www.pwc.com2012 Outlook for the Retail and Consumer Products Sector in Asia2012 Outlook for the Retail and Consumer Products Sector in Asia1ForewordCarrie Yu China the figure is 100% for United Colors of Benetton (Italy and international) and 90-95% for Levis (US)19.Several other global retailers with operations in India have released media statements that they plan to increase the level of products and accessories currently sourced from the country.Figure 8: Clothing: Market demand growth (% real change pa) Territory20082009201020112012201320142015 Asia and Australasia1.81.94.84.85.14.64.54.4 China3.211.06.27.98.48.18.88.3 Hong Kong2.7-1.45.85.44.43.12.42.0 India0.77.58.29.58.78.98.28.2 Japan-1.1-2.61.5-0.91.50.90.80.6 Taiwan-1.30.73.63.83.93.23.73.7Source: Economist Intelligence Unit Figures for 2011 onwards are forecasts. Prior years are actuals or estimates.2012 Outlook for the Retail and Consumer Products Sector in Asia17Section 1: Retail Figure 9: Clothing: Market demand (nominal US$ million) Source: Economist Intelligence UnitFigure 10: Clothing: Market demand (nominal US$ million)Territory20082009201020112012201320142015 China31,00534,89339,15646,97755,30665,16877,22690,041 Hong Kong38,89337,91340,34743,39646,16748,62250,62052,655 India5,3345,5686,9958,1009,25310,36811,77013,328 Japan22,76623,98225,55027,17728,07828,25228,42528,034 Taiwan3,4623,2773,5654,1274,4344,6734,9645,268Source: Economist Intelligence Unit Figures for 2011 onwards are forecasts. Prior years are actuals or estimates.100,000120,000140,000160,000180,000200,000220,000240,000260,000280,000Asia and AustralasiaNorth AmericaWestern Europe 2008200920102011201220132014201518PwCSection 1: RetailOnline retailingleading markets, Japan and South Korea, losing share to China and India22. Given the rapid growth of mobile-phone usage in emerging markets, purchases made via mobile phones (m-commerce) could become the leading form of e-commerce in these economies. Over 36% of the Chinese population, or 485 million people, have internet access as of June 2011, accounting for 52% of Asias internet users. With this user base larger than the population of the US China will remain a key market during the forecast period and explosive growth will continue. Chinas e-commerce transactions grew 22% to RMB4.5 trillion (US$682.16 billion) in 2010, according to a study from the China e-Business Research Centre and CNZZ Data Centre. Of this amount, the online business-to- business (B2B) sector accounted for RMB3.8 trillion, a 15.8% year-on-year increase, while the online retail business grew 97.3% year-on-year to RMB513.1 billion (US$77.78 billion). According to Chinese research firm Analysys International, the e-commerce market in China will top RMB6.4 trillion in 201223. Internet penetration in Hong Kong was a high 68.5% in June 2011. This, along with Hong Kongs concentrated population and the high levels of mobile and smartphone penetration, will generate opportunities for online retail. However, given the preference for bargain-hunting and hands-on shopping in Hong Kong, a large volume of shopping will continue to be done offline.Key findings Improvements in telecommunication infrastructure and in payment and security systems, together with the increasing appetite of consumers to shop online, will push online sales growth to an average of 20% a year in Asia. Shopping via mobile phones could become a leading form of e-commerce in the region. China will undergo explosive growth during the forecast period and according to industry analysts, the online retail business grew by 97.3% year-on- year in 2010 to US$77.78billion. In Japan, growth in online sales will outpace sales growth through traditional channels during 2011-2015, partly due to the growing popularity of online shopping among Japans elderly population. The success of .com companies is motivating brick and mortar retailers to go online.Online retailing in Asia will continue to grow strongly on the back of rapid improvements in telecommunications infrastructure and in payment and security systems, and an increased consumer willingness to shop online. Increasing internet access20 in the region will be a big driver. As of June 2011, 24% of Asias population had internet access and that figure is rising quickly. While growing access in currently under-penetrated markets like India will support the rapid growth overall, online retail markets in already well-connected countries such as Japan and Taiwan will continue to expand as well. Online sales are expected to rise by an average of 20% a year in Asia and by as much as 40% annually in some markets such as Japan21. Industry intelligence provider eMarketer forecasts that sales in the business-to-consumer (B2C) e-commerce segment in the Asia Pacific will grow by 23% to reach US$168.7 billion in 2011, with the 2012 Outlook for the Retail and Consumer P