While overall prospects remain good, Chinese retailers are having to adjust to a slowing market
By Chen Qian, Caijing 5 December 2008
Chinese retailers are now feeling the effects of a slowing economy, and many see even tougher times ahead.
“Although the government has announced 4 trillion yuan investment package, it will take about six months for the plan to take effect in the consumer market, which means that the period from October to next June will be quite challenging for the retail industry,” said Huang Guoxiong, a professor from Renmin University.
China’s Consumer Confidence Index in October fell 1 point from September to 92.3, according to the National Statistics Bureau. The drop put the index at 4.1 points lower than it was during the same period last year.
“Many companies are pessimistic about next year. But I think smaller companies will be hurt worse than larger ones,” said Li Ling, general manager of Beijing Huaxi Changan Commercial Co. “The changes will bring an industry reshuffle,” he said.
Supermarkets are some of the hardest hit. Beijing Hualian Hypermarket Co. Ltd. (SSE: 600361) reported a 90 percent year-on-year decline in its third-quarter net profit, which amounted to only 3.37 million yuan. The company plans to issue 700 million yuan in corporate bonds to alleviate pressure form its current capital shortage.
“The coming January and February will be a key period for us,” said Zhang Lijun, president of Beijing Cuiwei Group, which operates the building Cuiwei Mansion. During the first eight months this year, the group reported a 30 percent year-on-year rise in sales revenue. But growth started to slow down since August, and Zhang forecasts that the decline just started.
Zhang said that the company will set up a top grade luxury goods section next year in order to attract more up-market buyers and diversify its consumer base. The company will also offer more incentives to lure suppliers.
Other chain stores have decided to scale back expansion. The coffee shop C.straits Cafe will cut 10 new shops it planned to add by the end of this year.
While the times might call for a new approach to business, China’s retail industry is still well poised in the grand scheme. Professor Huang predicted that the sector will see up to 15 percent growth next year.
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Retailers Feeling the Winter Chill
While overall prospects remain good, Chinese retailers are having to adjust to a slowing market
By Chen Qian, Caijing
5 December 2008
Chinese retailers are now feeling the effects of a slowing economy, and many see even tougher times ahead.
“Although the government has announced 4 trillion yuan investment package, it will take about six months for the plan to take effect in the consumer market, which means that the period from October to next June will be quite challenging for the retail industry,” said Huang Guoxiong, a professor from Renmin University.
China’s Consumer Confidence Index in October fell 1 point from September to 92.3, according to the National Statistics Bureau. The drop put the index at 4.1 points lower than it was during the same period last year.
“Many companies are pessimistic about next year. But I think smaller companies will be hurt worse than larger ones,” said Li Ling, general manager of Beijing Huaxi Changan Commercial Co. “The changes will bring an industry reshuffle,” he said.
Supermarkets are some of the hardest hit. Beijing Hualian Hypermarket Co. Ltd. (SSE: 600361) reported a 90 percent year-on-year decline in its third-quarter net profit, which amounted to only 3.37 million yuan. The company plans to issue 700 million yuan in corporate bonds to alleviate pressure form its current capital shortage.
“The coming January and February will be a key period for us,” said Zhang Lijun, president of Beijing Cuiwei Group, which operates the building Cuiwei Mansion. During the first eight months this year, the group reported a 30 percent year-on-year rise in sales revenue. But growth started to slow down since August, and Zhang forecasts that the decline just started.
Zhang said that the company will set up a top grade luxury goods section next year in order to attract more up-market buyers and diversify its consumer base. The company will also offer more incentives to lure suppliers.
Other chain stores have decided to scale back expansion. The coffee shop C.straits Cafe will cut 10 new shops it planned to add by the end of this year.
While the times might call for a new approach to business, China’s retail industry is still well poised in the grand scheme. Professor Huang predicted that the sector will see up to 15 percent growth next year.
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