In India, digital gold sellers hope trickle will become a rush

Gold trading in India traditionally peaks around festival and wedding seasons. (Reuters)
Updated 21 March 2018
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In India, digital gold sellers hope trickle will become a rush

BENGALURU: A digital revolution is reshaping India’s $34 billion gold market, with smartphones, e-wallets and flexible investment schemes drawing new buyers into a business dominated by traditional, face-to-face transactions.
Digital payment systems have ballooned in popularity in India since the government scrapped large-value bank notes in 2016.
Among these offerings are applications that enable smartphone users to buy, sell or store gold — even in small amounts — kept in secured vaults operated by MMTC-PAMP India Pvt Ltd, a joint venture between MMTC Ltd, the largest national trading firm, and Swiss gold refiner PAMP.
Although online gold purchases have been growing globally for years, they are a relatively recent phenomenon in India, where jewelry and bars of the precious metal tend to be kept in hand and given as gifts.
“In India, the action is really starting now. The digitization of the economy will certainly lead to digitization of gold,” said Somasundaram PR, managing director of World Gold Council’s (WGC) India operations. “It is poised for significant growth, possibly in the next 12-24 months.”
The WGC estimated total Indian gold demand at 727 tons in 2017, and could be up to 800 tons in 2018. In China, the top consumer, 2017 demand was 953.3 tons.
It is difficult to gauge how many new buyers are entering the market because of online access. The e-wallet operator Paytm said that in the first six months after it began offering digital gold last April, it facilitated about $18.4 million worth of sales — a tiny fraction of the Indian gold market.
With the vast majority of purchases made in the traditional way, demand for physical gold isn’t abating, “especially when physical gold plays an important role at Indian weddings,” said Naeem Aslam, chief market analyst at Think Markets UK Ltd.
Besides convenience, Indian consumers are attracted to competitive pricing and ability to make purchases in tiny increments.
Gold-based financial offerings, including Gold Accumulation Plans (GAPs), allow users to buy and store gold in fractions as small as 0.1 grams — an amount that would be an uneconomical to trade physically because of the associated handling costs.
These accumulation plans, along with gold-backed bonds and websites selling coins and jewelry that can be shipped for free or cheaply within India, are especially appealing to young Indians. In the past, even those with an enduring affinity for gold have needed to wait until they have saved enough to build holdings.
Joe Jacob, a 29-year-old entrepreneur in the southern city of Bengaluru, recently bought 5 rupees (8 cents) worth of digital gold as a “trial investment.”
“Physical gold is a hassle in terms of storage, and I don’t wear gold, but understand it is an asset to hold. Digital gold is better than storing the actual metal at home, worrying about its safety,” he said.
Security experts said that because the gold, guaranteed to physically exist in an MMTC PAMP vault, was insured, there was little risk of fraudulent sales.
And digital wallet providers expect interest to grow.
Paytm leads the crowded e-wallet space in India and announced two new gold gift and savings plans this month after launching its first digital gold product in April 2017. The company, backed by Japan’s SoftBank Group and China’s Alibaba, sources its 24-carat gold from MMTC PAMP.
“There is no ‘season’ for this product; it is running twenty-four seven. Sitting in their offices, homes or wherever they want, they can easily access, buy sell or redeem,” said Gaurav Singh, deputy general manager of marketing at MMTC PAMP.
Gold trading traditionally peaks around festival and wedding seasons, experts say.
But Singh added that because digital gold lowers the minimum price needed to buy gold — from about 3,000 rupees previously, enough to buy roughly 1 gram of gold at current prices — and boosts market transparency via live pricing, there has been a rise in the frequency of gold purchases at other times of the year.
Nitin Misra, senior vice president at Paytm confirmed a similar trend, noting “about 40 percent of sales” happen during the “off-season” for buying gold in India.
He said more than half of the company’s users were repeat customers, and 70 percent were younger than 35. As of December 2017, about 1.4 million of its customers held some gold balance in their e-accounts.
“We have stumbled upon a brand new segment,” he said of younger users buying gold. “What we have done, is not cannibalize the existing market, but grown it.”
The company said last year it planned to sell $200 million worth of gold in the 2017 fiscal year, which ended March 1. But its reported sales in 2017 appeared to be headed far short of that number.
Its rival e-wallet provider PhonePe was upbeat.
“The gold consumption market is expected to grow by 35 percent from 2015 to 2020, and customers are exploring digital options for purchase,” it said in an emailed statement.
For Bangalore-based P Vinoth, a logistics consultant who still prefers buying ornaments and jewelry from retail stores, e-wallets now offer an alternative.
“For long term, I previously invested in exchange-traded funds. Now I am using Paytm gold,” he said.


