China Dis Issue114

Fung Business Intelligence Centre
Retail Market in China

September 2013
!
Executive summary 4
Overview 6
Competitive landscape 13
Key highlights 37
Government initiatives 44
Challenges 48
Conclusions and implications 52
Appendix 55
Table of Contents
Retail Market in China, 2013
"
China is in the course of economic rebalancing, moving towards a consumption-driven
economy. This presents huge opportunities for retailers, with foreign and local rms alike
continuing to expand into the market. As Chinas retail sector evolves, market players
are searching for ways to better adapt to a changing landscape. However, competition is
increasingly erce and some unresolved problems remain.
This report provides an overview of Chinas retail market and assesses competitive
prospects, offering key highlights on developments under different retail formats. We also
review the industrys latest developments and major challenges.
1 http://usa.chinadaily.com.cn/epaper/2013-08/15/content_16896046.htm
#
China is now the worlds second largest retail market. Total retail sales of consumer
goods doubled to 20.7 trillion yuan in 2012 from 10.8 trillion yuan in 2008. Furthermore,
China is expected to surpass the United States to become the worlds largest consumer
market within ve years
1
.
The countrys retail market is evolving as quickly as it grows. With higher incomes and
increasing afuence, consumers are demanding better quality and unique products and
services. Also, new technologies are revolutionising the way retailers are running their
businesses. Key aspects of this transformative phase include:
Aggressive store expansion is replaced by improving store productivity. Some
domestic retailers used to adopt aggressive expansion strategies to boost brand visibility,
only to nd that such disorganised business expansion created many problems. Hence,
a number of brand owners have started to close unprofitable stores and focus on
improving core competencies.
Retailers launch their own private labels or proprietary brands. Amid increasing
competi ti on, retai l ers are l ooki ng for ways to stand out from thei r competi tors.
Launching private labels or proprietary brands is a protable way for retailers to underline
uniqueness, pushing up margins while improving customer loyalty. Yet, private label
penetration is still at a low level in China. A lack of experience, skills and strategies on
how to launch private labels remain signicant challenges.
Mobile-commerce is increasingly popular, as is mobile payment. The mobile sales
channel has become extremely important. Transaction values have seen a tremendous
leap, up 181.0% yoy to reach 37.52 billion yuan in 2Q13. Increasing numbers of
e-payment providers have launched mobile services, making such payments increasingly
easier, safer and more popular.
Digital marketing is ever more prevalent. Social media is having an explosive impact
on consumer purchasing decisions. Influential social media websites are believed to
be increasing the sales conversion rate and encouraging more customers to purchase
goods. Many retailers have been leveraging huge SNS website user databases to
promote products and enhance protability.
Executive summary
$
Improving customer relationship management. An effecti ve customer l oyal ty
programme is seen as instrumental in attracting and retaining customers. But while
retailers have been running their membership programmes for a signicant period, many
simply collect data from customers without fully utilising the information. Also, many
retailers have no centralised customer database for effective management. This is an
area that is receiving increased attention.
The concept of the omni-channel emerges. The concept of the omni-channel is still
very new in China. Ofine and online operations of many retailers are often separated,
with limited interaction. However, some retailers are starting to take a closer look at
numerous aspects of omni-channel strategising and their impact on business. Online and
ofine integration is expected to become an inevitable industry trend.
Tier 3 and tier 4 cities become the development focus. With ongoing urbanisation
and rising incomes, consumption is growing fast in lower tier cities. Tier 3 and tier 4 cities
are expected to be the key focus for Chinas retail business development over the next
few years as competition gets tougher in tier 1 and tier 2 cities.
M&A continues to be an attractive avenue fuelling growth. Mergers and acquisitions
(M&A) provide a fast route to greater market presence and penetration within different
consumer segments. Indeed, several retailers are using this approach to extend their
market presence. As a result, M&A activities are expected to continue pushing Chinas
retail market growth.
Such developments paint a rosy picture for the future of Chinas retail sector, but
challenges still remain. For one, increased operating costs have squeezed prot margins
for many retailers. At the same time, duplicated investment in some cities, lack of
centralised city planning and mismanagement are all giving rise to such problems as
trafc congestion, tougher competition, poor customer footfall, uneven trade mix, high
vacancies and commercial disputes. Soaring logistics costs and relatively weak transport
infrastructure add further hurdles for retailers and distributors.
Faced with the headwinds of increasing competition and more demanding consumers,
the retail winners are those which constantly innovate and improve their business
practices. Indeed, to succeed, enterprises need to anticipate or at least keep abreast
of the latest market developments.
%
Overview
&
China becomes the worlds second largest retail market
The total retail sales of consumer goods in China doubled to 20.7 trillion yuan in 2012,
from 10.8 trillion yuan in 2008 (see Exhibit 1). According to the Ministry of Commerce
(MOFCOM), China is the worlds second largest retail market after the United States.
Exhibit 1: Total retail sales of consumer goods, 2008 - 2012
Source: National Bureau of Statistics
Having said that, retail sales growth has seen some signs of deceleration over recent
years. In 2012, the growth of total retail sales of consumer goods was 14.3% year-on-
year (yoy), the lowest since 2007. As to the retail market in 1H13, total retail sales of
consumer goods rose nominally by 12.7% yoy to 11.1 trillion yuan, while the growth rate
was 1.7 percentage points (ppt) lower than in 1H12. However, in real terms, retail sales
increased 11.4% yoy in 1H13, 0.2 ppt higher than in 1H12.
By month, nominal retail sales growth reached 15.2% yoy in December 2012, and then
decelerated signicantly to 12.3% yoy in January - February 2013. The growth rate slowly
picked up from March to June 2013 (see Exhibit 2).
'
Exhibit 2: Nominal growth of total retail sales of consumer goods by month,
January 2012 June 2013
Retail sales of consumer goods: mode of sales
Retail sales of commodities reached 9.9 trillion yuan in 1H13, up by 13.2% yoy. Retail
sales for enterprises above a designated size in the catering industry saw a signicant
decline by 2.2% yoy in 1H13 to 8.7% yoy (see Exhibit 3). This is mainly attributable to
the new Chinese leaderships increasing efforts to curb government spending on lavish
banquets.
Exhibit 3: Chinas total retail sales by mode, FY12 1H13
yoy growth (%) FY12 1H13
Total retail sales of consumer goods* 14.3 12.7
- Commodities 14.4 13.2
of which: enterprises above a designated size** 14.8 11.7
- Catering 13.6 8.7
of which: enterprises above a designated size 12.9 -2.2
* Total retail sales of consumer goods refers to the sum of retail sales of commodities sold by wholesale
retailing, catering, publishing, post and telecommunications and other service industries to urban and rural
households for private consumption, and to social institutions for public consumption.
** Enterprises above a designated size refer to enterprises with annual sales of ve million yuan or more and
with an employee strength of 60 or more.
(
Retail sales of consumer goods: commodities
The retail sales of commodities of enterprises above a designed size rose 11.7% yoy to
reach 5.2 trillion yuan in 1H13. Among various types of goods, sales of gold, silver, and
jewellery saw a 29.7% yoy jump in 1H13, driven by a drop in gold prices. Sales of home
appliances and video equipment also achieved growth of 15.3% yoy in 1H13, due partly
to the positive outcome of the governments energy-saving product promotion project.
By contrast, growth rates for sales of clothing, shoes, hats and textiles, and cosmetics
slowed to 12.5% yoy and 12.7% yoy respectively (see Exhibit 4).
Exhibit 4: Chinas nominal retail sales growth of enterprises above a designated
size, by commodity, FY12 1H13
yoy growth (%) FY12 1H13 Change
Grain, oil, food, beverages, tobacco, and liquor 17.9 12.8 5.1 !
Clothing, shoes, hats and textiles 18.0 11.9 6.1 !
Cosmetics 17.0 12.7 4.3 !
Gold, silver, and jewellery 16.0 29.7 13.7 "
Daily use products 17.5 14.2 3.3 !
Sports and entertainment products 10.5 10.0 0.5 !
Home appliances and video equipment 7.2 15.3 8.1 "
Chinese and western medicine 23.0 16.3 6.7 !
Stationery and ofce accessories 17.7 11.0 6.7 !
Furniture 27.0 21.3 5.7 !
Telecommunications equipment 28.9 14.4 14.5 !
Petroleum and related products 16.9 8.8 8.1 !
Automobiles 7.3 8.8 1.5 "
Building and decoration materials 24.6 18.2 6.4 !
Retail sales of consumer goods: urban vs. rural
Retail sales are primarily driven by the urban population, which accounted for 86.5% of
total retail sales in 1H13; however, rural retail sales grew at a faster pace. Urban retail
sales increased nominally by 12.5% yoy to 9.6 trillion yuan in 1H13, 1.8 ppt lower than
in 1H12; while rural retail sales rose 14.3% yoy to 1.5 trillion yuan in 1H13, 0.2 ppt lower
than in 1H12.
)*
The sharp increase in rural incomes has been a positive driver for rural spending. The per
capita net income of rural households has grown steadily since 2010, reaching 7,917
yuan in 2012. The per capita disposable income of urban households increased 9.6%
yoy in 2012 to 24,565 yuan in real terms. However, the per capita disposable income
for urban households was still three times more than for rural households; urbanites still
remain the major contributors to national total retail sales (see Exhibit 5).
Exhibit 5: Urban and rural incomes, 2008 2012
Consumers and entrepreneurs turn pessimistic due to weaker
economic sentiment
The consumer condence index has declined since February 2013 and stayed below the
neutral reading of 100 for two consecutive months from May, indicating weaker economic
sentiment over the period to June (see Exhibit 6).
))
2 http://www.stats.gov.cn/was40/gjtjj_nodate_detail.jsp?channelid=75004&record=31
Exhibit 6: Chinas consumer condence index, January 2012 - June 2013

Over the same period, the national entrepreneur condence index also dropped from
125.6 in 1Q13 to 120.6 in 2Q13 (see Exhibit 7), indicating that entrepreneurs in wholesale
and retail trades were less condent about the economy. Industry players became less
optimistic about their businesses, due to weaker market demand.
