"Domestic retailers should carry out trans-regional expansion to confront challenges and grasp opportunities," said Guo Geping, chairman of the China Chainstore & Franchise Association.

Last year, the world's two leading retailers - US-based Wal-Mart and France-based Carrefour - sped up their expansion in the Chinese market.

After a successful introduction to the Beijing market on November 7, Wal-Mart China Co Ltd will open seven more stores in China, said Tom McLaughlin, vice-president of merchandising and marketing for the company.

He said Wal-Mart will move its global purchasing center to Shenzhen.

Also in November, an agreement inked by Carrefour and the State Economic and Trade Commission (SETC) granted business approval to the retailer to put an end to a half-year restriction on its expansion in China.

Carrefour plans to open 10 chain stores every year and organize 10 purchasing centers in China.

"Given their rich operation experiences, global purchasing and sales networks, high-technology logistics systems and high-quality services, the world giants' entry into the Chinese market will inevitably deal a blow to the relatively fragile domestic retailers," Guo said.

Statistics from Guo's association show there are 7,685 chain stores in China, and the total sales volume of the top 100 reached 98.2 billion yuan (US$11.8 billion) last year.

Meanwhile, Shanghai Hualian Group has more than 1,200 chain stores nationwide and ranked No 1 among domestic retailers for three consecutive years. It achieved a sales volume of US$1.3 billion, compared with Wal-Mart's US$191.3 billion.

Faced with robust competitors, Chinese retail enterprises must sharpen their competitive edge via mergers, acquisitions and reorganization.

Shanghai Hualian, whose business has been limited to South China, gently eased into Beijing early last year and pledged to open 6,000 outlets throughout China within five years.

Along with Wal-Mart's entry into Beijing, the city's 13 commercial enterprises co-operated to set up the Beijing Retailing Commerce Group to enhance their competitiveness.

Experts said establishing large retailing groups is one way for domestic retailers to survive the fierce competition after the market is fully opened.

(China Daily January 22, 2002)