Foreign retailers race for piece of China’s expanding spending pie

More foreign-funded retailers are accelerating their expansion in the Chinese market, which has posted robust growth in recent years as the country is continuously upgrading its consumption structure, officials and industry analysts said on Thursday.

“Overall, foreign branches are opening more stores in the China this year, featuring more new brands, flagship stores and new business models,” Gao Feng, spokesperson for China’s Commerce Ministry, told a regular briefing on Thursday.

Apart from US-based retail giant Walmart, more transnational companies are increasing their investment in China, said Gao.

Walmart announced last week that it plans to open 500 new stores in China over the next five to seven years, more than doubling its footprint in China.

It also said it will upgrade more than 200 stores in China over the next three years, adding high-technology features such as an all-channel digital experience for consumers who can pay via facial recognition.

The announcement followed the release of the company’s third-quarter earnings, which showed that its sales grew 6.3 percent year-on-year, much higher than its 2.5 percent growth worldwide, the best results for Walmart China in the past five years with its Sam’s Club as the main contributor.

Another US retail player Costco opened its first physical store in Shanghai in August, with the opening day causing a shopping craze.

German fresh fruit and vegetable discount retailer Aldi entered the Chinese market in June, opening two stores in Shanghai, which also drew crowds.

Such moves indicate that the commercial retail sector in China is open and also grows very fast, according to Gao.

Zhang Yi, CEO of Shenzhenbased iiMedia Research, told the Global Times Thursday that China’s retail industry is flourishing.

“The growth trend is optimistic and inviting, especially for foreign companies.”

China’s retail sales increased 8.1 percent year-on-year in the JanuaryOctober period to 33.48 trillion yuan ($4.8 trillion), according to statistics from the National Bureau of Statistics.

However, for some other foreign players, it might be a different story as they are abandoning the Chinese market due to intensifying competition and challenges.

In October, German wholesaler Metro decided to sell a majority stake in its Chinese operations to Beijingbased Wumei Technology Group.

Metro said it would sell about 80 percent of its stake in the Chinese operations and retain a 20 percent stake, according to domestic media reports.