Retail Chains Plan China Retailing Strategy
At a recent retailing conference in Shenzhen, Chinese
and western retail chains revealed some of their plans
post-Dec. 11, when all government restrictions on the
retailing sector will be removed. These restrictions are
part of China's commitments for joining the WTO (World
Trade Organization).
Currently, western companies are limited in the number
of retail outlets they can open in one year, but these
will be removed next month. In addition, most had to set
up joint ventures (JVs) with local Chinese companies to
enter the market. Participants at the conference expect
another wave of non-Chinese companies will enter the market
as wholly-owned foreign enterprises (WOFEs) to compete
in the already highly-competitive sector.
While Carrefour, Ikea and other foreign chains already
have a strong presence in China, Chinese companies tend
to have the advantage in local distribution. This has
created strong demand for logistics professionals who
can set up new distribution networks in China's inland
regions, which are somewhat less developed than the coastal
provinces. In the past few months, major non-Chinese retailers
such as WalMart,
have expanded their presence inland. WalMart just opened
a new store in Wuhan in Hubei province.
The participants said that they welcome the new competition,
and expect the sector to quickly begin specializing so
that they can deepen sales. They said that the market
is big, and there is still room for more competitors.
Some networks, in addition to market segmentation, would
add regional segmentation to their strategies, focusing
only on certain regions of China, and building up their
presence in the tier-2 and tier-3 cities.
A few of the major privately-owned Chinese retailers
have also expressed interest in expanding outside China's
borders, and establishing networks in other countries
in southeast and central Asia.
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