Investment summary 1
China Food & Beverages 6
China’s food markets are dominated by a few highly profitable players. Its beer market, however, is
fragmented and competitive. Oddly, beer valuations are high.
China Department Stores 10
China’s department store market is fragmented. Few have the execution ability to build nationwide
platforms and target high-end consumers. Parkson, Golden Eagle are two exceptions.
China Footwear 12
Growth in this market has attracted many players but few have built a differentiated product portfolio and
strong local brands. Belle, Li Ning and Anta are three of these emerging local players.
China/HK Retailers 15
This sector is a mixed bag – Esprit is mostly a European retailer that is aiming to build a business in
China while Li & Fung is an outsourcing company that is rapidly gaining market share.
China Internet 17
The rollout of broadband supports internet spending. Companies such as Tencent offer a full range of
internet services, from messaging to social networking and gaming. Baidu is a popular search engine.
India Retail 19
Highly competitive, not least because of a strong informal retail network; differentiation is vital and
examples include Gitanjali Gems and Shoppers Stop which focus on high-end products.
India FMCG 21
Players that have built effective supply chains dominate the market. Mostly, these are global players and
Hindustan Lever is a prime example.
Household and Personal Care 23
Local HPC brands are starting to compete with international players. Examples are Hengan and Vinda in
China, Dabur in India and Amorepacific in Korea.
Food Retailers 25
Profitability varies greatly between formats. International players (Carrefour, Wal-Mart) have entered
China’s main cities, competing with emerging local leaders (Wumart).
Korea Consumer 27
Korea is a mature, consolidated consumer market. Domestic growth is low, so Korean players have
entered foreign markets, such as China and Russia. Execution, however, has been slow and problematic.
Company highlights 30-115
Stock selection framework 116
Economic outlook 118
Frederic Neumann argues that asset price inflation will stimulate consumer spending across Asia.
Disclosure appendix 123
Disclaimer 126