The growing popularity of online sales in China is posing mixed challenges for Taiwan’s two major contact lens makers, CIMB Securities Ltd said on Sunday.
Ginko International Co (金可國際), the largest contact lens maker in China, is facing stronger competition as a result of heavy price discounting on the Internet, while St Shine Optical Co (精華光學) might see increasing outsourcing orders from brand-name companies, the Hong Kong-based brokerage said in a research report.
Shares of Ginko increased 1.38 percent to NT$441 yesterday on the over-the-counter market and those of St Shine rose 1.23 percent to NT$659 compared with the GRETAI’s 0.54 percent decline.
CIMB’s latest analysis of statistics compiled by the China E-commerce Research Center shows that China has experienced a fast-growing online retail market for pharmacy and medical products, with sales increasing by a compound annual growth rate of 177 percent from 200 million yuan (US$32.57 million) in 2010 to 4.26 billion yuan last year.
EYEING THE MARKET
As many as one-third of China’s total population is estimated to have vision problems, CIMB said. CIMB expects strong growth in online retail sales for contact lenses in China over the next few years.
In June, JPMorgan Securities Ltd forecast that China’s market might double from the current 3.6 billion yuan in four to five years.
However, the analysis also highlights escalating price competition in the contact lens market, given that branded contact lenses are mostly standardized products.
HOLIDAY HUSTLES
CIMB said some pharmacy retailers tend to offer price cuts of up to 40 percent to attract online traffic, alongside higher discounts during certain special sales seasons like the “Golden Week” holiday next month or the “Singles Day” holiday in November.
Such market structure and retail practices could mean more risks than opportunities to contact lens brands, including Ginko, which operates Formosa Optical (寶島眼鏡) in Taiwan and manufactures Hydron (海昌) brand contact lenses in China, the brokerage said.
“We note that heavy price discounting on the Internet has become the means for attracting online traffic, which we believe has resulted in more irrational price competition, disruption in the existing distribution chain and a potentially higher risk of ‘channel stuffing,’” CIMB Taipei-based analyst Jack Lin wrote.
PRICE WAR
The brokerage’s analysis shows that Ginko is losing its price advantage over international peers due to aggressive discounting.
In China, where it competes with Johnson & Johnson, CIBA Vision and Bausch & Lomb Co, Ginko remains the No. 1 contact lens brand, retaining more than 30 percent market share.
“Based on the product ranking and sales of various retail Web sites, we found that Ginko does not have a leading position in sales or share, which makes us question the sustainability of its overall leading market share going forward,” Lin wrote.
ST SHINE BRIGHT SIDE?
As for St Shine, a maker of Ticon (帝康) brand contact lens products, the company is facing near-term headwinds such as an ongoing inventory digestion from Japanese clients, a lack of new product launches this year and stronger-than-expected competition in Taiwan.
However, it is likely to see a better growth outlook next year, likely benefitting from more orders from Bausch & Lomb given the brand name’s market share gains, CIMB said.
St Shine is the original design manufacturing partner for Bausch & Lomb’s color lenses.
“We also believe increased diversification in contact lens specifications and products will force smaller brand players to outsource, which will likely also benefit St Shine, given its leads in both capacity and expertise,” Lin wrote.
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Dutch brewing company Heineken NV on Friday announced an investment of NT$13.5 billion (US$414.62 million) over the next five years in Taiwan. The first multinational brewing company to operate in Taiwan, Heineken made the statement at a ceremony held at its brewery in Pingtung County. It also outlined its efforts to make the brewery “net zero” by 2030. Heineken has been in the Taiwanese market for 20 years, Heineken Taiwan managing director Jeff Wu (吳建甫) said. With strong support from local consumers, the Dutch brewery decided to transition from sales to manufacturing in the country, Wu said. Heineken assumed majority ownership and management rights
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI