Reasons for the expansion of foreign-invested retail industry in 2004-2008

1992, the first Sino-foreign joint venture retail enterprise, Shanghai First Yaohan, opened. Up to now, foreign retail enterprises account for half of China's retail industry. During the period of 17, the foreign retail industry in China market developed from scratch, from joint venture to sole proprietorship, from seeking advice to large-scale expansion, and staged a touching scene on the big stage of China's reform and opening up, leaving a strong impression.

Looking back and summarizing the drastic changes in China's retail market since 17, if China's local retail industry has changed from prudence of "inviting wolves into the house" to solemnity of "dancing with wolves", then foreign retail enterprises have successfully expanded in China for three times. At present, 70% of the top 50 retail enterprises in the world have left their chess pieces in China. Besides Wal-Mart and Carrefour, there are Metro, IKEA, Auchan, Tesco and RT Mart. After the financial crisis broke out, European and American consumer markets shrank, and international retail giants regarded China as a safe haven and launched a new round of expansion in China market.

First, the first two expansions of foreign retail industry in China.

(A) Ice-breaking trip: the first expansion and development of foreign retail in China.

After more than ten years of reform and opening up, Chinese mainland's foreign investment in manufacturing and other fields has increased year by year, but the commercial field has not been opened to the outside world. Even in Shenzhen and other special zones at the forefront of reform and opening up, the commercial sector has always been a forbidden place for foreign investment.

1 In July, 1992, the State Council issued the "Reply on the Utilization of Foreign Capital in Commercial Retail", which stipulated that1to two Sino-foreign joint ventures or cooperative retail enterprises should be established on a pilot basis in six cities including Beijing and five special economic zones including Shenzhen, and wholly foreign-owned retail enterprises should not be established for the time being. At the same time, it also stipulates that relevant projects shall be reported to the State Council for approval by local governments; 1In June, 1995, the State Council made the Interim Provisions on Guiding the Direction of Foreign Investment and the Catalogue of Industries Directed by Foreign Investment, which listed commercial retail as a Class B project in the Catalogue of Industries Restricted by Foreign Investment, allowing foreign investment to be attracted to a limited extent, but not wholly foreign-owned; On June 5438+ 10 of the same year, the State Council approved the establishment of two Sino-foreign joint venture chain commercial enterprises in Beijing or Shanghai, and stipulated that China must hold more than 5 1%.

Under the guidance of this policy,1On September 28th, 1992, Japanese Yaohan entered Shanghai and established the first Sino-foreign joint venture retail enterprise in New China: Shanghai First Yaohan Co., Ltd. Since then, Wal-Mart, Carrefour and other international retail giants have successively settled in Beijing, Shanghai and other metropolises, started an ice-breaking trip in Chinese mainland, and successfully expanded their development in China for the first time.

(b) Full opening: the second expansion of foreign retail development in China.

1In June, 1999, the State Council approved and promulgated the Pilot Measures for Foreign-invested Commercial Enterprises, which expanded the scope of Sino-foreign joint venture cooperation in the retail industry to all provincial capital cities, autonomous regions and cities with separate plans; 1999165438+1October, China and the United States reached the Agreement on China's Accession to the WTO, in which China promised to further open the sales and service fields within three years after its accession to the WTO and give foreign-invested enterprises more trade and distribution rights; On June 5th, 2004+February 1 1, the retail market in Chinese mainland was completely opened to foreign investors.

Under this policy background, since 2005, foreign-funded enterprises that have accumulated enough market experience in China have actively seized the market by adopting the sole proprietorship mode after years of joint ventures: in February 2005, Yichu Lotus (now renamed Yichu Lotus) opened the first wholly foreign-owned supermarket in new China; Subsequently, Metro, Wal-Mart, Carrefour and other foreign retail businesses have also been wholly-owned by acquiring the equity of Chinese partners. At the same time, the pace of foreign retail enterprises entering the Chinese mainland market has been further accelerated. According to the statistics of the Ministry of Commerce, in the first year when the retail market was fully opened, that is, in 2005, the Ministry of Commerce approved the establishment of 187 foreign-funded retail enterprises, which was more than six times that of the retail enterprises approved in 2004. According to relevant media reports, half of China's retail industry has been occupied by foreign retail industry. Five years after Chinese mainland's retail market was fully opened, foreign retail business successfully expanded for the second time in China.

Second, the third expansion of foreign retail enterprises in China and the main ways.