Exhibit 7: Chinas entrepreneur condence index, 1Q13 - 2Q13
1Q13 2Q13
National 125.6 120.6
Manufacturing 131.7 125.0
Construction 134.4 128.9
Wholesale and retail trades 124.9 121.0
Transport, storage and postal services 113.8 110.7
Accommodation and catering trades 79.8 82.9
Information transmission, software and information
technology services 140.6 136.8
Real estate trade 115.3 113.2
Social services 122.6 114.6
73.8% of the enterprises said that profitability in 2Q13 was normal or better than
normal. The condence index for large enterprises was higher than for mid-sized and
small enterprises
2
.
)!
3 Bain & Company, 2012 Luxury Goods Worldwide Market Study, October 2012
Luxury market slows as anti-gift regulations take root
Luxury goods sales in China were projected to reach Euros 15 billion in 2012. Taking the
Greater China area as a whole, including Hong Kong, Macau and Taiwan, the total size
of the luxury market was expected to reach Euros 27.3 billion, surpassing Japan and
becoming the worlds second largest luxury goods market in 2012
3
. The rapid increase
of household disposable incomes, fast-growing individual wealth, a more afuent middle
class, ongoing urbanisation, and rising demand for luxury goods in smaller cities along
with a surge in the number of credit card users all contributed to driving Chinas luxury
market.
However, the growth of luxury sales has started to decelerate since 4Q11. Bain &
Company expected 2012 to show 7% yoy luxury consumption growth in China, down
from 30% yoy in 2011 and 27% yoy in 2010. The slowdown was partly attributable to
weak economic growth, as well as the increasing preference of Chinese consumers
to shop for luxury goods abroad. Moreover, the move by Chinas new leaders to curb
government spending on luxury items as gifts might also have had a negative impact
on luxury sales. As shown in Exhibit 8, many global luxury brands have slowed their
expansion in China over recent years.
Recently, some luxury retailers have shifted their focus from aggressive store openings
to improving store productivity; others have started to make inroads into lower-tier cities.
In fact, luxury brands no longer see tier 1 cities as a springboard to raise their prole, but
have started to push their sales nationwide.
Exhibit 8: Number of selected luxury brand stores in China, 2011 - 2013
Change in Change in
2011* 2012** store numbers 2013*** store numbers
Burberry 49 58 +9 62 +4
Ermenegildo Zegna 60 73 +13 86 +13
Gucci 31 42 +11 58 +16
Louis Vuitton 36 39 +3 42 +3
Prada 15 18 +3 18
Source: Company websites; compiled by Fung Business Intelligence Centre
*As of January 2011
**AS of February 2012
***As of February 2013
)"
Competitive landscape
)#
Analysis of the Top 100 retail chain operators
The Top 100s see steady development
Early this year, the China Chain Store and Franchise Association (CCFA) released its
annual list of the Top 100 Retail Chain Operators in China (the Top 100s)
4
. Total sales
of the Top 100s in 2012 were 1,870.0 billion yuan, up 10.8% yoy. It is noteworthy that
total sales of the Top 100s increased at the slowest pace since 2007 and the growth
rate was slower than that of the national total retail sales of consumer goods over two
consecutive years. The signicant slowing of Top 100 sales was due to the combined
impact of a gradually diminishing demographic dividend, changing consumer behaviour
and intensied competition from online retailers (see Exhibit 9).
Exhibit 9: Performance of the Top 100 retail chain operators, 2008 - 2012
Year Retail sales (billion yuan) yoy growth (%)
2008 1,199.9 18
2009 1,360.0 14
2010 1,660.0 21
2011 1,650.7 20*
2012 1,870.0 11
Source: China Chain Store and Franchise Association, Fung Business Intelligence Centre
*Adjusted growth rate
As shown in Exhibit 10, total sales of the Top 100s accounted for 9.0% of total retail
sales of consumer goods. Chinas retail market remains highly fragmented.
Exhibit 10: The Top 100s share in national retail sales, 2001-2012
Source: China Chain Store and Franchise Association
4 http://www.ccfa.org.cn/viewArticle.do?method=viewArticle&id=ff8080813e0d6a70013e15f3bfcd0040&publi
shcid=402881e91c59dbcb011c59df8a2b0002
)$
According to the CCFA, the Tops 100s in tier 3 and tier 4 cities have developed and
expanded faster than those in tier 1 and tier 2 cities, mainly due to relatively saturated
retail markets in tier 1 and tier 2 cities. The average sales growth among leading Top 10
enterprises in tier 3 and tier 4 cities was 18% yoy, while the growth rate for store numbers
was 17% yoy. Both gures were higher than for tier 1 and tier 2 cities, at 6% yoy and 2%
yoy respectively.
Exhibit 11 shows the Top 10 retail chain operators ranked by total retail sales in 2012.
Suning Commerce Group (Suning), with total sales of 124 billion yuan, has overtaken
Bailian Group to become Chinas number one chain retailer by total sales.
Exhibit 11: The top 10 chain retailers, 2012 (Rank by retail sales)
Sales in 2012
(million yuan, yoy
Rank Name of company pre-tax) growth (%)
1 Suning Commerce Group Co., Ltd. 124,000.0 12.7
2 Bailian Group 122,052.2 3.3
3 Gome Electrical Appliances Holding Ltd. 117,479.7 6.8
4 China Resource Vanguard Co. Ltd. 94,100.0 13.8
5 RT-Mart Shanghai Ltd. 72,470.0 17.7
6 Wal-Mart (China) Investment Co., Ltd. 58,000.0 3.6
7 Chongqing General Trading (Group) Co., Ltd. 54,494.7 14.0
8 Yum! Brands Inc., China Division 52,200.0 30.5
9 Lushang Group 49,380.7 21.4
10 Carrefour China Inc. 45,273.9 0.2
Amid intensifying competition from online retailers, many traditional retailers have set up
their own online platforms. 62 of the Top 100s have their own online stores in 2012, up
from 31 in 2009 (see Appendix 1).
Foreign retailers in the Top 100s outperform domestic players
Among the Top 100s, foreign players generally perform better than domestic players in
terms of operating efciency and gross prot margins. In 2012, there were 20 foreign
enterprises in the Top 100 list, of which RT-Mart continued to hold the top spot, followed
by Wal-Mart and Yum!Brands (see Exhibit 12).
)%
Exhibit 12: Foreign retail chains among the Top 100s in China, 2012
2012 sales
Rank Rank (million yoy No. of yoy
in 2012 in 2011 Enterprise yuan) change (%) stores change (%)
1 1 RT-Mart Shanghai 72,470 17.7 219 18.4
2 4 Wal-Mart (China) Investment 58,000 * 3.6 395 6.8
Co., Ltd.
3 3 Yum! Brands Inc., China 52,200 30.5 5,200 16.9
Division
4 2 Carrefour China Inc. 45,274 0.2 218 7.4
5 5 Best Buy Co., Inc. 24,185 -12.0 252 -9.7
6 6 Tesco China 20,000 * 11.1 111 8.8
7 7 Parkson Retail Group Ltd. 19,724 20.1 48 4.3
8 10 Metro Jinjiang Cash & Carry 17,900 29.7 64 18.5
Co., Ltd.
9 9 Lotte Mart 16,318 6.7 99 8.8
10 12 Auchan (China) investment 16,305 28.4 54 20.0
Co., Ltd.
11 8 New World Department 16,000 * 3.2 39 0.0
Store China Limited
12 14 C.P. Lotus Corporation 12,493 * 6.6 57 9.6
13 13 Zhengzhou Dennis 12,200 13.0 144 45.5
Department Store Co., Ltd.
14 15 A.S. Watson & Co., Ltd. 12,000 * 20.0 1,500 36.4
(Guangzhou)
15 16 McDonalds Corporation 9,000 * 11.1 1,500 7.1
(China)
16 18 AEON Co., Ltd. 8,083 21.3 36 20.0
17 19 IKEA China 7,634 21.2 11 22.2
18 17 Ito-Yokado Co., Ltd 7,487 0.0 13 0.0
19 20 Parkn Shop (China) 4,077 -5.1 51 10.9
20 21 Emart China 2,400 * 0.0 16 0.0
Total 433,748.53 11.3 10,027 16.2
*Note: Estimated value
Also, the gross prot margins for foreign players are usually higher than for domestic
players and the differences are becoming more signicant each year. Exhibit 13 compares
the gross prot margins of domestic and foreign retailers.
)&
Exhibit 13: A comparison of gross profit margins for domestic and foreign
retailers, 2010-2012
Gross prot margin 2010 2011 2012
Domestic players 14.3% 15.9% 15.9%
Foreign players 14.7% 16.7% 16.8%
Source: Deloitte, China Chain Store and Franchise Association
A comparison of domestic and foreign retailers
Domestic retailers: eager to extend their national footprint
Most domestic retailers are regionally focused, except for some consumer electronics
appliance specialty retailers such as Suning and Gome. In fact, most domestic retailers,
including Dalian Dashang Group, Wuhan Wushang Group and Shandong Yinzuo Group,
focus their operations on respective regional markets due to huge regional differences
in consumer tastes across the country, supply chain complexities and strong local
networks. This is especially true for convenience store and department store operators in
China.
Some domestic players have started to expand their footprint nationwide through
mergers and acquisitions (M&A). For instant, Wangfujing Department Store acquired
a majority stake in PCD Stores with a view to expanding its overall market share and
geographical coverage across China, while diversifying its business scope.
Then again, domestic players are making efforts to differentiate themselves from
aggressive competitors. Major initiatives include conducting market studies to understand
consumer needs; specialising in certain merchandise categories; improving supply chain
management and better engaging consumers through various social network channels.
