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Opportunities and challenges of international retailing in China

October 3, 2018 • GLOBAL ECONOMY, BUSINESS & INNOVATION, China, Strategies for the Changing World, Top Investment Destinations

By Lisa Qixun Siebers

The performance of foreign retailers in China has shown a reversed U shape since their market entry in the 1990s. By the destruction of digitalisation, large retail giants continue to reduce both the number and the size of their stores, protecting bigger loss but worsening their sales too. They launched omnichannel retail after China’s online sales had started to soar in 2010 and introduced the experience-based retail ecosystem mostly in collaboration with local companies. However, their long-term performance will largely rely on the local consumption demands and institutional environment.

China has become the world’s largest e-commerce market, accounting for 40% of the value of worldwide e-commerce transaction by 2017, up from less than 1% ten years ago. China’s online retail market has also become the world’s largest, with a 38% annual growth rate of US$830 billion by 2017, compared to 14% in the U.S. In 2016, China’s internet users reached to 731 million, overtaking the combined number of the European Union and the U.S.; 20% of the internet users rely on mobile only, compared with 5% in the U.S., and China’s mobile payment has 11 times the transaction value of the U.S. The online competition has boosted customer-centred and experienced-based innovation in a physical shopping environment, represented by Life Mall (e.g., Parkson from Malaysia) and themed department store – Fashion Gallery (e.g., the New World from HK). Most of the foreign retailers have also started to emphasise private labels or owned brands, such as Carrefour’s Quality Line and French Touch brands. For foreign retailers or brands to succeed, it is important to understand the key development stages of China’s retail sector and what foreign retailers have experienced in the market in order to set up potential effective strategies they may implement in the future.

To increase online sales, many foreign retailers have collaborated with Chinese online platforms such as Alibaba and JD.com or social media platforms such as WeChat owned by Tencent Group to increase sales through e-tailing.

 
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About The Author

Lisa Qixun Siebers is Associate Professor of International Business at Nottingham Trent University, UK. She obtained her first degree in economics in China and MBA and Ph.D. degrees in the UK. She has been investigating foreign retailers’ expansion in China from the 1990s to date and has disseminated her work in books, journals, news articles, and online resources. Her monograph entitled Retail Internationalisation in China: Expansion of Foreign Retailers was published in 2011.

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