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Retail Giants Increasing Investment in China
World-renowned retail giants are investing more in China, with the optimistic view of a better investment environment and the hope of garnering a bigger slice of the huge pie.
U.S. Wal-mart, the world's No.1 retailer and the second in the world's 500 giants, announced here this week that it will continue to purchase goods from China in the coming years.
"In our investment plan, Wal-mart will increase its annual purchase from China by 25 percent or more," said Li Chengjie, vice- president of Wal-mart Asia.
Wal-mart opened its first store in Shenzhen in 1996 and became the first overseas retailer permitted to establish joint ventures in China. To date, its investment in China has surpassed 900 million yuan (US$ 108.4 million) and its annual purchase of goods from China has reached US$ 10 billion.
Parkson Group, the biggest department store and chain store company in Malaysia, has opened 19 Parksons in China. Sales from its Beijing branch topped 800 million yuan last year.
Zhou Fusheng, president of Parkson (China), said that Parkson has an ambitious plan, namely to open 100 Parksons in China by the year 2005, with distribution centers established in all Chinese provincial capitals.
Parkson's two other joint ventures are under construction in Huhhot, capital of north China's Inner Mongolia Autonomous Region, and Kunming, the provincial capital of Yunnan Province in southwest China.
Apart from Wal-mart and Parkson, other retail giants like Price Smart of the United States, Carrefour of France, Makro of the Netherlands and Metro of Germany all have clear investment timetables. Many of these companies have achieved success in investing in coastal China and are now eyeing the country's vast western region.
China began to open its commercial sector in 1992. Before then, foreign investors' entry into trade field was a taboo. With the step-up of China's entry into the World Trade Organization (WTO), China is also quickening its pace in opening up the commercial market.
The State Economic and Trade Commission (SETC) and the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) jointly issued a regulation late last year, allowing overseas investors to establish joint ventures in all provincial capitals, autonomous regions and a number of designated cities. Previously this activity was just confined to 11 coastal cities.
"China encourages overseas investors to invest more in the commercial sector, and China's attitude toward opening up has always been consistent," said Yi Hui, director of SETC's overseas fund management department.
Retail giants have shown enthusiasm in applying for new projects since the introduction of these new regulations, and as a result, the number of State-approved retail joint ventures has increased from 21 to 29. Another 277 joint retail companies have been authorized by local governments.
China is considered one of the world's largest markets, with annual retail sales hitting some 3 trillion yuan, but overseas investment only accounts for 2.5 percent of all retail sales, said Jiang Ming, secretary of the China General Chamber of Commerce.
He believes that the inflow of overseas capital will benefit domestic retailers in the way that they bring modern marketing patterns and advanced management to China.
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