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  3. Let China’s Retail Wars Begin Newly unfettered foreign chains could grab more of China’s market. On a cold and windy Friday

Let China’s Retail Wars Begin Newly unfettered foreign chains could grab more of China’s market. On a cold and windy Friday

admin2010-05-09  28
问题                                        Let China’s Retail Wars Begin
    Newly unfettered foreign chains could grab more of China’s market. On a cold and windy Friday afternoon, Li Fang is rushing to get some shopping done before the weekend begins. And the 30-year-old human resources manager knows exactly where she wants to go: the Carrefour hypermarket, a 10-minute bus ride from her apartment in north Beijing. it’s not the cheapest option, but the French-owned store has all the meat, vegetables and fruit she needs. "Carrefour offers high quality and a better variety of products compared to other supermarkets," she says.
    In recent years, major international chains like Carrefour SA of France and Wal-mart Stores, Inc. of the United States have expanded aggressively in China. Local Chinese retailers have loudly protested this and lobbied heavily for protection from the new competition in price and service that these major retailers have set off. Earlier drafts of the law had included a requirement for a system to rate and punish foreign retailers who had previously set up stores without central government approval. Another proposal would have prohibited foreign retailers from opening stores in cities that haven’t drawn up detailed maps of planned retail sites, which would include many smaller cities.
    Many more Chinese will soon get a chance to sample the quality and variety at Carrefour and other foreign-owned stores. In keeping with the conditions for China’s membership in the World Trade Organization, Beijing on Dec. 11 lifted most restrictions on foreign retailers. Gone are limits on the number of stores, rules confining them to large cities, and regulations capping the foreigners’ stake in local ventures at 65%.
    China erected those hurdles to give its own companies a chance to copy the West’s big-store model—and they have done so with great success. The top four retailers in the country are all run by the government or local entrepreneurs, led by a rapidly expanding chain called Shanghai Bailian. But the foreign companies are nipping at the locals’ heels, and they have big plans for expansion now that the barriers have been tom down. Pads-based Carrefour has some 240 stores in China, and plans to open as many as 150 more this year. Its 2003 sales of ＄1.8 billion make it China’s fifth-biggest retailer. China "is very important for our future," says Jean-Luc Chereau, executive manager of Carrefour China.
PREMIUM ON CONVENIENCE
    Carrefour was quick to get into China and often pushed the regulatory envelope, bypassing Beijing and cutting deals with local governments. Although that strategy got Carrefour into hot water at the time, the company has emerged as the undisputed leader. It has even bested its Bentonville (Ark.) rival, Wal-Mart Stores Inc., (WMT) which has 43 stores in 20 Chinese cities, and another 10 in the works this year. Germany’s Metro is the No. 3 foreign player, with 24 stores and another 40 within five years. All told, dozens of foreign companies have opened in the mainland.
    Why the rush? Over the past 20 years, retail sales in China have jumped nearly 15% annually, to some ＄628 billion in 2004—making it the third-largest market on earth. And consumer expectations have shot up even faster. Just a decade ago most Chinese were content to line up in state-owned stores to buy whatever meager products were available, then shuffle off to outdoor markets for meat, eggs, and vegetables. Now both local chains and the multinationals are pushing out the stodgy old state retailers and mom-and-pop shops by building big, convenient stores in choice central locations in Beijing, Shanghai, and Guangzhou. With the end of geographic restrictions, the battle for dominance will shift to smaller cities.
    The customers are a middle class that today totals at least 100 million. These shoppers like to buy clothes, TVs, and groceries at clean, modem outlets with a full range of products on hand. Surveys show that the top factors Chinese consider in deciding where to shop these days are convenience, followed by the spaciousness and comfort of stores and the selection they offer. Price ranks only sixth, according to researcher ACNielsen. Shopper Li would concur. One of the best features of the two-story Carrefour: It’s easy to find what she’s looking for. "The layout is perfect," she says.
    With the foreigners attacking their home turf, Chinese retailers are fighting back. Take China Resources Enterprise Ltd., which operates more than 1700 supermarkets and hypermarkets, including China Resources Vanguard stores. The retailer has trimmed its staff to boost profitability, and has sought to improve management by raiding the foreign chains. Today nearly half of the middle and senior managers in CRE’s retail unit have worked at foreign-owned stores. Those foreign-trained managers have brought in marketing expertise. For instance, to build brand loyalty CRE rewards frequent shoppers with discounts, and the company has rolled out more than 60 private-label products, including bottled water, shampoo, and body lotion. And CRE is moving upscale. The company this year expects to open four "lifestyle" stores offering higher-quality products. Plans call for an additional 20 such stores within three years. "We are targeting middle-class people with money," says Jonathan Wang, chief operating officer of China Resources Vanguard.
    There’s consolidation sweeping the sector, too. Shanghai Bailian, which boasts nearly 5000 stores and 2003 sales of ＄5.86 billion, has won permission to take over four rivals. And CRE in December boosted its stake in China’s 10th-largest retailer, Suguo Supermarket, to 85%. Beijing’s ultimate goal is to create a dozen or so big local players that will be strong enough to compete with the multinationals at home and expand overseas. "China’s market should be mainly dominated by Chinese retailers," says Huang Guoxiong, a professor of economics at Renmin University in Beijing. "It is not possible to allow foreign retailers to take the dominant position."
CONCERNED OFFICIALS
    There’s little doubt that Chinese retailers and government officials are getting concerned about the growing foreign competition. Vice-Premier Wu Yi—Beijing’s tough trade negotiator—last year met with the heads of top retail companies to discuss strategy. Under Wu’s guidance, the Commerce Ministry is considering guidelines that would require cities to provide detailed blueprints for all retail expansion plans. Some fear that measure could be used to brake the foreigners’ advance.
    Ultimately, the clash between locals and foreigners may be tempered by realities on the ground. While the locals need managerial talent, financing, and greater scale, the foreigners need help navigating China’s vast retail market—and even more so as they move beyond the large coastal cities. That means that in spite of the newly relaxed rules on ownership, Wal-Mart, for one, will continue to work through joint ventures. "Our partners are knowledgeable about the business in China, and we learn from them," says Wal-Mart spokesman Bill Wertz. And foreign retailers that decide to go it alone may soon find themselves facing many of the same problems the locals have—fickle customers with little brand loyalty and challenges of hiring decent. staff. Shopper Li’s sole complaint about Carrefour: "I can never find employees when I need them." The stores, local or foreign, that get such issues right are the ones that will win the baffle for the wallets of China’s consumers.
To compete with foreigners, Chinese retailers are taking measures to improve ______ by cutting down on the number of their staff and to improve management by bringing in foreign experts.
选项
答案profitability
解析 根据“Premium on Convenience”小标题下的第四段第三句话“The retailer has rimmed its staff to boost profitability，and has sought to improve management by raiding the foreign chains”可得到答案。“Trim its staff”意为“cut down on the number of their staff”。
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