0:10:19.640 I do think that, you know, there is potential for 0:10:19.760 --> 0:10:23.200 them to actually get much bigger than where they are 0:10:23.280 --> 0:10:27.640 right now. Can they double their MAU from where they 0:10:27.679 --> 0:10:30.200 are right now to the equivalent of what we are 0:10:30.240 --> 0:10:34.200 seeing from the Amazon shopping platform? Possible? I wouldn't rule 0:10:34.280 --> 0:10:35.440 that out at all, John. 0:10:35.920 --> 0:10:39.640 And Katherine Linn John's question raises another interesting point. How 0:10:39.720 --> 0:10:44.520 afraid should retailers be in the US of Timu and Chian. 0:10:45.240 --> 0:10:47.800 Well, this is something that you know is applicable for 0:10:48.080 --> 0:10:51.080 a lot of the categories of products that's coming from 0:10:51.120 --> 0:10:55.400 a big manufacturing hub such as China, whereby you know, 0:10:55.480 --> 0:10:59.160 they do actually have cost advantage and once you are 0:10:59.200 --> 0:11:03.920 able to actually the bridge the logistics inefficiencies and be 0:11:04.080 --> 0:11:10.480 in a position to bring goods fastest across different continents itself. Well, 0:11:10.600 --> 0:11:15.640 there is absolutely retailers in US should fear Timu the 0:11:15.679 --> 0:11:19.400 way I see it, because you know, for consumers, particularly 0:11:19.720 --> 0:11:24.120 as we all get more conscious about our spending uncertainties 0:11:24.160 --> 0:11:27.240 and economies out there, they are definitely the force to 0:11:27.280 --> 0:11:29.280 be reckoned with. Into twenty twenty. 0:11:28.960 --> 0:11:32.880 Four, Catherine, Tinu's very different from Sheen when I look 0:11:32.920 --> 0:11:35.200 at you know, she and she doesn't actually you know, 0:11:35.440 --> 0:11:38.600 sell anything in China but just exports, you know, all 0:11:38.640 --> 0:11:42.400 its goods overseas. In the case of Timu, it's owned 0:11:42.400 --> 0:11:46.480 by Pindodo or PDD, and they were very successful in 0:11:46.520 --> 0:11:50.840 disrupting the highly competitive Chinese you know, online retail space. 0:11:51.280 --> 0:11:53.440 Can you talk about some of the strategies of why 0:11:53.480 --> 0:11:56.360 they were so successful and they can they replicate that 0:11:56.520 --> 0:11:56.800 in the. 0:11:56.840 --> 0:12:00.840 US, right, So I guess before we get there, that 0:12:01.080 --> 0:12:05.080 was something that John we had discussed about PDD and TAMU. 0:12:05.480 --> 0:12:07.559 I think the companies would like us to actually keep 0:12:07.600 --> 0:12:11.200 the two platforms apart, but there are definitely lessons to 0:12:11.280 --> 0:12:15.200 be learned from the sister platform whereby social media is 0:12:15.240 --> 0:12:18.920 something that we have actually talked about in China. As 0:12:18.920 --> 0:12:22.920 we all know, social influence is a very big forced 0:12:23.040 --> 0:12:27.120 and makes a very big impact to retailers and brands. 0:12:27.679 --> 0:12:30.640 So being able to actually leaveaged on the one point 0:12:30.679 --> 0:12:34.840 four billion population and get them to think about your 0:12:34.920 --> 0:12:39.520 campaigns and get them to shop and browse through your platforms, 0:12:39.800 --> 0:12:43.280 that is something that social media and if you actually 0:12:43.360 --> 0:12:47.600 leaveage it right, tim can leverage on that in US 0:12:47.640 --> 0:12:51.360 as well. And you know, as Tatiana had earlier shared, 0:12:52.040 --> 0:12:56.199 TikTok is definitely a place to actually look into the 0:12:56.320 --> 0:13:00.680 wing in China, the equivalent of TikTok, you know, in China. 