Foreign retailers expand in China

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Last updated at: (Beijing Time) Thursday, February 05, 2004

Foreign retailers expand in China

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Foreign retail giants such as Wal-Mart Stores Inc and Carrefour SA are stepping up their expansion in China to explore the less-developed western and northeastern markets in a bid to gain a solid presence before the country's retail market is fully opened next year.

Carrefour SA, Europe's largest retailer which entered the Chinese market in 1995, plans to relocate its headquarters for China's middle and western areas to Chengdu, capital of Sichuan Province, from Shanghai.

"The headquarters director will leave for Chengdu next month," said Xia Ying, a spokeswoman of Carrefour China.

Analysts say the office relocation indicates that Carrefour is trying to consolidate its foothold in China's inner western region, which is expected to be a new battlefield in the coming years amid fiercer competition.

Currently, Carrefour has 10 hypermarkets in China's western region out of its 41 outlets countrywide.

It plans to have a total of 70 such stores by the end of this year.

"Carrefour will increase its investment in China's western and northeastern regions this year with more new stores to be opened," Xia said.

In the northern region, Carrefour has opened five stores in Shenyang, Qingdao, Dalian and Harbin. More stores are expected this year in the area.

Meanwhile, Wal-Mart, the world's largest retailer, is also quickly expanding in China's western and northeastern regions.

"In addition to the developed areas, Wal-Mart will step up investments this year in China's western and northeastern areas," said a Wal-Mart China official surnamed Zeng.

"China is calling for investments to develop its western and northeastern areas and it will be a good opportunity for Wal-Mart."

Wal-Mart has opened four stores in Kunming and Nanchang in China's interior area. In the northeastern region, it has opened seven stores. Nationwide, it has 34 stores.

Germany-based Metro AG said it will target the northeastern area, preparing new stores in Dalian, Shenyang, Harbin and Changchun.

The world's third-largest retailer has pledged to open 40 new outlets in the next three to five years in China. Currently, it has nearly 20 outlets.

Some foreign retailers started their foray into China's western hinterland and northeastern region around 2000, hoping to score profits from the less-tapped areas whose fund-strapped local governments went all out to support them opening their stores there, according to domestic industry insiders.

"The (west and eastward) trend will become more obvious this year," said Gu Guojian, director of Shanghai Chain-Store Research Institute.

"Foreign retailers are urged to gain a foothold in the less-tapped market to gain a competitive edge when China's retail market is fully opened to foreign investors in less than a year," he said.

Gu added that there's almost no competition in those markets, where hypermarket business is basically an alien concept.

Besides, the foreign giants enjoy advantages, including approval process and site selection, compared with domestic retailers in those areas, he noted.

Source: Xinhua

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