CRI NEWS

Shanghai Retail Sector Faces Reshuffle

2005-1-12 19:34:21 CRIENGLISH.com

Retailers in Shanghai have every reason to be proud of their fast growth over the past decade; but with the door opening to overseas competitors, they have to face a reshuffle within the industry.

Retailers in Shanghai have every reason to be proud of their fast growth over the past decade; but with the door opening to overseas competitors, as part of the WTO rules, they have to face a reshuffle within the industry. At a retailing conference held in Shanghai, domestic retailers pooled their ideas of new development strategies. CRI's Shanghai Correspondent Wang Jing has more.

It's been one month since the retail sector opened its doors to foreign competition.

Gone are limits on the number of stores, and regulations capping the foreigners' stake in local ventures at 65 percent.

Even before the limits were removed, retailer giant Carrefour was well established in Shanghai, where one of its outlets topped the number of customers received in the world.

The lucrative market is inviting more retailers, as Guo Geping, president of the Chinese Chainstore & Franchise Association says.

"Foreign retailers who have accessed the market will speed up their expansion and more are eyeing the Chinese market. After all China has a huge base of customers, and more importantly, people's buying power is developing quickly."

Wal-Mart, the world's largest retailer, has long ago announced plans to spend 18 million US dollars opening three outlets in Shanghai, and its first Shanghai store is expected to open this year.

Shanghai used to be proud of the great number of chain stores scattered at every corner of the city, but with an overcrowded market, the fall in profits has forced many to leave.

Last October, a Hong Kong based retailer which boasts eighty chain stores in Shanghai closed all of them, and only recently, famous chain-store 21century was reported to have encountered financial problems.

In the face of overseas competitors, homegrown players have realized that they have to consolidate their businesses.

The Shanghai Bailian group set a good example.

It merged into Shanghai Lianhua Group and Lianhua Group, the two biggest chain store operators in 2002.

Its sales income reached 30 billion yuan, or about 3.7 billion US dollars, in the first six months of last year, better than Carrefour did.

Wang Zongnan, chairman of the Bailian group says they will go on with the plan of merger and acquisition to highlight their advantages.

And improving management and retail skills are their primary objectives this year.

But even to this new retail giant in China, the encounter with overseas rivals seems to be a little uncomfortable.

To avoid face-to-face competition with the overseas stores, Wang Zongnan says his group is eyeing the market nearby Shanghai.

"The Yangtze river delta has room to develop, apart form the big cities, there are a lot of second and third tier cities and rural areas are yet to be exploited."

Both Wang Zongnan and Guo Geping believe in retailing market, the leading role should be acted by domestic companies, but it takes time before a number of companies will stand out with the capability to compete with overseas players.

Wang Jing, CRI news, Shanghai.

(Photo Source:Baidu)

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