By Sharen Kaur - Published in NST Property on April 27, 2022
sharen@nst.com.my
Country Heights Holdings Bhd (CHHB) is set to transform part of the Mines International Exhibition and Convention Centre (MIECC) in Seri Kembangan to launch a new retail business that will offer customers a seamless shopping experience.
MIECC, Malaysia's premier exhibition venue, has a total built-up area of approximately 1.2 million sq ft and a banquet seating capacity of more than 8,000 people.
The ground floor of the building, which has previously been used for car shows and exhibitions, will be transformed into a large retail space with both an e-commerce platform and offline experiential touchpoints.
The transformation is part of CHHB's plan to build its new retail business using its omnichannel business model via the recently launched JDMines online e-commerce platform.
The group expects to invest more than RM250 million over the next five years to set up large retail spaces and small retail footprints nationwide.
CHHB's entry into the retail business was established on December 28, 2021, when the property development and investment group signed a licensing and collaboration agreement with Beijing Wodong Tianjun Information Technology Co Ltd, a wholly-owned subsidiary of JD.com.
JD.com is a Beijing-based international e-commerce company that has reportedly invested in high-tech and artificial intelligence delivery around the world.
CHHB had set aside RM50 million to build the flagship retail store at the ground floor of MIECC, which spans 150,000 square feet, according to its managing director Datuk Jared Lim.
Lim said it will have a few anchor divisions such as smart living, smart home furnishing, smart home appliances, and consumer products from China that aren't easily available in Malaysia.
He told NST Property that CHHB will expand its retail business by introducing a new type of retail experience to Malaysia using advanced technologies developed by JD.com.
He said that the goal of the collaboration with JD.com is to reinvent the retail experience, both offline and online, by leveraging the firm's experience and technology.
"People are shifting their purchasing habits and going online. We hope to pioneer a new and distinctive shopping experience in Malaysia. Our partnership with JD.com is very strategic. The majority of a company's capital expenditure is usually spent on research and development, programming, and platform development. In this case, JD.com is our technology partner, and they built everything, which we are now localising for Malaysia," he said.
Tan Sri Lee Kim Yew, founder and chairman of CHHB, said that the collaboration between CHHB and JD.com is a marriage between two companies to take the e-commerce business to a whole new level.
"Malaysia must have a good set-up for import and export. The relevant agencies must have more liberal rules and regulations. Trade is very important for Malaysia. We are a trading nation.
"I hope Mines will transform into a major trading hub and also become a platform for new products for Malaysia. I believe that the trading business will become very sizeable. Our tie-up with JD.com is not cheap. We hope that all Malaysian will look at this platform for trading.
"With the joint venture, we hope to set up a business development unit to help Malaysians to develop products to export to China. The products must comply with China standards. We can export a lot of products and fruits like durians, pineapple, papaya, and mangoes to China like what I have been doing in the past," Lee said.
Immense value in omnichannel model
TA Securities believes that introducing the internationally recognised e-commerce brand, JD.com, via an omnichannel model, rather than the more commonly seen online-focused model implemented by peers such as Shopee, Lazada, Zalora, and others, has enormous value.
"Although some may think JDMines is late to the game in Malaysia, we reckon the inclination of consumers wanting to view and touch products before committing to new purchases online, having various options of purchasing based on respective preferences alongside being assured of good after-sales services and warranties would accelerate user growth within JDMines ecosystem.
"In addition, JDMines would be able to bridge Malaysian consumers to some of the well-priced high-quality goods available in China's JD.com through its ecosystem by easing complex warehousing, shipping, and delivery arrangements alongside the complicated process of translating the Chinese language into more familiar languages of Malaysians," the research firm said in a note recently.
In terms of JDMines' funding requirements, TA Securities said it understands that the initial set-up cost will be funded by CHHB via a c.RM20 million shareholder's loan at 10 per cent per annum.
Following that, a series of debt or equity funding would be raised externally at the JDMines level based on respective milestones met, limiting CHHB's overall exposure to the initial loan.
"We estimate CHHB's equity stake in JDMines would be diluted over time to c.40 per cent from the initial stake of 70 per cent. Nonetheless, the expected exponential growth in size and valuation of JDMines would make CHHB's investment in JDMines a worthy investment," it said.
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