Date
25 November 2017
Chief executive Ramesh Tainwala (left) says China's efforts to rid e-commerce websites of counterfeit goods will help improve online sales.  Photo: EJ Insight
Chief executive Ramesh Tainwala (left) says China's efforts to rid e-commerce websites of counterfeit goods will help improve online sales. Photo: EJ Insight

Samsonite keeps pace with surge in Chinese travelers

Chinese tourists have been fanning out across the globe, snapping up everything from electronics to cosmetics and luxury handbags.

That’s good news for retailers but particularly thrilling for luggage company Samsonite International S.A. (01910.HK).

Samsonite is adding points of sale as fast as these travelers are stuffing their suitcases for their next destination.

It is targeting a fast-growing market in lower-tier cities in mainland China, taking advantage of a burgeoning middle class and an e-commerce boom.

“The new middle class in China is eager to travel. And more and more foreign countries are eager to receive them… that helps our business,” Samsonite chief executive Ramesh Tainwala said.

The company plans to add 150 points of sale to its existing 600 this year, mostly in tier-3 and tier-4 cities.

Outbound Chinese tourists rose 19.5 percent year on year to a record 109 million in 2014, according to the China National Tourism Administration.

Last year, Samsonite sales surged 18.7 percent in China despite a slowing economy, making the country its best-selling market in Asia Pacific.

Samsonite’s airport retail sales were boosted by well-heeled Chinese travelers who account for 10-20 percent of revenue in this business segment.

“In popular destinations like South Korea and Japan, airport retail sales [contributed by Chinese travelers] can be as much as 30 percent to 40 percent,” said Leo Suh, president for Asia Pacific and Middle East.

Ramesh expects revenue contribution from its e-commerce business to increase by a third in the near future from 20 percent compared with less than 5 percent two years ago.

“Both our own e-commerce and third-party e-commerce are starting to become a very important part of our business in China… it is one of the fastest-growing e-commerce markets for us,” he said.

Ramesh endorsed China’s efforts to fight counterfeit products on e-commerce websites, saying it will help improve online sales.

China is Samsonite’s second largest market globally, behind only the United States and ahead of Korea.

Samsonite reported a 5.8 percent increase in net profit to US$186.3 million for the year to December.

Net sales rose 17.3 percent on a constant currency basis to a record US$2.35 billion.

The company, which owns the flagship Samsonite brand and mid-priced American Tourister, plans to ramp up acquisitions in 2015.

Last month, the company acquired Rolling Luggage, giving it a significant retail footprint in key international airports.

Earlier, it snapped up three brands from Lipault, Speck Products and Gregory Mountain Products.

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JH/JP/RA

EJ Insight reporter

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