Schmittzehe & Partners | China Business Consultancy

Retail Business Show, London 31 Jan - 1 Feb 2007

Retail Business Show
Organized by Retail Events Ltd.
31 Jan - 1 Feb 2007
Earls Court, London, UK

Schmittzehe & Partners were invited to present an overview of the booming retail sector in China. More details from the organizers are available here.

Presentation Overview:

China: the largest retail market in the world: an overview of the retail scene in China

The largest consumer market in the world and an emerging super-power with a population of 1.3 billion, a GDP growth of 8 -12% per annum expected to remain strong for the foreseeable future, and already the 4th largest economy in the world, China cannot be ignored. Significant changes in the past two to five years has made this an extremely attractive market for retailers. Yet, China continues to appear to many as complex and unpenetrable. The speaker will seek to shed light on the Chinese retail sector, its opportunities, its pitfalls, and the exciting emerging trends driving the phenomenal growth in this sector, including:

Since 11th December 2004, the ban on foreign companies conducting retail and wholesale activities directly has been lifted leading to a significant influx of foreign retailers.

Consumer retail spend is booming despite China having one of the highest savings rate (37-40% vs zero at best in the USA). China's retail sales rose 12.9% last year to 6.7 trillion yuan (US$837 billion).

Now, with a new shift in Beijing's economic policy away from investment growth and toward domestic consumption, retailers both foreign and domestic are looking forwards with great anticipation to capturing some of the $3.5 trillion of savings, with Beijing predicting a conservative 11% growth per year in retail spending and sales of $1.2 trillion by 2010. The stakes are high, the competition is tough and there will be winners and losers.

China is seeing the rapid emergence of an increasingly savvy middle class, keen for foreign products and brands, and forecast to reach 200million by the end of this decade.

Much of this wealth is concentrated in the urban centers, but with over 174 cities with a population over 1 million, and many retailers focusing on a small handful of tier I and II cities, where they are facing often stiff competition, rapidly rising rents, and increasingly long lead times to secure rights to new Greenfield sites, what strategies are emerging?

Many leading retailers have made significant investments in China, often leveraging a