1. Overview
1.a Economic Outlook
§ In 2001, while much of Asia seemed enmeshed in economic decline, China’s retail sales continued with strong gains. 2001 retail sales rose 10.1% year-on-year over 2000, to RMB 3.76 trillion (GB£ 318 billion).
§ Retail sales in the first two months of 2002 rose 8.5% over the same period last year. January retail sales increased 7.9%. With Chinese New Year falling in February, retail sales during that month climbed 9.1%.
§ Retail sales in urban areas continue to outpace those in rural regions, evidence of foreign and domestic retailers’ strong preference for investing in China’s wealthiest and most populated regions. The National Bureau of Statistics revealed that in 2001 urban retail sales climbed 11.5% year-on-year, while rural sales rose 7.7%.
§ The “Go West” policy claims to be producing results in the retail sector, with sales in the west increasing 11% year-on-year to October 2001, as compared with 10% in the east. This is in part a result of a relaxation of regulations that used to limit retail foreign investment in the west, and is likely to continue as pre-WTO regulations are further liberalised. This boost in consumption has also been attributed to heavy infrastructure investment in the region.
1.b The Retail Sector: A Bird’s Eye View
§ Increasing numbers of Chinese now use supermarkets or hypermarkets to buy food. A 2001 poll conducted by ACNielsen, the world’s largest market research firm, revealed that in a sample of 6,000 decision makers in seven major cities, 87% of surveyed hypermarket shoppers buy food. Among surveyed supermarket shoppers, 85% buy food and 46% buy other items. However, wet markets are still the preferred option for food shopping, with an average of 4.95 weekly visits.
§ Competition among foreign hypermarkets continues to heat up, with leading retailer Wal-Mart preparing to enter Beijing and Shanghai, bringing it into direct competition with Carrefour in these cities.
§ A recent report indicates that while international retailers like Carrefour, Wal-Mart, Makro, and Metro account for 40% of transactions in the grocery sector, they account for no more than 3% of all retail outlets in China.
§ Though China is considered one of the world's largest markets, overseas retailers account for only 2.5% of annual retail sales of RMB 3 trillion (GB£ 254 billion).
§ Multinational retailers procured GB£ 2.06 billion in goods from China last year, constituting 12% of the country’s total commodity exports. The increasing importance of the country to sourcing networks was demonstrated by the fact that major international retailers sent 625 buyers to the recent International Retailer Global Sourcing Fair in Nanjing.
§ However, there is still room for growth, as Chinese goods constituted less than 2% of the total global sales of Fortune 500 retail companies in 2001.