Foreign retailers: shifting from scale expansion to improving core
competitiveness
Over recent years, foreign retailers in China have encountered numerous challenges (see
Box 1). Many are reportedly losing money in the market and have slowed expansion
(see Exhibit 14). As seen in Exhibit 15, a number of renowned foreign players have even
closed some stores.
)'
Exhibit 14: New store openings for selected major foreign retailers, 2011 - 2012

Source: China National Commercial Information Centre
Exhibit 15: Selected examples of foreign retail store closures
Closing Opening
Store location City date date
Supermarket
Tesco Zhenning branch Shanghai May-13 Jun-05
Hugeo City branch Taizhou, Jiangsu Aug-12 Jan-11
Guangyu branch Tieling, Liaoning Sep-12 Feb-09
Tushan branch Bengbu, Anhui Aug-12 Jan-10
Huaihe branch Changzhou, Jiangsu Aug-12 Jan-10
Lotte Mart Binzhou branch Binzhou, Shandong Aug-12 Dec-07
Wal-Mart Huangshan branch Hefei, Anhui Jul-13 Jun-11
Yuanling branch Shenzhen, Guangdong Apr-13 Apr-03
Times Square branch Xiamen, Fujian May-12 Sep-05
Parkn Shop Westgate Mall branch Shanghai May-12 1998
Department stores
Isetan Taiyuan Street branch Shenyang Jun-13 2008
Ito-Yokado Wangfujing branch Beijing Jan-13 Nov-05
New World Taizhou branch Taizhou, Jiangsu Nov-12 Jan-09
Ningbo branch Ningbo, Jiangsu Feb-12 Nov-04
AEON Chaoyang branch Beijing Mar-12 Jun-10
Parkson Shijiazhuang branch Shijiazhuang, Hebei Aug-13 2008
Dashizi branch Guiyang Jun-13 2000
Jinfenghuang branch Guiyang Dec-12 2008
Hongqiao branch Shanghai Aug-12 Dec-02
Source: China National Commercial Information Centre; compiled by Fung Business Intelligence Centre
)(
Box 1: Major challenges encountered by foreign retailers in China
Some major hurdles facing foreign retailers:
Fa||ure to hedge rea| estate r|sks. Fore|gn reta||ers often cannot secure pr|me s|tes
at favourable prices to establish new stores.
Reg|ona| governments no |onger offer preferab|e treatment to |nd|v|dua| fore|gn
retailers.
Most fore|gn reta||ers operate s|ng|e-format stores, but |n Oh|na, mu|t|-format
regional retailers have usually increased synergies when negotiating with regional
distributors. Also, operating in multi-format mode provides greater exibility. So if
hypermarket growth slows a retailer can shift focus to opening more convenience
stores.
Poor |oca| adaptat|on. Strateg|es and |mages of fore|gn reta||ers typ|ca||y do not
differ signicantly from their original operations, a strategy which may not suit the
needs of the China market.
H|gher pr|ce po|nts than offered by domest|c p|ayers.
Facing unfavourable market conditions, foreign enterprises have adapted their China
strategies by shifting from large-scale expansion to improving core competencies.
For instance, Wal-Mart announced in April 2013 that it would invest 5 billion yuan on
revamping and upgrading 50 of its existing stores. Other foreign retailers are actively
seeking partnerships with local players. In August 2013, Tesco conrmed that it will team
up with China Resources Enterprise Ltd (CRE) to set up a joint venture in China.
Analysis of major retail formats
Overview
Among all major retail formats, Internet retailing recorded the highest sales growth for
2012. As to traditional channels, specialty stores in general saw higher growth than
grocery retailers such as hypermarkets and supermarkets (see Exhibit 16).
!*
Exhibit 16: Yoy sales growth in retailing, by retail format, 2012
yoy growth (%)
Total 12.8
Store-based retailing 10.8
Grocery retailers
5
8.2
Non-grocery retailers 12.7
Apparel specialist retailers
6
16.7
Electronics and appliance specialist retailers 6.8
Health and beauty specialist retailers 12.3
Home and garden specialist retailers 13.6
Leisure and personal goods specialist retailers 14.8
Mixed retailers
7
14.8
Other non-grocery retailers 12.1
Non-store retailing 65.2
Direct selling 20.0
Home shopping 24.0
Internet retailing 84.4
Vending 11.5
Source: Euromonitor
In terms of gross prot, all retail formats except convenience stores witnessed negative
yoy growth in 2012. Convenience stores gross profits increased slightly by 0.8 ppt
compared with 2011 (see Exhibit 17).
Exhibit 17: Gross prot margin, by retail format, 2011 - 2012
2012 (%) 2011 (%) yoy change in ppt
Convenience stores 17.3 16.5 0.8
Supermarkets 14.5 15.4 -0.9
Hypermarkets 12.4 13.1 -0.7
Professional stores 13.1 14.2 -1.1
Specialty stores 17.0 18.3 -1.3
Department stores 17.5 18.6 -1.1
Average 15.6 16.8 -1.2
5 Grocery retailers: convenience stores, discounters, forecourt retailers, hypermarkets, supermarkets,
independent small grocers
6 Specialist retailers: specialty stores, professional stores
7 Mixed retailers: department stores, variety stores, mass merchandisers, warehouse clubs
!)
As shown in Exhibit 18, specialty stores recorded the highest net prot margin of 4.15%
in 2012, and professional stores the lowest net prot margin of 1.30%. The net prot
margin for supermarkets dropped by as much as 1.05 ppt to 2.45% last year.
Exhibit 18: Net prot margin, by retail format, 2011 - 2012
2012 (%) 2011 (%) yoy change in ppt
Convenience stores 3.35 3.65 -0.30
Supermarkets 2.45 3.50 -1.05
Hypermarkets 2.00 2.40 -0.40
Professional stores 1.30 1.50 -0.20
Specialty stores 4.15 4.35 0.20
Department stores 2.15 2.50 -0.35
Average 2.46 2.66 -0.19
Exhibit 19 and 20 show the selected retail performance indicators of sample stores by
retail format
8
. Department stores led in terms of operating area, number of employees,
retail sales, average sales per sqm and average customer spending. Convenience stores
had an edge in gross margin.
Exhibit 19: Performance of selected sample store by retail format, 2012
Department Convenience
store Hypermarket Supermarket store
Operating area (m) 42,038 11,863 2,315 144
Number of employees 1,421 327 74 8
Retail sales (million yuan) 1,139 285 41 5
Average sales per m
(yuan/ m) 28,000 26,000 20,000 42,000
Average customer
spending (yuan/ visit) 337 81 58 21
Gross margin (%) 14.3 13.7 13.4 17.2
8 Sample stores are the stores with operational areas within 25% of the industry average; excluding outliners
!!
Exhibit 20: Performance of selected sample store by retail format, a yoy
comparison with 2011
yoy change Department Convenience
in 2012 stores Hypermarkets Supermarkets stores
Operating segment 7.6% 17.8% -5.4% 33.3%
Number of employees 5.7% -1.5% -10.8% -14.0%
Retail sales -7.0% -3.8% -9.5% 5.9%
Average sales per m -10.5% -11.6% 8.1% -1.6%
Average customer
spending -12.5% 3.8% -6.5% 28.0%
Gross margin 0.3 ppt 0.8 ppt 0.4 ppt -1.9 ppt
It is worth noting that the performance of sampled department stores showed a marked
deterioration in 2012, with retail sales, average sales per sqm and average customer
spending falling by 7%, 10.5%, and 12.5% respectively.
Department stores
Chinas department store sector is heavily dominated by regional players, and the market
is highly fragmented. Many players have struggled over recent years. As well as facing
erce competition from shopping malls, specialty stores, and online retailers, they have
also been undermined by their commission-based, concessionary model. As shown in
Exhibit 17, department stores gross prots from sales last year dropped by 1.1 ppt to
17.5%; the net prot margin from sales decelerated to 2.15% and was below the industry
average of 2.46%.
Exhibit 21 shows the top 10 department store operators by sales.
!"
Exhibit 21: Top 10 department store operators by sales, 2012
Country Sales yoy No. of yoy
Rank Enterprise of origin (million yuan) growth (%) stores growth (%)
1 Shanghai Friendship China 570,000.0 3.6 49 14.0
Group Incorporated (Shanghai)
Company
2 Dalian Dashang China 372,750.0 4.7 170 0.0
Group Co., Ltd. (Dalian)
3 Chongqing Department China 333,996.5 11.5 286 5.5
Store Co., Ltd. (Chongqing)
4 Yinzuo Group Co., Ltd. China 320,311.5 16.3 104 15.6
(Shandong)
5 Changchun Eurasia China (Jilin) 241,449.8 21.3 58 16.0
Group Co., Ltd.
6 Beijing Wangfujing China 215,743.9 7.4 28 12.0
Department Store (Beijing)
(Group) Co., Ltd.
7 Rainbow Department China 203,734.6 7.5 59 15.7
Store Co., Ltd. (Shenzhen)
8 Parkson Retail Group Malaysia 197,235.8 20.1 48 4.3
Ltd.
9 Wenfeng Great World China 194,905.9 0.8 995 0.5
Chain Development (Jiangsu)
Corporation
10 Golden Eagle Retail China 186,691.9 13.6 28 7.7
Group Ltd. (Nanjing)
Source: China Chain Store and Franchise Association; modied by Fung Business Intelligence Centre
Major trends
i. Integration of online and ofine channels
To extend customer reach and further penetrate the market, many department stores
have launched online platforms. Currently, most department store operators outsource
their online operations to third parties. They are running at a loss. Some operators are
actively working on integrating their online and ofine channels.
!#
Case: Intime Retail Group
Intime was one of the rst China department store operators to set up an online virtual
store. Its online store, Yintai.com, started in late 2010. Yintai.com is operated by Zhejiang
Intime Electronic Commerce Co., Ltd. (while Intime owns 40% of the company). Yintai.
com showed a 100 million yuan loss in 2012 despite reporting a stunning yoy sales
growth of 380%. Intimes online and ofine channels target different customer groups.
