Foreign retailers put best foot forward in evolving China market

BEIJING (Xinhua) – Foreign retailers are expanding their presence and navigating their strategies in China as the country aims for wider opening-up as its consumers pursue high-quality products.

Facing the complicated situation of rising risks and challenges both at home and abroad this year, China has maintained sustained and sound economic and social development. A meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee Friday emphasised the importance of deepening reforms in the economic system to achieve a higher level of opening-up.

For foreign retailers and local consumers, this meeting demonstrated China’s commitment in further opening up and creating an increasingly prosperous market while the world economy is mired in sluggish growth.

AN OPEN MARKET

Since the beginning of this year, a slew of international companies including Adidas, Nike and Lego have opened new flagship stores in major Chinese cities, while German supermarket chain ALDI entered the Chinese mainland market and Lawson convenience stores swept across third- and fourth-tier cities, according to China’s Ministry of Commerce.

Two years after debuting in China, German discount supermarket chain ALDI officially launched its first pilot stores in Shanghai on June 7, followed by three more launched in October, which were customised and tailored specifically to meet consumers’ needs.

“Chinese consumers’ enthusiasm and support strengthened our confidence in long-term development here,” said President of ALDI China, Yougang Chen, adding that the newly-launched stores will help expand the range of services.

Walmart China plans to accelerate its expansion by opening more than 500 new stores and “depots” (smaller warehouses) in the next five to seven years and updating 200 existing stores in three years, according to a press release.

Net sales of Walmart China increased 6.3 per cent in the third quarter with its comparable sales up 3.78 per cent, setting a record for the past five years.

Customers shop at United States (US) retail giant Costco Wholesale’s first brick-and-mortar store in east China’s Shanghai. PHOTO: XINHUA

Overseas retail companies’ interest in expanding their market in China has also been fuelled in part by the second China International Import Expo, which sent a strong signal about China’s commitment to wider opening up. LEGO Group CEO Niels B Christiansen told Xinhua that China is seen as the group’s “strategic growth market”, which recorded double-digit growth in consumer sales in the first six months.

The company has partnered with Chinese e-commerce platforms like Alibaba to boost its sales and branding.

It also teamed up with tech giant Tencent to soft-launch the children’s mobile game LEGO Cube.

A SPECIAL MARKET

China’s upgrading consumption structure is gravitating the retail industry toward an emphasis on convenience, diversity and hands-on experience.

China is mobile-first, and mobile payments have fuelled the e-commerce revolution in China. With mobile payment penetration at 86 per cent, the country is virtually cashless, according to a report by research firm Gartner L2.

Adaptation to the rapidly changing market is high on the agenda. ALDI’s new stores in Shanghai feature an integrated online to offline retail experience through the ‘Scan & Go’ function on its WeChat mini-programme and instant delivery services within three kilometres of the stores.

METRO AG, a leading international company in wholesale and food retail, in October agreed to a transaction and strategic partnership with Wumei Technology Group (Wumei), whereby METRO AG will sell its entire stake in METRO China and receive a 20 per cent stake in a resulting joint venture.

SHARED OPPORTUNITIES

China’s retail sales of consumer goods amounted to CNY33.48 trillion (about USD4.76 trillion) in the January-October period, up 8.1 percent year on year. Excluding sales of automobiles, the growth rate reached nine per cent during this period, NBS data showed.

Gartner L2 predicted that China’s total retail sales of 2019 will reach USD5.6 trillion, surpassing America to become the largest retail market in the world.

With China’s opening up expanding, retail enterprises from all over the world have entered the Chinese market and enriched the choices of the Chinese people, raking in great opportunities at the same time, said Bai Ming, an expert with a research institute affiliated to China’s Commerce Ministry.

“The upgrading of Chinese consumption and enterprises from other countries seeking greater development opportunities in China are mutually promoting,” Bai said. “Giving up the huge consumer market would mean self-inflicted damage.” Gartner L2 advised foreign retailers to take China as a digital laboratory to identify what can be transferrable to the West, experiment with emerging social commerce offerings and develop a holistic digital strategy for offline activations.

“Visit China to see the retail developments firsthand,” the research firm said in the report titled The Future of Retail through the Lens of China.