BMW picks insider Zipse as CEO to catch up with rivals

Oliver Zipse
Updated 19 July 2019
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BMW picks insider Zipse as CEO to catch up with rivals

  • German giant has lost ground to Mercedes-Benz and Tesla as tech steps up

FRANKFURT: BMW has named Oliver Zipse as its new CEO, continuing the German carmaker’s tradition of promoting production chiefs to the top job even as the auto industry expands into new areas such as technology and services.
Hailing Zipse’s “decisive” leadership style, BMW hopes the 55-year-old can help it win back its edge in electric cars and the premium market  from rival Mercedes-Benz.
But some analysts questioned whether Zipse was the right choice with new fields such as software and services like car-sharing becoming increasingly important.
“What is intriguing is the cultural bias to appoint the head of production. It works sometimes but ... being good at building cars is not a defining edge the way it was 20 years ago,” said Jefferies analyst Philippe Houchois.
Current CEO Harald Krueger, and former chiefs Norbert Reithofer, Bernd Pischetsrieder and Joachim Milberg were all former production heads.
Zipse joined BMW as a trainee in 1991 and served as head of brand and product strategies and boss of BMW’s Oxford plant in England before joining the board.
He will become chief executive on Aug. 16, taking over from Krueger who said he would not be available for a second term.
“With Oliver Zipse, a decisive strategic and analytical leader will assume the Chair of the Board of Management of BMW. He will provide fresh momentum in shaping  the future,” said Reithofer.
Zipse helped expand BMW’s efficient production network in Hungary, China and the US, in a move that delivered industry-leading profit margins.
Under Krueger, BMW was overtaken in 2016 by Mercedes-Benz as the best-selling luxury car brand.
It also had an early lead over US  rival Tesla in electric cars, but scaled back ambitions after its i3 model failed to sell large numbers.
Reithofer initially championed Krueger’s low-key consensus-seeking leadership, but pressured him to roll out electric vehicles more aggressively, forcing Krueger to skip the Paris Motor Show in 2016 to reevaluate BMW’s electric strategy.
Krueger’s reluctance to push low-margin electric vehicles led to an exodus of talented electric vehicle experts, including Christian Senger, now Volkswagen’s (VW) board member responsible for software, and Audi’s Markus Duesmann, who is seen as a future CEO of the company.
Both were poached by VW CEO Herbert Diess, a former BMW board member responsible for research who was himself passed over for BMW’s top job in 2015.
VW has since pushed a radical 80 billion euro ($90 billion) electric car mass production strategy, and a sweeping alliance with Ford.

Other skills
“A CEO needs to have an idea for how mobility will evolve in the future. This goes far beyond optimising an existing business,” said Carsten Breitfeld, chief executive of China-based ICONIQ motors, and former BMW engineer. “He needs to build teams, attract talent, and promote a culture oriented along consumer electronics and internet dynamics.”
German manufacturers have dominated the high-performance market for decades, but analysts warn shifts towards sophisticated technology and software is opening the door to new challengers.
“Tesla has a lead of three to four years in areas like software and electronics. There is a risk that the Germans can’t catch up,” UBS analyst Patrick Hummel said.
Germany’s Auto Motor und Sport car magazine, normally quick to champion German manufacturers, this week ran a cover questioning BMW’s future.
“Production expertise is important, but if you want to avoid ending up being a hardware provider for Google or Apple, you need to have the ability to move up the food chain into data and software,” a former BMW board member said.