The online platform targets the mass market, while the ofine stores target mid- and high-
end consumers. Products offered by the online and ofine platforms are not the same,
with overlapping rate lower than 50%.
Going forward, Intime is set to fully integrate its online and ofine channels. It intends
to create a unified client database and offer the same merchandise and shopping
experience to its customers across all sales channels.
ii. Department store operators rene market strategies and strengthen
merchandise categories
Competition is erce in the department store segment. To distinguish themselves against
competitors, some department store operators have started to revamp stores to target
the premium segment. Wangfujing Department Store has introduced its sub-brand
hQ to target the high-end market; Dalian Dashang has opened its Mykal Department
Store to cater to higher-end consumers, while Kingson Department Store targets
trendy youngsters. Some department store operators have started to focus on certain
merchandise categories. Realising that consumers pay more attention to home products,
Wuhan Zhongbai Commercial Group has teamed up with home product designers from
Japan, Taiwan and Hong Kong to offer unique collections.
iii. Players strive to enhance customer experience
To survive the highly competitive marketplace, some department store operators
differentiate themselves by incorporating more entertainment elements and catering
services. The department store plus shopping mall business model is becoming more
popular. This allows operators to offer a better shopping experience and diversify income
streams.
Shopping malls
Shopping malls continue to gain in popularity. Consumers can enjoy one-stop shopping
conveniently under one roof. According to a report by Deloitte and CCFA, as at the
end of 2011 China had a total of 2,812 shopping centres open for business, with an
aggregate total commercial building oor space of 177 million sqm. It is estimated that
new commercial building oor space for Chinas shopping centres will surpass 35 million
!$
and 44 million sqm in 2012 and 2013 respectively; by the end of 2013, Chinas shopping
inventory will occupy 250 million sqm. Exhibit 22 shows the number of newly-opened
shopping centres in China over recent years.
Exhibit 22: Number of newly opened shopping centres in China, 2002 - 2012
(estimates)
Source: Mall China Information Centre, Deloitte, China Chain Store and Franchise Association
Major trends
i. Shopping malls spring up in key city suburb areas
Suburb areas of tier 1 cities are becoming new development targets due to high-
density shopping malls and rising rents in city centres. Also, the growth of inter-city
transportation and the popularity of automobiles make it possible to travel conveniently.
As a consequence, shopping centres in suburban areas have larger floor areas than
those in city centres.
ii. Oversupply of shopping malls is common
Due to stringent measures imposed by the government to cool the residential property
market, many property developers have diverted their attention to the commercial
property market. Local governments have offered incentives to support shopping centre
development. These policies have led to an oversupply of shopping malls. According
to Knight Frank
9
, the average vacancy level for tier 1 cities in China was 8.1% in 2H12,
while the average vacancy rate for tier 2 cities over the same period was 9.5%. Exhibit 23
shows the vacancy rates of prime shopping centres in selected cities.
9 http://www.knightfrank.com.hk/content/upload/les/Reports/Research_retail/Holdways_retail_2h2012.pdf
!%
Exhibit 23: Vacancy rates of prime shopping centres, 2H12
Source: Knight Frank
iii. Shopping malls scale up in size
Shopping malls are becoming larger in scale and have more extensive oor spaces to
incorporate differentiated merchandise and services. Jones Lang LaSalle expected that
the average mall size would increase from 710,418 square feet in 2005 to over 947,224
square feet in 2013
10
.
iv. Catering and entertainment elements prevail
To enhance the consumer experience and
prol ong the ti me customers spend i n the
shopping malls, many malls have expanded
their catering and entertainment services.
For i nstance, Popark i n Guangzhou has
undertaken extensive renovation and the mall
now features a large food court hosting some
well-known restaurants. Other shopping malls
such as Saiho Plaza and CapitaMall Jinniu
Phase II i n Chengdu have i nvi ted ci nema
operators to open theatres.
10 http://www.cnbc.com/id/100865667
!&
Hypermarkets and supermarkets
Intensified competition, surging rentals and labour costs and increasingly saturated
markets have all seen hypermarkets and supermarkets margins narrowed. Planet Retail
forecasts hypermarket and supermarket sales growth to fall from 16% yoy in 2012 to
12% yoy in 2013 and store number growth to drop from 11% yoy in 2012 to 10% yoy in
2013 (see Exhibit 24).
Exhibit 24: Sales growth and store number growth for hypermarkets and
supermarkets, 2009 - 2013 (estimates)

Source: Planet Retail, Deloitte
Exhibit 25 shows the top 10 hypermarket and supermarket operators by sales in 2012.
China Resource Vanguard topped the list with total sales of 941 billion yuan in 2012,
followed by RT-Mart and Lianhua Supermarket.
!'
Exhibit 25: Top 10 hypermarkets and supermarkets operators by sales, 2012
Sales yoy No. of yoy
Rank Enterprise (million yuan) growth(%) stores growth (%)
1 China Resource Vanguard Co., Ltd. 941,000 13.80 4,423 11.2
2 RT-Mart Shanghai Ltd. 724,700 17.70 219 18.4
3 Lianhua Supermarket Holdings
Co., Ltd. 657,302 -3.40 4,762 -8.8
4 Wal-Mart (China) Investment
Co., Ltd. 580,000 3.6 395 6.8
5 Carrefour China Inc. 452,739 0.20 218 7.4
6 Nonggongshang Supermarket
(Group) Co., Ltd. 303,028 0.20 2,734 -19.0
7 Yonghui Superstores Co., Ltd. 279,300 37.00 249 22.1
8 TESCO China 200,000 11.10 111 8.8
9 Shandong Jiajiayue Group 181,880* 12.00 595 3.8
10 A-Best Supermarket Co., Ltd 180,000* 2.70 116 0.0
Major trends
i. Direct farm sourcing continues
An increasing number of hypermarket and supermarket operators source directly from
farmers to lower distribution costs. They can also provide cheaper, fresher and better
quality agricultural produce to consumers. A typical example is Carrefour. In the vanguard
of direct farm sourcing, the retailer has partnered with over 460 farm cooperatives since
2007. Other hypermarket operators such as Wal-Mart, RT-Mart, Tesco, Metro AG,
Wumart and China Resources Vanguard have undertaken similar initiatives and achieved
remarkable successes in direct farm sourcing. This has in turn also helped farmers
increase their annual incomes and improve the rural retailing landscape.
Exhibit 26 depicts some specic ways that hypermarket operators engage in direct-farm
sourcing.
!(
Exhibit 26: How hypermarket operators engage in direct-farm sourcing
Invest directly in planting Work with farmers cooperatives to
and production bases handle transportation and logistics needs
Work with agricultural production Line up with other retailers to
and processing rms source food products together
Source: Fung Business Intelligence Centre
ii. Players keen to introduce high-quality imported foods
With higher household incomes and increasing food safety concerns, many middle class
consumers are willing to pay a premium for high-quality, authentic, imported foods.
Eyeing such large opportunities, some supermarket and hypermarket operators have
opened high-end stores which specialise in selling imported foods. For example, China
Resources Vanguard launched Ole, a high-end supermarket chain to cater to the growing
demand for fresh, organic and natural products. It plans to expand the brand to cities
such as Chengdu, Nanning, Xian, Shenyang and Zhongshan. The accumulated store
number is expected to reach 50 by 2016
11
.
iii. Private brands become increasingly common in hypermarkets and
supermarkets
For many Chinese consumers, private brands are usually associated with low pricing and
value for money. Many hypermarket and supermarket operators have launched their own
private labels in categories such as household products and packaged foods.
However, there are already a huge number of low priced brands available at hypermarkets
and supermarkets. So, many Chinese consumers prefer to purchase branded products
that are sold at similar or slightly higher prices. To sustain their competitive advantage, it
is essential for private labels to improve on perceived quality and safety standards.
11 http://news.winshang.com/news-127181.html
!"
Convenience stores
The development of convenience stores in China is somewhat unbalanced. In some
cities such as Shanghai and Guangzhou, competition is extremely erce. But in other
cities, especially the lower-tier ones, development is lagging to a greater extent. Exhibit
27 maps out the competitive landscape of Chinas convenience stores.
The leading players by number of stores are shown in Exhibit 28. For most convenience
store players, ever-increasing rental and labour costs remain major challenges.
Exhibit 27: Competitive landscape of convenience stores in China, 2012
Source: Kantar Retail
")
Exhibit 28: Top 10 convenience store operators by number of stores, 2012
Convenience Country of No. of stores
Ranking Enterprise store brand origin in 2012
1 Sinopec Group Easy Joy China (Beijing) 20,891
2 PetroChina Co., Ltd. uSmile China (Beijing) 13,000
3 Dongguan Sugar &
Liquor Group Meiyijia Meiyijia China (Dongguan) 4,650
Convenience Store
Co., Ltd.
4 Zhejiang Gongxiao Gongxiao; China (Zhejiang) 2,115
Supermarket Ltd. Jialian
5 Shanghai Liuhua Quik Quik China (Shanghai) 2,031
Convenience Stores
Co, Ltd.
6 Nonggongshang Group Kedi; Alldays China (Shanghai) 1,780*
7 7-Eleven 7-Eleven United States 1,732*
8 China Resource Suguo Suguo China (Nanjing) 1,694
9 Guangdong Sun-high Sun-high China (Guangdong) 1,559
Convenience Store
Co., Ltd.
10 Chengdu Hongqi Chain Hongqi China (Chengdu) 1,336
Co., Ltd.
Source: China Chain Store and Franchise Association, modied by Fung Business Intelligence Centre

Major trends
i. Convenience store players extend value-
added services
To differentiate from competitors, convenience store operators increasingly focus on
offering value added services. These include selling admission tickets for specic shows
or tourist sites, top-up services for mobile phone users and bill payment schemes.
Although the profit margins are slim, many convenience store players view these as
effective in increase consumer traffic and driving impulse buying, particularly at the
checkout counter.
