Seizing Asia Luxury Boom and E-Commerce Opportunities Riccardo Fuochi – President OMLOG Group

© OM LOG (Asia) Ltd.

AGENDA I. OMLOG BACKGROUND II. THE LUXURY MARKET IN ASIA III. E-COMMERCE IN CHINA IV. SUPPLY CHAIN

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OMLOG Today HONG KONG & CHINA ITALY

• 800 Staff • Over 1,100,000 Sq.ft. w/h

• 1500 Staff • Over 1,800,000 Sq.ft. w/h

USA • 50 Staff • 300,000 Sq.ft. w/h

…Over 180 M units moved per year © OM LOG (Asia) Ltd.

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A complete Logistic service with OMLOG  Om Log Group, is a leading 3PL Worldwide organization. We are managing for our Customers complete logistics service, including International and domestic transportation, warehousing, distribution, inbound and outbound flows management, storage, order processing, returns and a dedicated store opening and Creative division.  Om Log owns the experience, skills, capabilities, know-how, proper human capital, structures and premises resources to carry out such logistics management.  Dimensional growth of contributed to reach organisation which has units and warehouses accessories produced companies.

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the company along the years has a turning point in the enterprise brought to the creation of operative where are managed garments and by the major international fashion

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Offices

New York Los Angeles

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Switzerland Italy

Beijing Shanghai Tokyo Hong Kong

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Luxury Goods Market in Asia • Asia’s becoming a luxury consumption hub and the world’s biggest market driven by China • Asia is the world’s biggest market for luxury goods with average growth of 20% per year • Asian luxury market driven by China where Chinese consumers account for 25% consumption of the world’s luxury

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Luxury Goods Market in Asia • 2.7 M High Net Worth Individuals (HNWIs) in China with personal assets of more than 6 M RMB (US$ 950,000) and 63,500 Ultra-High Net Worth Individuals (UHNWIs) with assets of more than 100 M RMB (US$ 15.8 M) • 73% of individuals purchase luxury goods in Hong Kong

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28% purchase goods in the Mainland due to high prices and high taxes

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Hong Kong first choice destination for HNWIs to buy luxury goods.

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Traditional Retail vs. E-Commerce • TRADITIONAL RETAIL  Real Estate in major Asian and Chinese cities is a real estate war driven by huge demand  High rental costs

 Low availability of top locations • E-COMMERCE  as a complement to the traditional retail channel  Low cost entry level  Opportunity for SME’s to access the Luxury Market © OM LOG (Asia) Ltd.

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Asia E-Commerce Market • Asia is extremely diverse economically and culturally • Mature markets like Hong Kong, Japan and Korea • China and India as huge developing markets

• Different legal challenges for Customs procedures, online invoicing and online payment • Distribution challenges with vast and spreadout countries © OM LOG (Asia) Ltd.

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Asia E-Commerce Market • Challenge today: from 3M wealthy Chinese shoppers to 0.5 Bil. E-commerce users

Internet users

• Rapid growth thanks to 3rd party platforms such as Taobao and 3rd party payment systems, like Alipay

Mobile phones users

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China E-Commerce Market

513 millions: Internet users in China 145 millions: 2011 Online Consumers in China 329 millions: 2015 Online Consumers in China

Theshopping Chinese online 4 times Chinese onlinebuy 4 times more than Europeans !

more than European

70%

Almost 70% of potential consumers search for luxury brands online at least once a month

Average number of purchases per month!

Source: PWC Multichannel Survey December 2011 !

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Supply Chain Impact: Asia - China • Specialized logistics, crucial for luxury e-commerce distribution • Governments implementing importing controls – i.e. China CIQ for apparels (China Inspection and Quarantine Department) • Distribution challenges in a continent with a developing logistics infrastructure • Diversified and complex import/export regulations in the region

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Hong Kong E-Commerce: Hub for Asia • Regional E-commerce Logistics Hub (Macau, Singapore, Taiwan) with easy import and re-export procedures • Customer Service center Hub • High connectivity and IT infrastructure

• Local Government favorable policies and IP protection • Strategic location with excellent port and airport facilities

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E-commerce challenges in China

• To understand the local requirements and the local regulations in regards to customs and DC location • China is a very large country with a very fragmented distribution network of many different express courier providers • Luxury Fashion with very special requirements for customized order and special gift packaging

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What we have done… • Expansion of its presence from Hong Kong to China acquiring 50% of LifeStyle-Logistics Ltd. present in the regions of Shanghai, Beijing and Guangdong where 50% of the wealthiest populations reside

• Continuous investments in its in-house Supply Chain Platform and warehousing infrastructure to supports end to end Logistics • Strategic Alliances with internationally recognized e-commerce portals and gateways

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How we address the challenges… • Defining a Logistics model that will sustain the growth in Asia and complying with the ever changing regulations • Asia-China Fashion Logistics Retail and E-Commerce consultancy and logistics services • Specialized and experienced Fashion Imports and Customs in the region with China CIQ certified operations • Quality Control & Vendor Compliance • Fashion VAS services - China Labeling • In House IT systems WMS, Import customs clearance

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• Fashion Logistics DC’s: HK, Shanghai, Beijing, Shenzhen and more than 40 pull-points in the main Asian Logistics & Maritime Conference China cities with full distribution coverage

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Thank You! Our Mission: “To provide a faster way to reach the retail markets, reducing the inefficiencies throughout the supply chain, focusing on timing and customer’s care; assisting our present and potential customers to broaden their boundaries in China and and Asian markets.” Riccardo Fuochi

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