Among the latest is Shanghai Bailian Group, which announced plans in early April to merge its two department store chains, forming the Shanghai Brilliance Group, China's biggest department store chain. The new group will have 14 department stores, three malls and combined sales of US$507 million, with analysts expecting an overseas listing as soon as this year.
It's all part of a mass reorganization as retailers prepare for a further influx of foreign competition eager for a slice of China's US$500 billion a year retail market. In line with WTO membership, China is to remove curbs on foreign investment before December 11, along with restrictions on the number and location of foreign-owned retail
As China prepares to lift restrictions on its retail sector, both domestic and foreign retailers are preparing for intense competition outlets.
With China's retail market the world's fastest growing, numerous foreign department stores and hypermarts have expanded their presence in recent months. France's Carrefour, US-based Wal-Mart, Sweden's Ikea, the UK's B&Q and Tesco and Germany's Metro and OBI, have all exported the pile-it-high philosophy to China.
Eyeing the new opportunities, Wal-Mart plans to hold its annual board meeting in Shenzhen later this year, giving board members a first-hand look at China's retail potential. Meanwhile, Ikea has said it is planning to expand its China-based stores from just two currently to 10 by the end of the decade.
In addition to larger retailers, convenience store chains are also expected to find opportunities for expansion in mainland markets that have yet to experience the boom in outlets among China's larger cities. And even the relatively developed market in Shanghai, which had more than 4,500 convenience stores at the end of 2003 (up from zero in 1996), is expected to see a further increase.
Mitsubishi-owned Lawson already has a toehold in the city with 153 stores, but Japanese rival FamilyMart is likely to challenge Lawson's local dominance. FamilyMart announced plans to open 1,000 stores in Shanghai and neighboring Jiangsu province by 2010.
Meanwhile Seven-Eleven, the largest convenience store operator in Japan, formed a joint venture that opened its first convenience store outlet in Beijing in April, with 50 more planned in the next five years. With all three convenience store chains aiming for a massive but still limited market, customers are likely to benefit from promotions and low prices.
In general, foreign retailers in China enjoy advantages in brand perception, economies of scale and cleanliness – but that doesn't ensure success. According to government statistics, foreign retailers currently account for less than 3.5% of all retail sales in China, which should mean there is plenty of room to grow.
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