After the global financial crisis broke out in 2008, due to the bursting of the consumption bubble in the United States and other western developed countries, the commercial retail industry in many countries shrank in a large area, and many retail giants suffered heavy losses at home and other host countries, while their business in Chinese mainland market increased instead of decreasing, leading to the third expansion in China. The main ways of its expansion are as follows:

(A) the expansion of investment scale

Since the beginning of this year, Wal-Mart, the world's largest retail giant, has expanded significantly in China. As of September 2009, the number of newly opened stores has reached 35, compared with the average of 10 to 20 in previous years. Carrefour, a foreign retail giant that successfully operated in China for 14 years and ranked first in the retail market in China, has made outstanding performance against the trend in this financial crisis. On June 26th, 2008, Bai, global vice president of Carrefour Group, told the media in Chengdu that not all places have been hit by the financial turmoil, and Carrefour will maintain the speed of opening more than 20 stores in China every year. According to statistics, from the financial crisis in August 2008 to the end of July 2009, Carrefour opened 23 new stores in Chinese mainland, the highest in all years before the crisis. Previously, Carrefour (China) had no record of opening more than 20 stores a year. Tesco, Britain's largest retailer, announced plans to invest 500 million yuan in China in the second half of 2009.

(B) the expansion of the market layout

Due to policy factors, foreign retail can only enter provincial capitals after entering Chinese mainland.

Since 2005, after the geographical restrictions on foreign retail investment were lifted, foreign retail enterprises began to try to enter second-and third-tier cities. After the outbreak of the financial crisis, with the acceleration of the contrarian expansion of foreign retail industry, a large number of mature second-and third-tier cities have become battlegrounds for foreign retail industry, and foreign retail industry has sounded the clarion call to fully enter second-and third-tier cities. For example, in the year after the financial crisis broke out in August 2008, Carrefour opened six new stores in second-tier cities, which was the fastest year since it entered Chinese mainland. In the first half of 2009, Wal-Mart's statistics of new stores showed that 29 of the 30 stores were located in second-and third-tier cities such as Qujing in Yunnan, Liupanshui in Guizhou, Yangquan in Shanxi, Jingzhou in Hubei, Zibo in Shandong and Deyang in Sichuan, among which there were as many as 20 third-tier cities. Tesco, the largest British retailer, opened seven stores in the first quarter of 2009, five of which were selected in second and third tier cities such as Tieling, Fushun, Wenling, Taizhou and Weifang, Shandong.

(C) the expansion of the mode of operation

Generally speaking, the format of retail enterprises can be divided into two categories: one is the format classified according to different marketing forms, such as discount stores, convenience stores, general agents, general distribution, wholesale and retail operations, industrial and commercial joint ventures, etc. The other is the business form classified by enterprise organization form, such as enterprise groups, supermarkets, chain stores, general stores, specialty stores, warehouse stores and shopping centers, or commercial cities focusing on entertainment, catering and leisure. After entering Chinese mainland, most foreign retailers choose the business model of supermarkets, shopping centers or commercial cities. After the outbreak of the financial crisis, the foreign retail industry has also expanded in its business model. Among them, Wal-Mart, which entered Chinese mainland in the form of hypermarkets, and Tesco, which entered in a small and convenient way, attracted more attention.

In June 2009, Wal-Mart began trial operation of a long-planned convenience store in Shenzhen. It is reported that this small chain convenience store named "Huixuan" mainly focuses on food and daily necessities, and its site selection is characterized by convenience and in-depth community. This business model has never been seen in the United States. On the other hand, Tesco is expanding into large-scale commercial shopping centers in the opposite direction: According to beijing business today Today's June 18, 2009, Tesco will spend 500 million yuan on land acquisition in the second half of 2009 to build four shopping centers integrating specialty stores, restaurants, supermarkets, hypermarkets, cinemas and entertainment.

(d) cost-leading expansion

Since the outbreak of the financial crisis, we have seen a number of foreign retail enterprises, which seized the opportunity of the crisis, established a sense of crisis, and successfully carried out cost-leading expansion. Take Carrefour, the first retail market in China, as an example. Since the outbreak of the financial crisis, Carrefour enterprises in China have implemented a series of internal management reform measures to achieve the cost leadership strategy.

