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By Liu Jie (China Daily)
Updated: 2008-07-21 10:38

Domestic competition

"Domestic players made fast progress during the period, because they learned from foreign counterparts and national market-oriented reforms were under-run," says Huang.

A group of Chinese retailing giants, such as home appliance retailer Gome, Shanghai Brilliance (Group) and Beijing Wu-Mart, were formed via organic expansion or merger and acquisitions (M&As).

Wang Zongnan, former president of China's top commercial group Shanghai Brilliance and former chairman of Lianhua Supermarket, a subsidiary of Brilliance, says that Lianhua has received great benefits from neighboring Carrefour. Lianhua's first supermarket in Shanghai is side by side with Carrefour's hypermarket.

"The neighborhood facilitated us learning from the foreign giant. It added to our advantages regarding domestic market knowledge and sound local government relations have also accelerated Lianhua's development," he says.

Currently, Hong Kong-listed Lianhua has more than 3,000 outlets nationwide as hypermarkets, supermarkets and convenience stores.

Foreign retailers also found they were faced with stiff local competition from the likes of Wu-Mart in the Beijing region and Lianhua in Shanghai.

"Some giant local retailers are extremely powerful," Eric Legros, CEO of Carrefour China says, "You cannot forget that a local retailer that dominates the region like Beijing is working in a market that is the size of Spain."

Access Asia estimates that between 1999 and 2006, China's total retail market grew 157.41 percent in current terms to 4.16 trillion yuan - representing an annual average growth rate of 19.68 percent over that period.

Access Asia is the first clearinghouse to track the expertise and current research of specialists on policy-related issues in Asia and established by National Bureau of Statistics Research.

Sources from the Ministry of Commerce say though foreign retailers have expanded in China quickly over the past two decades, domestic retailers still occupy large part of the Chinese market. Among China's top 100 chain retailers in 2006, only 18 were overseas enterprises, while only three, including Carrefour, were ranked in Top 10.

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