Myer opens China store, Kogan eats words

Australian retail chain, Myer has opened its online store based in Hong Kong, China, forcing consumer technology entrepreneur Ruslan Kogan to eat his words.

Australian retail chain, Myer, has opened an online store based in Hong Kong, China, forcing consumer technology entrepreneur Ruslan Kogan to eat his words.

Ruslan Kogan

Ruslan Kogan (Ruslan Kogan image by KoganTech, CC2.0)

Myer CEO Bernie Brookes said late last year that the company would open an online store in order to avoid the 10 per cent goods and services tax (GST) on products under $1000.

Kogan was sceptical and said a week later that if Myer opened an online store in China and kept it open for three months, he would post ads on his site directing customers towards it.

Brookes has, however, come good, with going quietly live yesterday, which was quickly jumped on by Gizmodo.

Ruslan Kogan, the outspoken founder of Kogan Technologies, posted a blog shortly after the store's opening, airing his grievances with the way Brookes and Myer had brought it to market.

"Myer is a public company and did not disclose the plan to their shareholders prior to Bernie's announcement to a private group (not via the ASX)," Kogan said, adding that the non-disclosure may result in a contravention of the GST Act.

"It may contravene the 'Anti-avoidance provision' (Division 165) of the GST Act, which states: 'If the dominant purpose or principal effect of a scheme is to give an entity such a benefit, the commissioner may negate the benefit an entity gets from the scheme by declaring how much GST or refund would have been payable, and when it would have been payable, apart from the scheme'," he cited.

In a sign of good faith, however, Kogan attached a link to Myfind in his blog post.

"Nonetheless, we were wrong and are happy to eat humble pie on this one. Here's a link to their store, which [we] are happy to provide (even though it hasn't yet been operational for three months) as promised," he said.

The site is not registered under the Myer banner directly, instead it is held by a company called Myer Sourcing Asia Limited — a site which Myer told the Herald Sun this morning, is intended to act as a low-cost subsidiary, similar to Qantas' relationship with Jetstar.

Speaking at the MediaConnect Kickstart 2011 forum this morning, Kogan said it was great to see Myer moving in the online direction, but said that being an online retailer was based on more than just putting up a site.


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