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China Focus: Retailers chase growth in China's west

By Lyu Dong, Zuo Wei and Yu Li (Xinhua)

19:19, June 06, 2013

CHENGDU, June 6 (Xinhua) -- Finding a table during lunch time at IKEA's restaurant in southwest China's Chengdu is never easy, even on weekdays.

The reason can be found in the parking lot, packed with cars with license plates from other provinces in west China, a sign that the furniture retailer's client base stretches beyond Chengdu, capital of Sichuan Province.

"Chengdu's sound economic environment and local people's laid-back lifestyle were the major reasons for IKEA to open its first store here in west China," said Janny Zhang, local market manager at the IKEA Chengdu store. The outlet opened in 2006.

A growing number of retailers are scrambling to establish footholds in west China to tap into the region's potential to become a new engine to drive private consumption.

Store and restaurant revenue of the Chengdu store ranked second among all IKEA stores in China from Sept. 1, 2012 to mid-May 2013, posting a year-on-year growth of 15 and 27 percent respectively, said Janet Zhou, public relations manager at the store.

IKEA, with 13 outlets on the mainland, is ready to open its second store in west China at Chongqing municipality, with billion-dollar deals involving new stores and distribution centers in Chengdu and Xi'an.

Japanese retailer Ito Yokado has also reaped strong gains in Chengdu, known as China's "leisure capital." Sales at five stores in Chengdu hit 5 billion yuan (0.82 billion U.S. dollars) in 2012, twice as much as that grossed by eight stores in Beijing.

"Consumers in west China are very curious and love to try out new things," said Tomihiro Saegusa, Ito Yokado's general representative in China. "Though they don't earn as much as people in east China, people in the west seem willing to shop more."

Wal-Mart, the world's largest retailer, is eyeing growth opportunities in third and fourth-tier cities in southwest China.

Meanwhile, Chengdu's chain store Hongqi Chain became the first Chinese convenience store operator to be publicly traded in China's A-share market in 2012. Hongqi is facing challenges from foreign contenders like 7-Eleven and FamilyMart on its home turf.

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