0:13:01.000 --> 0:13:05.120 It's also a place that PDD has worked with some 0:13:05.160 --> 0:13:09.040 of the other brands and manufacturers to actually sell the goods, 0:13:09.240 --> 0:13:13.520 particularly agricultural goods. So it's actually interesting, you know, you 0:13:13.559 --> 0:13:16.160 can sell all kinds of things on social media, and 0:13:16.360 --> 0:13:19.440 really it's up to you to actually create that content 0:13:19.800 --> 0:13:21.000 to bring the shoppers in. 0:13:21.559 --> 0:13:24.560 Do either of you think that TMU could be the 0:13:24.800 --> 0:13:28.400 killer app that drives Amazon from dominance? 0:13:29.559 --> 0:13:32.240 Right, I'll take that first term. I guess you know, 0:13:32.280 --> 0:13:35.640 the killer app and whether it is that super app. 0:13:36.080 --> 0:13:38.400 Lots of jargons out there as to what is the 0:13:38.520 --> 0:13:42.320 next app in the market, but to go actually get 0:13:42.480 --> 0:13:46.040 to where Amazon is, I think what what I would 0:13:46.040 --> 0:13:48.920 be looking out for for TMU will be, you know, 0:13:48.960 --> 0:13:53.319 the sustainability of their low price strategy and whether they 0:13:53.400 --> 0:13:58.240 are constantly able to understand what consumers in the US 0:13:59.000 --> 0:14:02.480 and around the rest of the world excluding China. Once 0:14:03.040 --> 0:14:05.800 now social media in China has been a big force 0:14:05.960 --> 0:14:10.920 in helping PDD back in China understand very quickly what 0:14:11.080 --> 0:14:14.480 is popular and what is the flavor of the month, 0:14:14.640 --> 0:14:17.120 and if they can actually replicate that in the US. 0:14:17.400 --> 0:14:20.040 I do think that, you know, they have you know, 0:14:20.080 --> 0:14:22.040 bulk of the success in their pockets. 0:14:21.640 --> 0:14:26.040 Already and Tatiana for she and it's already the largest 0:14:26.120 --> 0:14:30.320 online fashion retailer, right, so is the growth to super 0:14:30.320 --> 0:14:31.760 far so they sort of slowing down? 0:14:33.440 --> 0:14:39.080 Yes, I think it's certainly Sheen is not immune to 0:14:39.200 --> 0:14:43.920 the well global e commerce slow down overall, and I 0:14:43.960 --> 0:14:47.520 think growth is likely to slow further. But let me 0:14:47.640 --> 0:14:51.400 let me explain. I think I believe Sheen was valued 0:14:51.440 --> 0:14:53.920 at about sixty six billion US dollars in the latest 0:14:53.920 --> 0:14:57.640 founding round, and that's down a third by a third 0:14:57.960 --> 0:15:01.160 from the year before, but the still about ten times 0:15:01.160 --> 0:15:05.000 more than the Zalando, Aesos and Boohoo combined in Europe. 0:15:06.000 --> 0:15:10.080 Such an eye popping valuation obviously demands aggressive growth targets. 0:15:10.760 --> 0:15:13.720 Sales need to be prioritized over profit, and this is 0:15:13.840 --> 0:15:17.000 what she In right now seems to be doing. There 0:15:17.080 --> 0:15:20.240 was a Financial Times report saying that she and is 0:15:20.280 --> 0:15:24.320 targeting to grow it's gross merchandise volumes by forty percent 0:15:24.360 --> 0:15:27.160 each year to twenty twenty five to reach eighty billion 0:15:27.480 --> 0:15:31.200 US dollars that would outpace eBay, and already this target 0:15:31.280 --> 0:15:35.560 looks like a stretch if we look at European retailers, 0:15:35.600 --> 0:15:39.520 all online rivals have shifted from burning cash in pursuit 0:15:39.560 --> 0:15:44.720 of growth to focusing on profit and cash preservation, and 0:15:44.960 --> 0:15:46.840 the reason for that is that over the past years 0:15:46.840 --> 0:15:49.240 there has been a step up in capital spending across 0:15:49.280 --> 0:15:54.000 the industry, building new warehouses, doing automation projects. So e 0:15:54.000 --> 0:15:58.720 commerce became very capital intensive, and as online growth slowed 0:15:59.040 --> 0:16:01.920 in the last two years, the return on capital has collapsed. 