Following the recent demise of the AdMart and ezVan online home delivery operators and the withdrawal of French supermarket chain Carrefour from China, retail analysts have stressed that sector competition in the country will be no less fierce; good news for Chinese shoppers after the best deal, and a timely warning for any company hoping to make its entrance on a notoriously unwelcoming scene. Owned by Jimmy Lai Chee-ying, the two online ventures AdMart and ezVan lost a phenomenal US$1bn since their conception last June and announced their closure on Monday (11 December). Initially, the launch of these services prompted a price war and led the Big Two in the sector, Wellcome and ParknShop to offer free delivery to online shoppers in Hong Kong. Since their closure, however, many anticipate a rise in prices, although industry representatives are stressing that this is unlikely to be the case.
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So Wai, a spokesman for the Consumer Council commented: “Customers have one choice less, so it’s a loss. The impact on prices is hard to see at the moment, but Wellcome competes with ParknShop, and that should keep prices down.” Yu Pang-chun, chairman of the Retail Management Association, reiterated, “Hong Kong consumers are very price-sensitive. They have no company loyalty. I don’t think there is an unhealthy monopoly of the market. The closure of one chain store won’t affect things too much.” Owner of the Hutchison Whampoa company that controls ParknShop, Li Ka-shing declined to say whether his prices would be hiked, but added that he was still facing competition from Wellcome and CRC, the third largest player in the sector. In the long run, however, market analyst Tommy Ho Kin-tak believes that the sector will be increasingly dominated by ParknShop and Wellcome: “They’ve shown they have the ability to kick out competitors. It will certainly not be very favourable for consumers if the groceries market is dominated by two players. The consumer will pay higher prices eventually.” Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
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