Global retailers need to grasp market nuances
Updated: 2007-07-11 14:41
It's still not too late for global retailers to enter the lucrative Chinese consumer market, but they should first understand the nuances of the market and find the right business models in order to win, say experts.
China's consumer market, expected to become the world's second largest after the United States by 2015, according to investment bank Credit Suisse, presents enticing opportunities for retailers.
Some early movers such as US retail giant Wal-Mart and French firm Carrefour have already set up shop in China while many others are considering joining the fray.
"I would say it is still not too late for other global retailers to enter the market," said Michael Silverstein, senior partner and managing director of Boston Consulting Group.
As the economic boom in China's major cities - where most global companies are concentrated - spreads to second- and third-tier cities, it is expected to fuel an increasing demand for consumer goods in those areas, said Hubert Hsu, a senior partner and managing director of the Hong Kong office of Boston Consulting Group.
Understanding China's unique landscape and culture, both Silverstein and Hsu agree, is the first step toward developing a winning retailing strategy.
Winning in the scramble for China's retail customers will depend on how quickly a retailer, especially one from outside China, understands the economic, geographic and cultural landscape of its market, Hsu said.
"Finding the right local partner is one of the keys to success," Silverstein said.
The urban, coastal and inland markets in China, Silverstein said, are quite different and demands different requirements for retailers. Local partners, he said, would help foreign players adapt to local needs. "Missing the nuances is to miss the opportunities."
Latecomer retailers, Silverstein suggested, may look at the secondary cities first to avoid the fiercely competitive markets in top cities such as Beijing and Shanghai.
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