0:16:02.160 --> 0:16:04.400 And now on top of that, the cost of capital 0:16:04.680 --> 0:16:08.280 has jumped for some retailers two to three times for 0:16:08.400 --> 0:16:11.600 others such as TG even nine times since the end 0:16:11.600 --> 0:16:14.680 of twenty twenty, and this has added the urgency to 0:16:14.760 --> 0:16:17.960 generate profit. So she And must also be seeing the 0:16:18.040 --> 0:16:20.720 rising cost of capital. It seems to have invested a 0:16:20.760 --> 0:16:24.640 lot of new infrastructure like warehouses in Poland, manufacturing in 0:16:24.640 --> 0:16:27.880 Turkey and Brazil, so there is there has to be 0:16:27.920 --> 0:16:30.320 a moment and likely soon when it has to focus 0:16:30.320 --> 0:16:33.640 on profit as well. If it was already profitable, it 0:16:33.680 --> 0:16:36.880 would probably not need to keep raising funds. So yeah, 0:16:36.920 --> 0:16:39.200 I think she won't be able to avoid those same 0:16:39.240 --> 0:16:43.680 dynamics that are hitting the ass Boho of Europe, et cetera. 0:16:44.320 --> 0:16:47.440 And she And and Timo are really the last online 0:16:47.480 --> 0:16:50.720 retailers that are really still focused on growth. 0:16:51.520 --> 0:16:54.680 Tatani, you just mentioned that she's building up these retail 0:16:54.960 --> 0:16:58.120 warehouses in Europe are the sort of you know, moving 0:16:58.160 --> 0:17:02.040 away from the traditional sort of made to order strategy. 0:17:02.200 --> 0:17:06.120 Yes, that is one of the sort of key shifts 0:17:06.119 --> 0:17:10.200 and their business model that we're observing. It's moving exactly 0:17:10.240 --> 0:17:14.680 away from its China supply chain towards sort of regional 0:17:14.720 --> 0:17:18.480 hubs in order to also reduce the delivery times. Similar 0:17:18.560 --> 0:17:22.960 to TIMO, their delivery times right now about eight to 0:17:23.200 --> 0:17:27.080 twelve maybe business days for standard delivery, depending on the region. 0:17:27.119 --> 0:17:29.360 It can vary a little bit. So yeah, it has 0:17:29.400 --> 0:17:35.359 begun manufacturing elsewhere in the world open distribution centers, et cetera. 0:17:35.920 --> 0:17:38.520 And now this is interesting because the direct from China 0:17:38.600 --> 0:17:41.840 distribution model gave it a competitive advantage and now she 0:17:42.040 --> 0:17:45.159 and will likely have to pay import duties which will 0:17:45.240 --> 0:17:48.200 hurt profitability, and it could also force them to raise prices, 0:17:48.240 --> 0:17:52.840 which is another key advantage and also a Caser mentioned 0:17:52.880 --> 0:17:59.040 the manufacturing concentration with I think over three thousand suppliers 0:17:59.040 --> 0:18:02.640 based in China has been one of the its key advantages. 0:18:03.119 --> 0:18:07.360 Having multiple warehouses around the world requires more stock planning 0:18:07.720 --> 0:18:11.040 means it has to have more inventory at each at 0:18:11.040 --> 0:18:17.000 each stage. And this is a deviation from the short 0:18:17.080 --> 0:18:20.280 lead made to order model, and it raises the question 0:18:20.600 --> 0:18:24.240 to what extent will be added complexity of diversifying and 0:18:24.320 --> 0:18:27.080 expanding its supply chain result in a loss of productivity 0:18:27.600 --> 0:18:29.160 and flexibility. 0:18:30.080 --> 0:18:33.240 Tachiana and Catherine, do you think that there's a kind 0:18:33.280 --> 0:18:38.160 of addictive quality to the online shopping experience at either 0:18:38.440 --> 0:18:42.520 Shean or Timu? And if yes, what is that? Precisely, 0:18:42.640 --> 0:18:46.159 how does that so called entertainment factor play into their 0:18:46.200 --> 0:18:47.399 sales growth strategy? 