"!
ii. More on-the-go meal services available
Convenience stores have been offering fresh, prepared foods for years, but the trend has
become more pronounced as increasing numbers of time-conscious consumers look for
on-the-go meals. Some retailers have revamped their conveniences stores and added
on-site catering to provide hot and cold food and drink. For example, some Circle K
outlets provide in-store catering to offer meals and drinks under its own Hot & In brand.
Circle K believes its Hot & In service is the main revenue driver in the Guangzhou market,
contributing approximately 40% of the sales mix in FY2012
12
. 7-Eleven has also launched
foods under its 7-Fresh brand
13
, while Family Mart has established its own store brand
Fami
14
. In general, prot margins for catering services are higher than for many other
categories of merchandise.

iii. Partnerships with online retailers for pick-up services
Given the vast network of convenience stores, more online retailers are considering
adapting their stores as pick-up points, so consumers can collect products they order
online. For example, Amazon China has teamed up with Family Mart since last March
to offer pick-up services at the latters outlets in Shanghai. Consumers can pick up their
online orders in designated convenience stores within a specic period of time. They can
choose to pay by cash, credit card or debit card at the store.
Specialty stores
Specialty stores are expanding aggressively, driven by both the rapid expansion of local
specialty retailers and the increasing number of international players that have entered
the China market. Some examples include Topshop, Forever 21, and Hollister.
As illustration, Exhibit 29 shows the pace of expansion for apparel specialist retailers. The
compound annual growth rate for total sales, numbers of outlets and size of sales space
have increased by 17.8% yoy, 10.6% yoy and 12.5% yoy respectively between 2007 and
2012.
12 http://www.hkexnews.hk/listedco/listconews/SEHK/2013/0816/LTN20130816253.pdf
13 http://www.7-11.cn/cn/exclusive_fastfood.aspx?catid=8|28
14 http://www.familymart.com.cn/shfm/product/productlist.aspx?nodeid=52
""
Exhibit 29: Apparel specialist retailers: value sales, outlets and sales space,
2007-2012
2007 2008 2009 2010 2011 2012
Value sales (billion yuan) 214.8 257.3 292.5 354.0 417.8 487.5
Outlets (thousands) 309.5 341.3 369.7 421.4 467.9 512.8
Sales space (million sqm) 28.6 31.9 35.1 40.9 46.2 51.5
Source: Euromonitor
Exhibit 30 depicts the number of stores established by selected major fast fashion
specialty retailers over recent years. All such retailers have accelerated their expansion in
China.
Exhibit 30: Store count of fast fashion specialty retailers in China, 2010-2012
Source: China National Commercial Information Centre, Company websites
Having said that, specialty store profitability has suffered a significant slowdown over
recent years. According to CCFA, gross profits were down by 1.3 ppt to 17.0% in
2012 and net profits for specialty stores were down by 0.2 ppt to 1.3%. Specialty
store operators, similar to their counterparts in other retail format segments, are facing
increasing competition from online retailers. Also, after years of rapid expansion, many
specialty store operators, particularly in the apparel and sports specialty segment, are
now facing the challenge of holding large inventories along with higher operational, rental
and labour costs.
"#
In order to cut costs and jettison excessive inventory, some apparel retailers are closing
existing stores and opening factory outlets. For instance, Puma has announced that it will
close 90 stores in China as part of its global cost-cutting measures. Meanwhile, Nike is to
open between 40 and 50 factory outlets in China this year, with discounts of up to 70%
to clear inventory.
Similarly, despite their national presence, many 3C specialty stores remain unprotable.
Some players are looking for ways to transform. Suning and Gome, for instance, are
gradually shifting from solely consumer electronics sales to offering a larger range of
other products such as apparel, cosmetics, books and household products. Sunings
ofine stores are set to carry more categories; the rm is introducing virtual displays of
online categories through iPad and other mobile devices. The idea is to introduce a shop
anywhere, buy anywhere experience.
Discount outlets
The discount outlet format continues to gain popularity among both retailers and
consumers. It is estimated that China has more than 400 discount outlets
15
, far
exceeding the total number in the United States.
Eyeing the booming market, more domestic and foreigner retailers are opening stores
in discount outlets. For example, Shanghai Bailian Group opened its third discount
outlet, Wuxi Mall, at the end of June this year after successfully opening two other
discount outlets since 2006. Value Retail, the European discount luxury outlet chain, is
reportedly to open its rst store in a discount outlet in Suzhou in early 2014. Shopin,
Chinas discount outlet chain with the majority of its stores in Beijing, has branched out
to Hangzhou, and the retailer plans to roll out its outlet stores in Eastern and Southern
China. Hunan Friendship & Apollo Commercial Co., Ltd. expects to open its second
discount outlet in 2014. Exhibit 31 lists out some major discount outlets that have
opened in 2013.
Exhibit 31: Major discount outlets open in 2013
Name of discount outlet City
Megamills Shanghai
Beijing Capital Outlets (Fangshan branch) Beijing
Changsha Globe Outlets Changsha
Tianjin Yansha Outlets Tianjin
Florentia Village Tianjin
Source: China Commerce Association for General Merchandise, Commerce Magazine, May 2013
15 http://www.zgswcn.com/2013/0815/217882.shtml
"$
For retailers, discount outlets are possibly the best channel to offload stale inventory
without slashing prices in retail stores. Consumers can buy their desired brands at a
discount. The governments anti-corruption campaign, which may lead to an increase
in inventory for luxury brands, could further boost the outlet business, as many luxury
retailers sell off-season products through them.
On the other hand, discount outlets in China are not as mature channels as those in
many other countries where consumers can easily nd rst-tier brands at big bargains.
Many outlets in China can only attract lesser-known brands. Also, the problem of
counterfeit products undermines the image that discount outlets would prefer to project.
Online Retailing
Onl i ne shoppi ngs popul ari ty conti nues to power ahead i n Chi na. Accordi ng to
iResearch
16
, the transaction value of the online retail market increased by 66.2% yoy to
reach 1,304.0 billion yuan in 2012, accounting for 6.2% of the countrys total retail sales.
China has become the worlds second largest online market. Exhibit 32 shows total
transactions in the countrys online retailing sector by quarter.
Exhibit 32: Total transactions for online retailing, 1Q11 - 2Q13 (estimates)
Source: National Bureau of Statistics, iResearch
With Chinese consumers increasingly used to shopping online, the retail markets growth
momentum is set to be sustainable for a number of years. iResearch expects total online
sales to reach 3,600 billion yuan in 2016 and account for 10.8% of total retail sales.
China is expected to overtake the United States for online sales in 2014.
16 http://www.iresearch.com.cn/coredata/2012q4.shtml
"%
Major trends
i. More B2C players operate as open platforms
The B2C segment is highly competitive, so many B2C retailers are transforming
themselves into open platforms in order to expand the scope of their business and
become more profitable. Third parties can sell goods on their platforms and online
tenants are usually charged various types of fees, such as credit deposits, entry fees,
annual fees, commissions, advertising and transaction fees. The platform owners provide
logistics, warehousing and after-sales services for these tenants. Hence, B2C players can
expand their product categories without needing to make a signicant investment.
ii. Online retailers enrich product offerings
Many online retailers have been actively increasing their product offerings by either
adding new categories or forming partnerships with other brands on their open platforms.
Reasons for expanding product offerings are threefold: (1) to enhance consumers
stickiness and cross-selling opportunities; (2) to improve overall margins and turnover;
and (3) to expand market share.
iii. Price competition is common
Competing on price to build market share remains the number one marketing strategy
in Chinas online retail market, as most Chinese consumers remain largely price focused.
Many retailers have tried to squeeze out competition and increase market share by
adopting a low price strategy.
The price wars have made it difcult for smaller online retailers to compete with giant
operators. Many lack the scale and resources to provide a wide range of products
through efficient logistics, and they are also less competitive in terms of pricing and
reputation. So, for these smaller players, focusing on a specic category can help them
to secure a foothold in the market. It seems they should actively seek better ways to
differentiate themselves from competitors.
For detailed information on online retailing in China, please refer to our Online retailing in
China report published in June 2013.
(http://www.funggroup.com/eng/knowledge/research/china_dis_issue111.pdf)
"&
Key highlights
"'
From aggressive store expansion to improved store productivity
Some retail players adopted aggressive expansion strategies in the past to boost brand
visibility, but they now nd that many stores undertaking this approach are unprotable.
Faced with slowing growth in the market, some retailers have started to close unprotable
stores and focus on improving core competencies.
Retailers are adopting various methods to do so and achieve operational excellence.
Some signicant approaches include greater investment in R&D, the launch of longer-
term brand marketing campaigns, introduction of new store brands and retail concepts.
Other strategi es i ncl ude the l aunch of di fferenti ated merchandi se assortments,
accelerated format revamps and innovative schemes.
Poorly-managed business expansion by some domestic players, particularly sportswear
and fast fashion retailers, has sparked considerable concern. Many have opened too
many store outlets, causing overstocking of often obsolete inventory. As a result, some
sportswear companies have suffered a considerable slowdown in sales growth. For
instance, domestic players such as Li Ning, Anta, 361 Degree, Xtep, and Peak suffered
yoy sales declines of minus 17%, minus 18%, minus 15%, minus 12% and minus 29%
respectively in 2012.
Retailers launch own private labels or proprietary brands
Launching private labels or proprietary brands appears a feasible way for retailers to
build core competencies. Private labels or proprietary brands can also increase prot
margins and improve customer loyalty. Yet, penetration by private labels is low in China.
According to a report by Rabobank, sales of private labels account for only about 3% of
total sales
17
. But the share of private labels in China is expected to rise between 25%
and 30% by 2030, as Chinese consumers increasingly buy private label products and
retailers become more familiar with launching house brands
18
.
