Retailers Eager to Invade Guangdong

Retailing giants are to escalate their competition this year in south China's Guangdong Province, one of the largest retail markets in the country.

"The first things the public will notice will be a soaring number of new stores, frequent mergers and innovative marketing actions," said Sun Xiong, president of Guangdong Chain Association.

Actions taken by foreign retailers indicate they are planning on speeding up their entry or expansion into the prosperous Pearl River Delta in 2001.

After four years of operation in China, Walmart plans a major market expansion and is particularly eyeing Guangzhou, capital of Guangdong Province, whose gross retail volume exceeded 110 billion yuan (US$13.3 billion) in 2000, one-third of the province's total.

Walmart has prepared its campaign carefully, with eight of its 11 Chinese stores in Guangdong, local analysts said, and the company is now familiar with the local rules of the game.

Following the successful entry of Japan's Jusco and Hong Kong's Parknshop, France's Carrefour is reported recently to have made a breakthrough in its negotiations to open a department store in Guangzhou.

The same vigorous market invasion can also be found among the surging non-state-owned and domestic retailing groups such as Shenzhen's Wanjia Department Store, Huarun Supermarkets, IGA and other chain stores.

Sources from Huarun said the company will maintain its growth rate of six new stores per month this year.

"A reshuffling is bound to happen in the coming years when the retail market will be completely open to any investors," Sun said.

Traditionally an industry monopolized by state-owned companies in the planned economy, the retailing sector will become a hot battlefield this year when it is expected to be fully opened up.

A pilot area, the Zhuhai Special Economic Zone completed the withdrawal of state capital from the sector in the last week of 2000, by auctioning off or transferring its property rights in state-owned department stores, worth 1.5 billion yuan (US$181 million).

"The withdrawal of the state presence, as well as the huge and lucrative market, is enough to touch off a world war among retailers," said Chen Sui, an official from the Guangdong Commercial Commission.

He predicted that without local protectionism, fair and free competition will bring fundamental changes to the industry, particularly in business operation and management.

The industry will be transformed from a labour-intensive sector into a capital- and technology-intensive one.

Modern marketing and distributing concepts and technologies will replace the traditional planned economy and bring more convenience to the customers, Chen said.

In 2000, Guangdong hit a record of 410 billion yuan (US$49.4 billion) in gross retail volume, six times more than 10 years ago.

The figure accounts for 11 percent of the national figure, making the province one of the largest consumer markets in China.

(China Daily 02/01/2001)

In This Series

Half of World Top 500 Branch Out in Guangdong

China to Remain the Most Competitive Investment Market



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