0:18:48.320 --> 0:18:52.240 The shopping experience that consumers are now looking for goes 0:18:52.359 --> 0:18:55.760 beyond do you know what we typically look for, because 0:18:55.920 --> 0:19:02.119 really it's an integration of social commerce, life streaming. You know, 0:19:02.160 --> 0:19:05.560 it's always something that now pops up when you actually 0:19:05.600 --> 0:19:09.760 browsed for a product. I don't see much of it 0:19:09.960 --> 0:19:13.240 on the Timu website yet, but again, you know, keeps 0:19:13.240 --> 0:19:16.480 your fingers crossed because it's become such a big phenomenal 0:19:16.840 --> 0:19:20.879 having short videos and live streaming to help better explain 0:19:20.960 --> 0:19:24.520 and tell the story behind the product itself. So that 0:19:24.800 --> 0:19:29.280 entertainment content will definitely be the next add on that 0:19:29.359 --> 0:19:31.520 we will probably see on top of what John has 0:19:31.600 --> 0:19:35.040 highlighted about. You know, games that we're now seeing as 0:19:35.119 --> 0:19:38.239 we browsed for products on Timu. You know, on these 0:19:38.240 --> 0:19:39.600 shopping websites. 0:19:39.840 --> 0:19:42.639 What are the some of the downside risks for both companies, 0:19:42.680 --> 0:19:45.960 you know, like the US regulators are looking at TikTok 0:19:46.040 --> 0:19:48.560 and trying to ban that in certain states. Do you 0:19:48.600 --> 0:19:51.959 think some of the regulators could go after potentially Shean 0:19:52.520 --> 0:19:53.160 or Timum. 0:19:53.680 --> 0:19:56.040 I mean for for she and I would say the 0:19:56.119 --> 0:20:04.879 key concern is ESG, So I'd say probably scores worse 0:20:04.920 --> 0:20:07.920 than many other fashion companies, but. 0:20:07.840 --> 0:20:10.520 They're pretty bad anyway, right the fashion companies. 0:20:11.280 --> 0:20:17.720 That's true. Fast Session is certainly not viewed well. However, 0:20:17.960 --> 0:20:21.760 I think the perception on Sene is even worse. So 0:20:21.840 --> 0:20:26.920 we have survey data. According to survey data from WGS 0:20:26.960 --> 0:20:30.800 and Barometer, Chiann has more negative buzz so sort of 0:20:30.800 --> 0:20:34.360 negative press in the UK compared to other online retailers 0:20:34.359 --> 0:20:37.439 and also in Germany compared to the Zealando about you 0:20:37.520 --> 0:20:41.720 for example. But the question is I suppose how much 0:20:41.720 --> 0:20:45.720 consumers or influenced by that. And there's rising awareness obviously 0:20:45.720 --> 0:20:49.640 among consumers around and environmental issues, and there are also 0:20:49.680 --> 0:20:53.880 studies showing that gen z care increasingly about the environment 0:20:53.960 --> 0:20:58.719 and social conscience. Nonetheless, there's also evidence that sustainability is 0:20:58.760 --> 0:21:02.600 not the main factor in fluencing shopping decisions. Price seems 0:21:02.640 --> 0:21:07.520 to be the main motivation, especially in the current in environments, 0:21:08.720 --> 0:21:11.680 and we have seen this also with Booho. In twenty 0:21:11.760 --> 0:21:15.360 twenty they got in the spotlight for modern slavery allegations 0:21:15.400 --> 0:21:18.439 occurring in one of their factories in the UK. It 0:21:18.480 --> 0:21:21.399 was a big scandal and bo Who has addressed that 0:21:21.480 --> 0:21:24.160 later on. But the point is that despite the scandal 0:21:24.359 --> 0:21:28.360 and the initial protests to boycott boo Who, consumers did 0:21:28.440 --> 0:21:31.840 not really stop shopping with them, and similar with Shean, 0:21:32.400 --> 0:21:34.439 it doesn't seem to have lost a lot of this 0:21:34.560 --> 0:21:40.560 image of being exciting and value good value in European 0:21:41.240 --> 0:21:45.560 in European countries at least, and I mean, of course, 0:21:47.720 --> 0:21:52.000 for it from an investor perspective, and ESG concerns are 0:21:52.080 --> 0:21:56.280 likely to be much higher, and there has been investigations 0:21:56.280 --> 0:22:01.359 into Sheine's business practices with alec issues of garment exploitation, 0:22:01.560 --> 0:22:04.760 working hours breached, et cetera, et cetera, and is Shein 0:22:04.840 --> 0:22:10.200 has pledged seventy million US dollars towards improving its supply 0:22:10.640 --> 0:22:14.520 chain conditions over the next five years. So clearly ESG 0:22:14.640 --> 0:22:17.359 remains a difficult issue for the fast session player to tackle, 0:22:17.400 --> 0:22:23.960 and is G scrutiny continues to grow, especially if it's 0:22:24.000 --> 0:22:25.000 going to pursue. 