In the meantime, more retailers now realise the importance of direct sales. Department store
operators, in particular, are stepping up efforts to develop private brands. For instance, Intime
has increased its proportion of direct sales; total sales proceeds from direct sales increased
by 29.7% to 921.3 million yuan in 1H13
19
. The company also set up its own direct sales
17 http://nance.eastmoney.com/news/1355,20130820316235017.html
18 https://www.rabobank.com/en/press/search/2013/20130812_Rabobank_Report-Private_Label_Goes_to_
Asia_Share_in_India_and_China_expected_to_hit_25-30_by_2030.html
"(
department in 2012, recruiting buyers to handle their own private label businesses
20
. At the
same time, Hola, the Taiwan-based home furnishing store, launched kitchenware under its
own brand last July
21
. Zhongnan Commercial (Group) Co., Ltd. announced the launch of a
department store stocking solely self-sourced merchandise.
Launching private labels indeed seems to be an attractive strategy for retailers seeking
differentiation; yet, there are many challenges. Private labels in China are not particularly
successful in terms of revenue generation and popularity among consumers. Many
local department store operators believe they lack professional and experienced buyers
to select appropriate products. It normally takes more than three years to nurture a
professional buyer and the turnover rate is high.
In addition, many retailers do not possess appropriate knowledge to manufacture
and market their in-house product lines. The operating model is completely different,
requiring a new range of management skills. Retailers have to hold inventory and be
prepared to incur additional risk in contrast to when they are operating under the familiar
concessionary model. Given the huge capital investment needed, many retailers are
reluctant to launch their own products.
Mobile-commerce is increasingly popular, as is mobile payment
The mobile platform has become a highly significant sales channel. According to
iResearch, in 2Q13
22
, the transaction value of mobile shopping reached 37.52 billion
yuan, up 181.0% yoy (see Exhibit 33).
Exhibit 33: Transaction value via mobile, 1Q11 - 2Q13 (estimates)
Source: iResearch
20 http://www.takungpao.com.hk/house/content/2012-09/26/content_1166712.htm
21 http://money.chinatimes.com/news/news-content.aspx?id=20130717002036
22 http://www.iresearch.com.cn/coredata/2013q2_7.shtml
#*
Increasing numbers of telecommunications and network operators have launched
mobile payment services. A typical example is Tencent. Tencent rolled out its mobile
payment service for Chinese users on WeChat, a smartphone text and voice messaging
communication service developed by the company. Bank accounts can be bundled on a
WeChat account
23
.
Another example is China Unicom. The mobile operator partnered with Agricultural Bank of
China to provide mobile banking and payments services to the latters customers
24
. HTC
(Beijing) has signed a strategic deal with China Merchants Bank to offer its Mobile Wallet
service to Chinese consumers
25
. Alipay, Chinas largest e-payments provider, launched its
Alipay Wallet mobile app which, apart from providing online payments, also allows offline
payments at points of sales using barcodes and QR codes
26
to settle payments.
The prevalence of digital marketing
As Chinese consumers become more affluent and digital savvy, retailers are starting
to recognise the importance of developing digital marketing and sales channels.
Social media is having an explosive impact on consumer purchasing decisions.
Thi s i s parti cul arl y the case i n Chi na si nce shoppers general l y engage more
actively on social media platforms than their overseas counterparts. According to a
PricewaterhouseCoopers survey
27
, 57% of surveyed respondents follow brands or
retailers on social media, compared to 38% in the global sample.
The belief is that influential social media websites can increase the conversion rate and
encourage more customers to purchase goods. Many retailers have tried to leverage the
huge user databases of SNS websites to promote their products and enhance protability.
Sina Weibo, with more than 500 million registered users, is one of the most popular SNS
websites in China. WeChat, the instant messenger with more than 400 million registered
users, is another tool for brands to interact with consumers. Many department stores also
develop mobile apps equipped with interactive features, such as QR code. App users can
download exclusive coupons by simply scanning the QR code with their smartphones and
tablets. Retailers hope they can generate more sales via such e-initiatives.
However, the majority of companies still believe that they are not yet adequately prepared
to convert growing online interactions into a sales advantage
28
.
23 http://thenextweb.com/asia/2013/08/05/tencents-wechat-mobile-messaging-app-gets-payments-game-
center-and-stickers-in-long-awaited-update/
24 http://www.mobilepaymentsworld.com/china-unicom-partners-agricultural-bank-of-china-for-m-banking/
25 http://engl i sh.cmbchi na.com/CmbInfo/News/Detai l Info.aspx?gui d=6d7584f3-1023-43d6-9e3d-
d9e3e6652df2
26 http://www.alizila.com/alipay-introduces-mobile-wallet-app#sthash.9ekNbwiR.dpuf
27 PWC, "Demystifying the online shopper. 10 Myths of multichannel retailing", January 2013
28 ht t p: //www. amcham-shanghai . or g/AmChamPor t al /MCMS/Present at i on/Templ at e/Cont ent .
aspx?Type=32&Guid={EDFDF671-E699-42E8-AF46-7F99B6C51793}
#)
Improving customer relationship management
Although many retailers in China have been running their membership programmes
for a long time, most simply collect data from customers but do not fully utilise the
information. It is common that members of a particular branch of a department store
cannot enjoy membership discounts in other branches. This is attributable to the fact
that many retailers do not have a centralised customer database for effective customer
management.
An effective customer loyalty programme is considered instrumental in attracting and
retaining customers. Retailers now realise the need for creating a centralised database
for ease of data analysis and customer management. For example, Joycity is trying
to combine the membership programmes of its ve shopping malls to allow members
to accumulate points when they purchase in any malls owned by the same group.
They can enjoy the same discounts in each mall using the same card
29
. Meanwhile, as
mentioned earlier, many retailers use various types of social media to reach out to their
members
30
.
The concept of the omni-channel emerges
The omni-channel is a seamless approach to providing customer experience through
different shopping channels. Retailers seek to pull together multi- and cross-channel
offerings, including physical stores, online platforms and social media, to create a highly
convenient and impactful shopping experience.
The concept of the omni-channel is still very new in China. The offline and online
operations of many retailers are often separate. Retailers usually target different consumer
segments online and ofine, while their online and ofine pricing strategies do no match.
Also, distribution centres for online and ofine markets are usually different; customers
can only return products to the channel where they purchased them. Also, many
retailers have separate customer databases for ofine and online purchases. In short, the
interaction between online and ofine businesses is very limited.
At the moment, there is no fully integrated onmi-channel player in China. However, some
retailers are starting to take a closer look at various aspects of omni-channel strategies
and the impact on their businesses.
29 http://www.bbtnews.com.cn/news/2013-08/16000000153923.shtml
30 http://economists-pick-research.hktdc.com/business-news/article/%E5%9C%8B%E9%9A%9B%E5%B8
%82%E5%A0%B4%E7%B0%A1%E8%A8%8A/%E5%85%A7%E5%9C%B0%E7%99%BE%E8%B2%A8
%E6%A5%AD%E7%86%B1%E8%A1%B7%E5%BE%AE%E4%BF%A1%E8%A1%8C%E9%8A%B7/imn/
tc/1/1X000000/1X09U8LR.htm
#!
For example, in February 2013, Suning announced the change of the companys name
from Suning Appliance Co., Ltd. to Suning Commerce Group Co., Ltd.; its future retail
business model in China is described as physical stores, e-commerce, plus retail service
provider
31
. From a long-term perspective, the company has the opportunity to make a
transition from a conventional retail channel of household appliance and 3C to a Wal-
Mart + Amazon model which runs an all-category and all-form business both online
and ofine, providing consumers with a shop anywhere, buy anywhere omni-channel
experience. Since June 2013, Suning has also unified its online and offline pricing
strategy. Intime Department Store has also been striving to offer a multi-channel shopping
experience by building an interactive online platform. For example, this offers free in-
store WiFi services. Another example is the footwear company, Belle. The company
is reportedly to launch in-store pick up services within two years aimed at consumers
purchasing from its online platform, yougou.com
32
.
Industry experts believe that online and ofine integration will become an inevitable retail
trend.
Tier 3 and tier 4 cities become the focus for development
Thanks to ongoing urbanisation and rising incomes, consumption in lower tier cities is
growing fast. Tier 3 and tier 4 cities will be the key focus for development of Chinas retail
business over the next few years as competition gets tougher in tier 1 and tier 2 cities.
Many hypermarkets have already shifted focus to lower-tier cities. For instance, Sun Art
Retail Group, the owner of RT-Mart and Auchan, has approximately 10.9% of its stores
located in tier 1 cities, 18.7% in tier 2 cities, but with 43.7% in tier 3 cities, 20.0% in tier 4
cities and 6.7% in tier 5 cities, as of 30 June 2013
33
.
M&A continues to be an opportune avenue fueling growth
M&A is a fast way to expand market presence and penetrate different consumer
segments. One prominent case recently was the partnership between China Resources
Enterprise (CRE) and Tesco. CRE announced that it will team with Tesco to establish a
joint venture (JV) for the food retail business on the Chinese mainland, in Hong Kong and
Macau
34
. CRE will own an 80% stake in the JV with the remaining 20% owned by Tesco.
31 http://www.cnsuning.com/snsite/sn_contentFront.do?method=contentDetail&id=2206
32 http://www.chinawuliu.com.cn/zixun/201308/19/248576.shtml
34 http://www.cre.com.hk/announ/e-20130809A-1.pdf
#"
Another case was the acquisition of PCD Stores by Wangfujing Department Store (WFJ)
last January. WFJ acquired PCD Stores, which operates 18 department stores and three
outlets in China, with a view to expanding market share and geographical coverage
on the mainland, diversify its retail business activities by engaging in discount outlet
businesses, and increasing the proportion of self-owned properties.
Exhibit 34 shows some recent M&A cases in Chinas retail sector.
Exhibit 34: Selected M&A cases in Chinas retail sector, July 2012 - August 2013
Announced Amount
Company Target date (million USD)
Shandong Commercial Yinzou Group Co., 30-Mar-13 40
Group Co., Ltd. Ltd.
