China　　Redesigning Area Strategies to Respond to Changes in the Business Environment

Since opening our first mall in Beijing in 2008, AEON MALL has grown to 23 malls in China (as of August 2024) by focusing on four regions: Beijing and Tianjin, Hubei Province, Jiangsu Province, and Guangdong Province. In Wuhan City (Hubei Province) and Suzhou City in (Jiangsu Province), we established area branding by opening malls ahead of the competition, gaining tremendous support from our customers.
In 2024, we plan to open our first mall in Changsha City, Hunan Province, and we will continue to open malls with a focus on inland regions offering high growth potential.
Our strength in China lies in the services and customer consideration. In particular, the convenience provided by our vast flat parking lots has become a major differentiating factor not found at other facilities. Another competitive advantage is the strengths we cultivated in mall operations in Japan.
These strengths include comfort and cleanliness, customer service, relationships with specialty retailer companies, and maintaining a freshness to our malls through systematic tenant replacements and other means.
With the changes in business environment and the experience of the COVID-19 pandemic, we have sensed a shift in needs in the Chinese market from the consumption of goods to the consumption of moments in time. China features a high demand for nighttime dining, and we plan to respond to this demand by developing hybrid mall properties that blend interior and exterior, creating zones that are not restricted by business hours.
With the recent slowdown of the Chinese economy due to the sluggish real estate market and other factors, our malls are experiencing differences in growth potential among regions.
The competitive environment is intensifying, and the shakeout of commercial facilities is becoming more apparent.
We recognize that we are in a phase in this business environment where we must assess trends carefully in each region and redesign our overall strategy for our businesses in China. We will reexamine our allocation of management resources, reflecting a keen awareness of investment efficiency. These investments will include measures to help malls that generate money make even more money and put malls with issues firmly back on a growth trajectory.

　ASEAN　　Building a solid foundation for growth in Vietnam by expanding the areas selected for new malls

In ASEAN, we opened our first mall in Ho Chi Minh City, Vietnam, in 2014. Since then, we opened malls in Cambodia and Indonesia, expanding our business to a total of 14 malls in three countries (as of August 2024). In 2019, we designated Vietnam as our most important area for opening new malls, acknowledging the high growth potential of that market. We have opened malls mainly in the Ho Chi Minh City area in the south and the Hanoi area in the north.
We have few competitors developing large-scale commercial facilities in the suburbs of Vietnamese cities. For this reason, AEON MALL facilities enjoy high awareness, and we create a competitive advantage through area dominance. In fiscal 2024, we plan to open our first mall in Hue City in central Vietnam. Success in outlying cities is a key point of our mall opening strategy in Vietnam, and this approach will lay the foundation for further growth.
Indonesia has suffered the impact of the COVID-19 pandemic over the past several years. However, consumption trends began to recover this fiscal year, and we intend to step up efforts to improve profitability at existing malls. Considering the population and market size, Indonesia represents a promising market. We will continue to open new malls, mainly in the suburbs of Jakarta.
In Cambodia, we plan to solidify area dominance further through a three-mall configuration in Phnom Penh. We will also take on the challenge of creating new businesses, including a logistics business at the logistics center we opened last year in Sihanoukville.
More than 10 years have passed since our foray into the Vietnamese market and ASEAN. The economic and social situation has changed dramatically in that time. We are approaching a new stage of growth, which necessitates reassessing our area strategy to determine where to concentrate management resources. We will continue to expand our focus to the next likely growth regions, conducting market research in countries and regions we have yet to enter—countries and regions of potentially high population and GDP growth in the future.

Emphasizing Human Capital Investments as a Basis for Growth

Our growth strategy for overseas operations still centers on opening more malls in growth areas. To this end, we must allow local employees to play active roles. In addition to stepping up our recruitment and training of local employees, we will seek actively to promote local hires to senior management positions. We also believe that the exchange of diverse values and expertise through personnel exchanges across national boundaries strengthens our organization and serves as a source of further competitiveness. We intend to invest in human capital overseas at a steady pace, ensuring AEON MALL will continue to build a presence in Asia.