Clam­or­ing for a piece of the Chi­nese mar­ket

China Daily (Canada) - - SHANGHAI - By WANG YING in Shang­hai

wang_y­ing@chi­nadaily.com.cn

With the grow­ing in­flu­ence of China’s econ­omy and the renowned spend­ing power of its peo­ple to­day, it comes as no sur­prise that global brands are flock­ing to the coun­try to se­cure a foothold.

Macy’s, one of the United States’ big­gest depart­men­tal store chains, is the lat­est to en­ter the fray. Through a joint ven­ture with Hong Kong­based Fung Re­tail­ing Ltd, the Amer­i­can brand is set to launch its first flag­ship store, al­beit a vir­tual one, on Tmall Global, Alibaba’s e-com­merce plat­form, ac­cord­ing to For­tune mag­a­zine’s Chi­nese edi­tion. The move will make Macy’s the first US depart­ment store to be fea­tured on Tmall.

How­ever, Macy’s foray into Chi­nese re­tail ter­ri­tory is by no means a novel one. Ja­panese depart­ment store op­er­a­tor Takashimaya Co had in De­cem­ber 2012 opened an eight-storey shop­ping space cost­ing 4 bil­lion yuan ($630 mil­lion) in Gubei, an area in Shang­hai that is pop­u­lar with Ja­panese ex­pa­tri­ates.

More than a decade since it first en­tered China, French Ga­leries Lafayette made a come­back in Septem­ber 2013 by open­ing a six-storey depart­ment store. The Ga­leries Lafayette (China) Ltd is a 50-50 joint ven­ture be­tween the French depart­ment store vet­eran and I.T Ap­par­els Ltd.

Ear­lier this year in May, a new up­scale depart­men­tal store called Shang­hai New World Daimaru, a 6 bil­lion yuan joint ven­ture be­tween Shang­hai New World Co Ltd and Ja­pan’s Daimaru Mat­suza­kaya Depart­ment Stores, wel­comed its first batch of cus­tomers in Shang­hai’s East Nan­jing Road.

Not all those who have en­tered the Chi­nese mar­ket have been suc­cess­ful, how­ever.

Back in the mid 1990s, Ga­leries Lafayette had opened a branch on Bei­jing’s pedes­trian street of Wang­fu­jing, but closed its shut­ters af­ter just a year. US con­sumer elec­tron­ics chain Best Buy closed all nine of their stores in 2011 af­ter a five-year stint in the coun­try. In 2012, Macy’s maiden at­tempt at in­vest­ing in an e-com­merce com­pany failed as well. It has now joined hands with Alibaba, the Chi­nese e-com­merce gi­ant which closed 673 bil­lion yuan worth of deals in the sec­ond quar­ter of this year.

While the old-fash­ioned, brick and mor­tar Chi­nese depart­ment stores in China are no long as pop­u­lar, this re­tail mode still re­mains vi­able in ma­jor western ci­ties the likes of New York and Lon­don, ac­cord­ing to Regina Yang, head of re­search and con­sul­tancy with Knight Frank Shang­hai.

Siu Wing Chu, deputy man­ag­ing di­rec­tor of Sav­ills Shang­hai, at­trib­uted the de­cline of China’s depart­ment stores to the fact that most of them still of­fer a lim­ited se­lec­tion of brands and not hav­ing their own in-house prod­ucts.

Chu also ap­plauded Macy’s at­tempt to test the wa­ters in China via an on­line store, say­ing that past fail­ures by for­eign re­tail­ers were mainly due to a lack of se­ri­ous re­search.

“This small trial will pro­vide them with im­por­tant in­for­ma­tion of the China mar­ket such as shop­ping pref­er­ence and pre­ferred mar­ket­ing tac­tics,” he said. “Chi­nese shop­pers are just like con­sumers from other parts of the world. They have their unique pref­er­ences.”

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