Beijing Wangfujing PCD Stores Ltd. 24-Jan-13 257
International Commercial
Development Co., Ltd.
Mianyang Yaoda Taiyuan Tianlong 6-Jan-13 32
Investment Co., Ltd. Group Co., Ltd.
Xizi UHC Baida Group Co., Ltd. 30-Aug-12 6
Taubman-TCBL Xian Xian Wangfujing 29-Aug-12 51
(Hong Kong) Ltd. Department Store
Baoji Store Co., Ltd. Hanzhong Century 28-Aug-12 21
Sunshine Building
Co., Ltd.
Parkson Retail Group Ltd. Qingdao Parkson 27-Aug-12 54
Xiamen ITG Holding Xinda Duty-free 10-Jul-12 9
Co., Ltd. Department Store
Source: China Venture
##
Government initiatives
#$
35 http://hk.lexiscn.com/latest_message.php?id=86984
http://www.gov.cn/zwgk/2013-08/14/content_2466856.htm
36 http://www.saic.gov.cn/zwgk/zyfb/zjwj/scgfgls/201308/t20130802_136982.html
37 http://www.gov.cn/zwgk/2013-06/05/content_2419964.htm
The Chinese government has been very supportive in promoting the development of the
retail sector. Exhibit 35 lists some major initiatives launched by the government recently.
Exhibit 35: Major government initiatives related to the retail sector, July 2012
August 2013
Government
policy/ initiative Launched by Release date Details
Opinions on The State August 2013 In the Opinions, the main tasks for
Promoting Council promoting information consumption are
Information put forward in the following aspects:
Oonsumpt|on and Acce|erate the evo|ut|on and upgrad|ng
Boosting Domestic of information infrastructure
Demand
35
Strengthen the supp|y capac|ty of
information products
Foster the demand of |nformat|on
consumption
Advance the |nformat|sat|on of pub||c
services
Strengthen the env|ronment for
construction of information consumption
Opinions on State August 2013 The Opinions aim to strengthen the
Accelerating the Administration enforcement of market supervision and
Development of for Industry create a sound market environment a
the Distribution and Commerce sound market environment for the healthy
Sector
36
development of the distribution sector.
Plan for Specifying The State May 2013 The Plan delegates specic tasks to
the Division of Council various departments for implementing
Work for reform of the distribution system and
Deepening the accelerating the development of the
Reform of the distribution industry. It ensures better
Distribution System division of labour, promotes collaboration
and Accelerating and strengthens coordination between
the Development of different departments. The plan points
the Distribution out the need to optimise supply chain
Industry
37
management, accelerate the development
of e-commerce, foster the core
competitiveness of enterprises, reduce
distribution costs and strengthen the
protection of intellectual property rights,
among other measures. The Plan also
calls for reducing the burden of the
distribution sector by offering favourable
scal and nancial policies and preferential
land policies.
#%
Government
NDRC to deepen The National May 2013 The Opinions aim to promote economic
economic reform
38
Development restructuring and transformation. A total
and Reform of 22 major tasks in seven elds were set
Commission as priorities in 2013, including delegation
of the approval authority, scal and
nancial reforms to stimulate the
economy, expansion of the VAT pilot
programme to lower the tax burden on
companies and formulation of a
development plan to promote urbanisation.
Draft Amendment National April 2013 The Draft aims to further protect
to the Consumer Peoples consumer rights and boost domestic
Protection Law
39
Congress demand in the country, and has made
revisions to the current Consumer
Protection Law in the following ve areas:
Enhance ru|es concern|ng consumer
rights protection
Strengthen the ob||gat|ons and dut|es
of business operators
Regu|ate the e-commerce |ndustry
O|ar|fy the ru|es of consumer
associations
O|ar|fy the regu|atory respons|b|||t|es of
administrative authorities
Measures for the State April 2013 The Measures stipulate that merchants
Management of Administration on online retail platforms are required to
Online Invoices
40
of Taxation issue ofce invoices with each purchase.
Circular on Further National April 2013 The Circular aims to further improve the
Promoting the Development trans-departmental working coordination
Sound and Rapid and Reform mechanism, boost innovation in the
Development of Commission e-commerce sector, and promote a safe
E-Commerce
41
with 12 other and credible environment for
government e-commerce transactions.
departments
Comprehensive The State January 2013 The Work Plan aims to reduce distrubution
Work Plan regarding Council costs, improve distribution efciency, and
Cutting Distribution establish a comprehensive system for
Expenses and collecting data and statistics.
Improving
Distribution
Efciency
42

39 http://www.china-brieng.com/news/category/legal/page/12#sthash.Z1Hvu7ua.dpuf
40 http://www.chinatax.gov.cn/n8136506/n8136593/n8137537/n8138502/12236582.html
41 http://www.china-briefing.com/news/2013/06/11/china-further-promotes-e-commerce-development.
html#sthash.cRCsrlkY.dpuf
#&
Government
Guiding Opinions on Ministry of December The Opinions emphasise the importance
Promoting Brand Commerce 2012 of brand building and encourages
Consumption in enterprises to develop and cultivate
China
43
Chinese brands. Chinese enterprises are
encouraged to expand their sales
networks domestically, as well as consider
acquiring foreign brands and sales
channels to expand into overseas
markets. The Opinions also call for
commerce departments at all levels to
work together to promote consumption of
branded products domestically, as well as
formulate regulations to provide better
legal protection for brands.
12th Five-Year Plan The State September The government set the following targets
for Domestic Trade Council 2012 during the 12th FYP period:
Development
44
Tota| reta|| sa|es of consumer goods to
reach 32 trillion yuan, with an annual
growth rate of 15%
va|ue-added of the who|esa|e, reta||,
accommodation and catering sectors to
reach 7 trillion yuan, with an annual
growth rate of 11%
Tota| transact|ons w|th|n the
e-commerce market to reach 18 trillion
yuan, with an annual growth rate of 30%
Opinions of the The State August The Opinions aim to establish a modern
State Council on Council 2012 distribution system, reduce the ratio of
Further Reformation total logistics cost to GDP, enhance the
of the Distribution competencies of large-sized distribution
Sector and enterprises, adopt modern information
Acceleration of the technology, and improve the market
Development of the environment.
Distribution Sector
45
Regulations on the The State July 2012 As part of the anti-corruption campaign,
Affairs and Council the government promulgated the
Administration of regulations effective October 2012.
Government According to the regulations, government
Agencies
46
agencies are prohibited from purchasing
luxury goods.
Source: Government websites
43 http://www.mofcom.gov.cn/aarticle/b/d/201301/20130108511628.html
#'
Challenges
#(
Signicant increase in operating costs
Increased operating costs in China have squeezed prot margins for many retailers. The
ever-escalating rental and labour costs have particularly troubled many retailers over
recent years. Rental costs have been debilitating particular for retailers whose contracts
ended in 2012. On average, rental costs increased by between 3% and 5% yoy in
2012
47
. For leading retailers, average rental costs in prime locations increased by 21%
yoy in 2012.
At the same time, labour costs have increased by between 5% and 10% since 2012 due
to rising minimum wages across the country in the wake of labour shortages and surging
ination. Some 13 cities and provinces have raised their minimum wage levels this year,
with an average increase of around 17% (see Exhibit 36).
Exhibit 36: Minimum wage levels in 13 cities and provinces that raised the
minimum wage in 2013*
Minimum wage Minimum wage
after increase before increase yoy Effective
City (yuan/month) (yuan/month) change (%) date
Shanghai 1,620 1,450 11.7 1 Apr 2013
Shenzhen 1,600 1,500 6.7 1 Mar 2013
Guangdong 1,550 1,300 19.2 1 May 2013
Tianjin 1,500 1,310 14.5 1 Apr 2013
Zhejiang 1,470 1,310 12.2 1 Jan 2013
Beijing 1,400 1,260 11.1 1 Jan 2013
Shanxi 1,290 1,125 14.7 1 Apr 2013
Henan 1,240 1,080 14.8 1 Jan 2013
Jiangxi 1,230 870 41.4 1 Apr 2013
Guangxi 1,200 1,000 20.0 7 Feb 2013
Gansu 1,200 980 22.4 1 Apr 2013
Shaanxi 1,150 1,000 15.0 1 Jan 2013
Guizhou 1,030 930 10.8 1 Jan 2013
Source: China Brieng
* Amounts are based on minimum wage levels in Class A Districts.
47 Deloitte, "China power of retailing 2013", August 2013
$*
Unstructured development of retail properties and lack of
centralised city planning
Chinas commercial property sector has experienced significant growth over the past
decade. In some key cities, duplicated investment, lack of centralised city planning
and mismanagement are giving rise to problems such as trafc congestion, increased
competition, poor customer footfall, an uneven trade mix, high vacancy levels and
commercial disputes.
On the other hand, the development of large-scale retailers is seen as more rapid than of
smaller retailers mainly serving local neighborhoods. There is also a lack of large-scale,
modern retailers in smaller cities and local communities. So, Chinas retail scene remains
unbalanced.
Logistics bottlenecks are here to stay
As Chinas retail market continues to become increasingly sophisticated, the efficient
movement of goods is proving to be a key success factor for retailers. However, Chinas
logistics sector is less efficient than in many other developed countries, reflecting
the relatively higher ratio of total logistics cost to GDP. High logistics costs and weak
transport infrastructure pose hurdles for both retail and distribution companies.
Furthermore, in many lower-tier cities, there are a lack of logistics and distribution
centres. The technology for distribution is often not advanced enough to support Chinas
rapidly developing retail market.
To better control logistics costs and enhance competitiveness, some large-scale
retailers have put greater emphasis on retail logistics management. One key approach
is to partner with reliable and capable logistics service providers to improve delivery
capabilities and enhance customer experience and satisfaction.
For detailed information on retail logistics in China, please refer to our Retail logistics in
China report published in April 2013.