0:22:24.680 --> 0:22:29.440 An IPO so Tatiana. If price is driving all these 0:22:29.600 --> 0:22:35.600 millions of online consumers online buyers, how does customer loyalty 0:22:36.080 --> 0:22:37.560 fit into the bigger picture here? 0:22:38.560 --> 0:22:41.680 Yeah, that's a good point. I think gen Z are 0:22:41.840 --> 0:22:46.560 generally very open to experiment with other with other brands 0:22:46.600 --> 0:22:52.679 and to switch to switch to other brands if something, 0:22:52.800 --> 0:22:56.480 if they don't like something, So if prices increase or 0:22:56.960 --> 0:23:03.200 perhaps also ESG becomes just the more important concern. I 0:23:03.240 --> 0:23:07.320 can definitely see customers switching away from Sheen and growth 0:23:07.320 --> 0:23:12.760 flowing significantly. So I think it's quite a bit concern 0:23:12.840 --> 0:23:17.879 that gen Z is not necessarily a loyal customer. 0:23:17.440 --> 0:23:19.760 Just talking about gen Z. Look, Catherine, do you think 0:23:20.440 --> 0:23:23.720 Americans actually know that teaming was actually owned by a 0:23:23.800 --> 0:23:24.560 Chinese company? 0:23:25.160 --> 0:23:25.360 Right? 0:23:25.480 --> 0:23:29.800 I guess, John, hopefully I've got your question right. Well, 0:23:30.040 --> 0:23:33.560 I don't think they do, because nothing on the website, 0:23:33.840 --> 0:23:36.640 do you know, not anything telling that you know, as 0:23:36.640 --> 0:23:40.480 you click into getting your Purchases, et cetera, actually tells 0:23:40.520 --> 0:23:45.000 you that it is a Chinese company, and you know notwithstanding, 0:23:45.040 --> 0:23:47.639 of course, you know if you actually look at the payments, 0:23:47.760 --> 0:23:52.320 et cetera. It's very international and global friendly. 0:23:52.720 --> 0:23:56.639 And among you as consumers, there might be some skepticism 0:23:56.880 --> 0:24:01.280 about doing business with a Chinese company, So that strikes 0:24:01.320 --> 0:24:03.879 me as perhaps being part of their strategy. Is that 0:24:03.920 --> 0:24:06.119 how they intend to overcome that skepticism. 0:24:06.680 --> 0:24:09.880 Yes, I do think that you know, that is a factor, 0:24:10.359 --> 0:24:12.720 and you know, and I'm sure you know most of 0:24:12.760 --> 0:24:15.840 the audience would also agree that. At the end of 0:24:15.880 --> 0:24:19.080 the day, I think, you know, putting a site some 0:24:19.240 --> 0:24:24.640 of the geopolitics issues that you know comes up every 0:24:24.680 --> 0:24:29.120 now and then. Consumers ultimately, they are after one thing 0:24:29.359 --> 0:24:32.080 and that is, you know, to actually have the best 0:24:32.160 --> 0:24:35.879 value for money products. And do you know if it 0:24:36.000 --> 0:24:40.000 is pencils coming from China that's a fraction or just 0:24:40.040 --> 0:24:42.679 a quarter of the cost of what you get in US. 0:24:43.000 --> 0:24:43.399 Why not? 0:24:43.880 --> 0:24:44.080 Right? 0:24:44.720 --> 0:24:47.639 Okay, I'd love to you know, wrap up with you know, 0:24:47.720 --> 0:24:50.800 a question of personal question, Tatiana Catherine. I have to 0:24:50.840 --> 0:24:55.360 ask have you recently purchased anything from Shean or Timu? 0:24:55.520 --> 0:24:56.800 And if so, what was it? 0:24:57.440 --> 0:24:59.679 Right? John? You know, I'm just gonna jump in on 0:24:59.800 --> 0:25:04.320 that because I'm waiting for Singles Day here in Asia, 0:25:04.359 --> 0:25:07.960 and you know that's gonna come to like hopefully next 0:25:08.000 --> 0:25:10.639