Tom Group sharpens China e-commerce focus after posting wider interim loss

PUBLISHED : Thursday, 04 August, 2016, 8:02pm
UPDATED : Thursday, 04 August, 2016, 10:58pm

Tom Group, the Chinese media conglomerate controlled by Li Ka-shing, plans to ratchet up investments in its rural e-commerce operation after reporting a wider net loss in the first six months of this year.

“Going forward, Tom Group will continue to streamline its cost ... and focus on the continuing growth of Ule in the second half of this year,” chairman Frank John Sixt said in the company’s filing with the Hong Kong stock exchange on Thursday.

Ule, the e-commerce joint venture established by Tom and China Post in 2010, is benefiting from the mainland government’s policies on boosting rural income and stimulating rural consumption, according to Sixt.

Ule’s gross merchandise volume – the total amount of goods ordered through its retail platform – surged 327 per cent in the first half of this year to reach 28.2 billion yuan (HK$32.9 billion), up from 6.6 billion yuan in the same period last year, on the back of its rural e-commerce expansion.

The lower-tier cities and rural areas are now home to 257 million online shoppers
Alan Lau, McKinsey

Backed by China Post’s vast infrastructure, Ule continued to encourage more rural store owners and villagers to shop and trade through its network of online, offline and mobile retail channels.

At the end of June, Ule had more than 190,000 rural outlets across the mainland, offering online-to-offline services.

Online retail sales in lower-tier cities and rural areas of mainland China, the world’s largest e-commerce market, started to overtake those in its largest cities for the first time last year, according to global management consulting firm McKinsey.

“The lower-tier cities and rural areas are now home to 257 million online shoppers,” said Alan Lau, a senior partner at McKinsey in Hong Kong.

According to Tom Group, Ule will continue to rapidly roll out outlets in the rural villages and simultaneously launch more value-added services.

Tom reported a wider interim net loss of HK$129.07 million from HK$77.75 million in the same period last year. The company blamed a weak advertising market and tough regulatory environment on the mainland for losses at its traditional media, television and entertainment businesses.

Total revenue declined 20 per cent to HK$514.57 million, down from HK$641.82 million the previous year.

Tom’s share price was down 0.95 per cent to close at HK$2.08 on Thursday.