Chinese retailers banned from distributing free plastic bags

And other news in Greater China

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BEIJING--One of the first efforts by China to reduce energy consumption and curb pollution went into effect on June 1, 2008. Starting that Sunday, all Chinese retailers, including supermarkets, department stores and grocery stores, are no longer allowed to provide customers with free plastic shopping bags. China also banned ultra-thin plastic bags, or those thinner than 0.025 mm. The measure outpaces changes taking place in other parts of the world, including developed western markets.

Retailers who break the law, passed by China’s State Council in January 2008, could be fined up to RMB 10,000 ($1,444). Instead, shoppers are encouraged to carry reusable bags. They can also buy bags at prices ranging from 0.2 yuan (0.02 cents) to RMB 10 ($1.44) depending on their size, thickness and material. Retailers are free to set prices for bags, as long as the fee is not less than the wholesale cost of the bag, and some have chosen to create their own branded bags to replace the disposable plastic ones.

China’s top economic planning group, the National Development and Reform Commission (NDRC), said consumers use more than one billion plastic bags a day at supermarkets alone. While a majority of Chinese are in favor of the new law, according to a survey conducted by CIIC-COMR, an online market research company, many question whether it will be effective, since it will be difficult to enforce in small cities and rural areas.

Dior pulls ads featuring Stone after karmic retribution comments
PARIS--Differences of opinion over the role of China in Tibet has affected yet another advertiser. This time, however, it’s not about the upcoming Olympic Games in Beijing this summer.

The French fashion house Christian Dior pulled ads featuring Sharon Stone after the American actress made statements about China perceived as insensitive following the devastating earthquake in Sichuan last month.

While in France for a fundraiser for the American Foundation for AIDS Research during the Cannes Film Festival, Ms. Stone told a reporter, “I'm not happy about the way the Chinese are treating the Tibetans because I don't think anyone should be unkind to anyone else. And the earthquake and all this stuff happened, and then I thought, is that karma? When you're not nice that bad things happen to you?”

Her May 22 remarks implying that karmic retribution may have caused the natural disaster were made just one day after China concluded a three-day mourning period for victims of the earthquake. After the interview was posted on online video sites, Chinese reacted swiftly via online blogs and in official Chinese news media. State-owned Xinhua News Agency called Ms. Stone a “public enemy of all mankind.”

Dior also moved quickly to distance itself from Ms. Stone’s comments in China, where just weeks earlier, its parent company, LVMH Group, nearly faced a boycott in the mainland over the Olympic torch relay. Chinese were angered by unfounded rumors implying Bernard Arnault, the chairman of LVMH, provided financial support to the Dalai Lama. (See “Chinese to boycott French brands,” AdAgeChina, April 16, 2008.)

The actress later apologized for her remarks in a statement issued by Dior’s Chinese headquarters in Shanghai: "Due to my inappropriate words and acts during the interview, I feel deeply sorry and sad about hurting Chinese people. I am willing to take part in the relief work of China's earthquake, and wholly devote myself to helping affected Chinese people."

Even so, the company has removed ads for makeup and skin care products featuring the actress in China and issued an apology of its own. Dior, like all divisions of the French luxury goods group, is eager to avoid offending consumers in the mainland, a major growth market for high-end cosmetics and luxury goods in general.

The company has not indicated when it will reintroduce ads featuring Ms. Stone in China but, observed Greg Paull, principal at marketing consultancy R3 in Beijing, “This just shows the power of a connected China--few messages have cascaded faster across the web than this. A four-second comment will damage her brand equity here for years.”

Coach buys out Chinese distributor and opens Hong Kong flagship store
HONG KONG--Coach has acquired the Coach domestic retail businesses in Hong Kong, Macau and mainland China from its current distributor, Hong Kong-based ImagineX, in a phased buyout deal.

Coach will acquire the assets, including fixtures and inventory, of its current stores in the region in stages over the next year. The deal does not include Coach’s five airport shops, which will continue to be managed by third-party operators.

Gaining control of its distribution in this region will allow the New York-based luxury goods marketer to directly manage growth, particularly with mainland Chinese consumers in their home market as well as two of their top travel destinations, Hong Kong and Macau.

The acquisition coincides with the launch of a 9,400 square foot Coach flagship store in Hong Kong’s Central district on May 30, 2008. The area is frequented by wealthy Hong Kong shoppers as well as the tourists from mainland China who account for most of Hong Kong’s tourism revenues.

Traditionally, the U.S. and Japan have been Coach’s largest markets, but “there's a lot of potential for our brand in China. It's the third pillar in our strategy," said Thibault Villet, Coach's Hong Kong-based president, Greater China.

Company research, he said, indicates that by 2013 the premium handbag and accessories market in Greater China will likely exceed $2.5 billion, more than double its current size of $1.2 billion. Over the next five years, Coach plans to open over 50 new locations, up from 24 today. The company is hoping for annual sales of over $250 million and a market share of at least 10% by 2013, up from about $30 million and 3% today.

World Gold Council promotes K-gold in China
SHANGHAI--The World Gold Council dares Chinese women to question the status quo and celebrate their independent thinking with a new ad campaign for K-gold, or Italian-inspired 18 carat gold. A new campaign pokes fun at those who blindly follow the latest trends in China, the world's fourth largest gold producer and consumer of gold.

Young Chinese consumers are highly trend-conscious. Chinese have traditionally loved gold, as a way to invest their money and as jewelry. Today, however, trends favor less traditional platinum and diamond jewelry. And social expectations are so high that young Chinese are also spending their salary on clothes, watches and other non-jewelry items from luxury retailers.

Created by Bartle Bogle Hegarty, Shanghai, the campaign running in TV, print and outdoor media promotes K-gold as a stylish blend of gold and alloyed metals with executions that counter conventional wisdom with the tagline “My philosophy: No fad makes me more attractive," said Jasmine Huang, account director at BBH, Shanghai. “This campaign is about each woman celebrating her inner voice and trusting her own instincts."
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