(http://www.funggroup.com/eng/knowledge/research/china_dis_issue110.pdf)
$)
Integrating online and ofine businesses remains a challenge
Online retailers offering low priced products and convenient shopping have posed
increasing challenges to traditional retailers. Seeing the huge growth potential of the
online market, an increasing number of traditional retailers have started to go online too.
However, as mentioned, the operating models for online and physical stores are very
different. Supply chains for online stores are generally more complicated than for physical
stores. The lack of qualied staff to operate the online business is another key challenge.
$!
Conclusions and implications
$"
Facing the headwinds of an increasingly competitive retail landscape, together with the
growing afuence and sophistication of Chinese consumers, the real retail winners are
those which constantly innovate and improve business practices. To succeed in Chinas
rapidly evolving retail market, enterprises need to keep abreast of the latest developments
in the market.
Understand the paradigm shifts in consumer behaviour
With increasing wealth and rising consumer sophistication, the consumer market in China
is undergoing fundamental changes. Most signicant is their abiding interest in trading
up more Chinese consumers are willing to pay a premium for higher quality products
and services. These consumers also demand unique products and services. To win in
the market, retailers need to understand the changing needs of consumers and take
appropriate action. At the same time, changing shopping preferences have transformed
the competitive landscape. In particular, the prevalent of online shopping has forced
retailers to rethink their strategies in response to the new retail environment.
Seamless cross-channel experience
Chinese consumers today are becoming accustomed to optimising their shopping
experience across different channels, including physical stores, online platforms and
social media. More retailers are stepping up efforts to pull together multi- and cross-
channel offerings, and explore various aspects of omni-channel strategies in the hope of
enhancing customer experience. The challenge for retailers is to ensure that all channels
complement one another and provide accurate, consistent and current information.
From Big Data to actionable insight
Advances in information technology and increasing access to information through
the Internet and mobile connectivity, have impacted consumers buying habits and
preferences across all channels. The appropriate use of Big Data allows retailers to
spot trends and better adapt to consumers changing needs. The key is to successfully
transform all such customer information and business intelligence into actionable insight,
and to adjust product and service offerings to suit the changing needs of customers.
$#
New technologies revolutionise the future of retail
Retailers need to closely monitor the development of new technologies such as data
analytics and 3D printing, which may have a revolutionising impact on how a business is
run; they should embrace change accordingly. Optimising performance and improving
competitiveness are crucial factors leading to success in Chinas highly competitive
marketplace.
Unique brand positioning
In todays competitive world, uniqueness is the key to standing out from the competition.
Retailers and brand owners need to develop strategic brand positioning, based on
the companys value proposition. They have to take account of the rapidly evolving
retail landscape and consumer preferences. Differentiated positioning and continuous
improvements of products and services are needed for an enterprise to stay ahead of
its competitors. Moreover, Chinese consumers are becoming increasingly brand loyal,
making it essential for retailers to establish and maintain a strong brand image.
Sustainable development
China is stepping up efforts to develop a sustainable economy. Likewise, an increasing
number of retailers are pursuing green initiatives as a means of building a socially
responsible corporate image. A number of global retailers, such as Wal-Mart and Tesco,
are stepping up efforts to be more eco-friendly by focusing on sustainable procurement
and opening green stores with low power lightning systems. With sustainability
increasingly perceived as a competitive factor, retailers should take account of green
issues when formulating their business strategies.
$$
Appendix
Appendix 1: List of enterprises among the top 100s that have launched their own
online purchasing platforms, as of April 2013
Enterprise Website
1 Suning Commerce Group http://www.suning.com
http://redbaby.suning.com/
http://binggo.suning.com/
2 Gome Electrical Appliance Group http://www.gome.com.cn/
http://www.dzelec.com/
http://www.coo8.com/
3 Wal-Mart (China) Investment Co., Ltd. http://www.yihaodian.com/
http://www.samsclub.cn
4 Intime Retail (Group) Co., Ltd. http://www.yintai.com/
5 Yum! Brands Inc., China Division http://www.4008823823.com.cn/kfcios/
index.htm
http://www.4008123123.com
6 McDonalds (China) Co., Ltd. https://www.4008-517-517.cn/
7 Bailian Group Co., Ltd. http://www.blemall.com/
http://www.jaja123.com
Lianhua Supermarket Holdings Co., Ltd. http://www.lhok.com/index.html
8 ShenZhen Nepstar Chain Drugstore Ltd. http://www.star365.com/
9 Guangzhou Watsons. Food & Beverage Co., Ltd. http://www.watsons.com.cn/
http://watsons.tmall.com/
10 Metro Group Co., Ltd. (China) http://www.metromall.com.cn/
11 Beijing Wangfujing Department Store (Group) Co., Ltd. http://www.wangfujing.com/
12 Carrefour China Inc. http://www.carrefour.com.cn
13 Rainbow Department Store Co., Ltd. http://www.myrainbow.cn/
14 New World Department Store China Ltd. http://www.xinbaigo.com/
15 Liqun Group Shareholding Co., Ltd. http://www.liqunshop.com/
http://www.lqyaopin.com/
16 PCD Stores (Group) Ltd. http://www.saite.com/
17 Shandong Commercial Group Corporation (Yinzuo Group) http://www.yinzuo100.com
18 Wuhan Zhongbai Group Co., Ltd. http://www.zon100.com/
19 Guangzhou Grandbuy Co., Ltd. http://www.igrandbuy.com/
20 Ito-Yokado Co., Ltd. http://www.yiteng365.com/
21 Hisap High Technology Corporation http://huimai100.com/
22 Nonggongshang Supermarket (Group) Co., Ltd. http://www.chblt.com/
23 Dalian Dashang Group Co., Ltd. http://www.66buy.cn/
24 Easy Joy Convenience Store of SINOPEC http://www.ejoy365.com/
25 Auchan (China) Investment Co., Ltd. http://www.auchan.com.cn/
26 Liaoning Xinglong Happy Family Business Group http://www.xlgoo.net
27 Beijing D-phone Commercial & Trade Co., Ltd. http://shop.dixintong.com/
28 Parkson Retail Group Ltd. http://www.parkson.com.cn/emall/
index.html
29 Chengdu Hongqi Chain Co.,Ltd. http://www.hqwg.net/
30 Hefei Department Store Group Co., Ltd. http://www.bdemall.com/
31 Shijiazhuang Beiguo Renbai Group Co., Ltd. http://www.ruyigou.cn/
32 Guandong Jiarong Supermarket (SPAR Guangdong) http://www.sparlala.com
33 Renrenle Commercial Group Co., Ltd. http://www.rrlgou.com/
34 AEON Group http://eshop.qdaeon.com/
$%
Enterprise Website
35 Qingdao Weekly Group Co. http://www.diandian.com/
36 Sanjiang Shopping Club Co., Ltd. http://www.sanjiang.com
37 Shandong Weifang Department Store Group Co., Ltd. http://www.92xmf.com/
http://www.zbasw.com/
38 Chongqing Peace Chain Drugstore Co., Ltd. http://www.hp1997.com/
39 China Zhenhua Group Science & Technology Co., Ltd. http://eshop.zhenshang.com/
40 Guangzhou Friendship Group Co., Ltd. http://121.8.125.2:6080/
41 Hunan Friendship & Apollo Holding Co., Ltd. http://www.9448.com.cn/newjrdshop/
index.php
42 A-Best Supermarket Co., Ltd. http://www.xyj-shop.com/
http://huichaoshi.taobao.com
43 Changchun Eurasia Group Co., Ltd. http://www.oysd.cn/
44 Chongqing New Century Department Store Co., Ltd. http://www.sjgo365.com/
http://www.cbmall.cn/
45 Eading Group Co., Ltd. http://www.itu4.com/
46 Changsha Tongcheng Holdings Co., Ltd. http://www.dolton.cn/
47 Jiangsu Wenfeng Great World Chain Development http://www.wfdsj.com.cn/shop
Corporation
48 Beijing Capital Retailing Group Co., Ltd. http://www.igo5.com/
49 Anhui Huishang Group Co., Ltd. http://www.hsnjf.com/
http://www.hzsmall.com/
50 C & U Group Co., Ltd. http://www.rbcs.cn/
51 Wuhan Wushang Group Co., Ltd. http://www.wssmgc.com
52 China Resources Vanguard Co., Ltd. http://www.crvmore.com
53 Shandong Newstar Group Co., Ltd. http://www.xinxing001.com/
54 Qingdao Likelai Co.,Ltd. http://www.shoplikelai.com/index.html
55 New Cooperation Joint-Stock Trade Chain Co., Ltd. http://www.csckl.com/
56 Wuhan Zhongnan Commercial Group Co., Ltd. http://www.aizsw.com/zs/default.html
57 Handan Sunshine Department Store. (Group) Co. Ltd. http://www.ygttg.com/
http://hdyg.taobao.com/
58 Shandong Quanfuyuan Commercial Group Co., Ltd http://www.sgbhdl.com:8080/ehdshop/
webshop/index/index.jsp
59 Beijing Funtalk Century Telecommunications Equipment http://funtalk.tmall.com/
Retail Chain Co., Ltd.
60 Xiongfeng Group http://hopeful.tmall.com
61 Nanjing Central Emporium Co., Ltd. http://njzysc.tmall.com
62 Guangdong Dashenlin Chain Drugstore Co., Ltd. http://www.800pharm.com/
Copyright 2013 The Fung Business ntelligence Centre. All rights reserved.
Though the Fung Business ntelligence Centre endeavours to ensure the information provided in
this publication is accurate and updated, no legal liability can be attached as to the contents hereof.
Reproduction or redistribution of this material without prior written consent of the Fung Business ntelligence
Centre is prohibited.
Fung Business ntelligence Centre
10/F, LiFung Tower,
888 Cheung Sha Wan Road,
Kowloon, Hong Kong
Tel: 2300 2470 Fax: 2635 1598
Email: lfdc@lf1937.com
http://www.funggroup.com/

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