e of 5.4 per cent from the same period a year ago.  Revenue increased by double-digit percentages in all of Aeon’s overseas markets (China, Vietnam, Cambodia and Indonesia), and by 2.4 per cent in Japan where it still does the majority of its business. Underlying (‘ordinary’) income growth was 8.6 per cent, but net income (the bottom line) fell 13.6 per cent to 9.1 billion yen (US$60.5 million), due to an impairment expense and a provision for store closings.  Specialty store sales at the company’s domestic malls reported growth of 5.9 per cent. Aeon not only benefited from increased rental income from these specialty tenants but costs fell too, so the profitability of the Japan business rose by a healthy 13.8 per cent. To help achieve this, the company undertook 10 renovations and upped the volume on its promotional and marketing efforts. Notably, echoing the experience of the large department store companies, Aeon has also benefited from a sharp increase in duty-free sales at malls near airports and tourist attractions as inbound international tourist numbers grow. It is currently making strenuous attempts to leverage its mall network more intensively for tourists, particularly those travelling in groups, by arranging for receipt of large buses, offering multilingual floor maps and supporting payment methods commonly used by overseas visitors. Malls promoted as a refuge from the summer heat The average summer temperature in Japan’s summer this year was, along with last year, the equal-hottest on record. Air-conditioned malls have a history of doing well when outside temperatures are more extreme than usual and this was no exception. Aeon promoted its malls as cool oases and promoted activities like mall walking. It also reminded its citizens that winter would soon return with events like snowfalls, ice sculptures and a Shaved Ice Festival.  In doing so, Aeon cemented its role as a community gathering place, and specialty store sales at its malls in August rose by 11.8 per cent, with foot traffic up 6.2 per cent. The company noted in its presentation to investors that the strong sales growth continued through September. China China, Aeon’s largest field of operations outside Japan, also saw strong growth in operating revenue (15.8 per cent). Specialty store sales at Aeon’s 21 existing malls rose by 3.3 per cent but foot traffic was up about four times that, indicating that average transaction values are sinking. Sales from food and beverage and leisure tenancies carried the can. This was confirmed by the company in its commentary on the results: “Time-consumption industries such as food and beverage and amusement remained firm…shopping for merchandise such as apparel and accessories has been in decline.”  Aeon blames this on price consciousness owing to uncertainties around the economy. Although Aeon’s own China revenues grew strongly, income for the six months in China fell due to the closure of some malls last year.  Aeon wants to focus its China expansion on inland areas in Hubei Province and Hunan Province. To that end, it opened a mall in Hangzhou Qiangtang, in Zhejiang Province, in June, and another in Changsha, in Hunan Province, on September 12. During the six months ending August 31, China accounted for 15 per cent of Aeon’s total revenues and 65 per cent of its non-Japan revenues.  Vietnam and Indonesia rise while Cambodia stays stuck In Vietnam, Aeon Mall’s operating revenues grew by 14.5 per cent in the six months, with operating income from the company’s six malls up by more than 20 per cent. Specialty store sales rose by 8.3 per cent. Vietnam has become an important market for Aeon and it has big plans for growth there. On September 21, Aeon opened its first mall in central Vietnam, in the city of Hue, where it hopes that surrounding development and the city’s tourist attractions will bring business to the mall. Cambodia, where Aeon operates three malls in Phnom Penh, business is slower. Operating revenue was up more than 15 per cent in the six months, but income was slightly down and specialty store sales hardly moved from the base period despite marketing efforts to drive foot traffic.  Aeon 1 in downtown Phnom Penh (formal name: Aeon Mall Phnom Penh) is doing okay but the two newer malls in outlying areas of the city (Sen Sok and Meanchey) are struggling with high vacancy and weak foot traffic despite their world-class design.  Both malls are, in a sense, ahead of the market, particularly Meanchey which has been plagued by the slow development of residential and office facilities in its primary trade area and access issues because of road construction.  The company blames the slower-than-expected residential and office development on weaker foreign investment: this is important in Cambodia, where a significant slice of residential uptake and mall spending has been derived from affluent expats. Indonesia is a whole different story While things have been disappointing in Cambodia and so-so in China, Aeon has been going gangbusters in Indonesia, where it operates five malls that yielded an operating revenue gain of 38 per cent and an income loss in the base period was reversed. Customer traffic was up by more than eight percent and leasing efforts bore fruit, lowering the vacancy rate. Overseas remains a focus The company has big ambitions for overseas development but says it is being hamstrung by delays in getting through government red tape, particularly in Vietnam.  It has bought land in Da Nang (central coast) and in two norther provinces and wants to open malls in regional areas where market and infrastructure growth are expected. In this regard it will hopefully learn from the mistakes of its local competitor, Vincom, which has a big vacancy problem in its retail projects outside the CBDs of the two major cities.