First, use the sense of crisis to reduce expenses. We have successively adopted the methods of lowering the expense standard of business travelers, reducing business contacts in different places, teleconference, network electronic communication, centralized training, etc., and greatly reduced the expenses. For example, in the past, the store manager could stay in a five-star hotel on business trip, but now it has dropped to four stars, and the director has also dropped from the previous four-star standard to three stars; In the past, the mayor could travel in business class, but now he can only travel in economy class. In the past, the store manager trained once a month, one topic at a time, but now several topics are trained together, only once a quarter; In the past, the monthly regional meetings of functional departments are now teleconferences, which reduces the exchange of personnel in different places and saves travel expenses. The savings of all these projects are used for commodity price investment in stores to attract more customers, increase sales and expand market share.

Second, rationally and legally optimize the personnel structure and reduce the cost of human resources. After the outbreak of the financial crisis, based on the long-term characteristics of employee mobility, Carrefour adopted the principles of "lenient entry and strict exit" and "no entry" to rationally and legally optimize the personnel structure, and successfully reduced the average number of employees in the store from more than 400 in the past to no more than 300 at present. Moreover, by establishing employees' sense of crisis and making rational use of the severe employment forms objectively caused by changes in the external economic environment, the sales of various stores have not been affected by the sharp drop in the number of shop assistants, and the sales of most stores have maintained a certain growth trend. Per capita sales have increased by more than 25% compared with the past.

Thirdly, the analysis of the reasons for the third expansion of foreign retail industry in China.

(A) After the outbreak of the financial crisis, the fundamentals of China's economic development have not changed.

On June 28th, 2009, Premier Wen Jiabao of the State Council delivered a speech at the 2009 annual meeting of the World Economic Forum in Davos, Switzerland: The current economic situation in China is generally good. In 2008, China's economy maintained steady and rapid development. The GDP increased by 9%, and the consumer price was basically stable; Grain harvest for five consecutive years, the total output reached 528 million tons; Urban employment increased by11130,000, and the income of urban and rural residents continued to increase; The financial system operated smoothly, and the quality of liquidity in the banking system and credit assets maintained a good level.

After the outbreak of the global financial crisis, although the uncertainties and unstable factors in international economic development have increased, the fundamentals of China's economic development have not changed. The statistics in the first three quarters of 2009 show that China's economy is developing steadily in a good direction, which is not only conducive to the recovery of the world economy, but also provides a guarantee for the expansion of foreign retail enterprises in China objectively and strengthens their confidence subjectively.

(b) China government's policy of "stimulating domestic demand" has further improved the level of social consumption.

Since the beginning of 2009 1 1, the central government has issued a series of policies and measures to expand domestic demand, among which the decision to gradually invest 4 trillion yuan in the next two years has attracted worldwide attention. Thanks to this series of measures, in the context of the global financial crisis, China's consumer market continues to heat up. Since the outbreak of the crisis, many foreign-funded retail enterprises such as Wal-Mart, Carrefour and Tesco, which have suffered disadvantages in the local market, have achieved rare sales performance in the China market: Kang Baide, vice president of Carrefour China, said that the Asian region has strongly boosted the performance in 2008, and it is expected that the sales in China will increase by more than 15% in 2009; Xiang, vice president of Wal-Mart in China, said that in 2008, Wal-Mart's sales in China increased by more than 25%. However, in 2008, the operating income of Metro and Tesco in China still maintained double-digit growth for several consecutive years.

(C) The imbalance of local retail development in China objectively provides space for the development of foreign retail.

Looking back on 17, when foreign retailers entered the China market, on the one hand, foreign retailers made great strides, on the other hand, local retailers in China were losing ground. This shows that there is still a huge market gap in China's retail market. Under the impact of foreign retail, we have seen the growth and expansion of minority retail enterprises, such as Gome and Suning, but most of them are closed down, bankrupt and reorganized. In 2008, when the crisis broke out, as many as 5 1 retail enterprises in China closed down or closed down within one year. In addition, poor management, poor sales performance and vicious competition among local retail industries are also widespread. According to People's Daily Online's Analysis Report on the Operation of Chain Retail Enterprises in China, the growth rate of chain retail in China declined for five consecutive quarters in 2008 and the first quarter of 2009. This undoubtedly provides more entry space for the expansion of foreign retail industry in China.

(d) In the context of the financial crisis, the cost of expansion is reduced.

First of all, it is an indisputable fact that the spread of the financial crisis has affected the real economy, and a large number of factories have closed down and gone bankrupt, which has led to the decline of rents and labor costs. This has brought favorable conditions for the retail industry that has expanded against the trend. In May 2009, San Pu Si Long, director and general manager of Jusco, Guangdong, revealed to the outside world that the cost of opening a new store had dropped by about 30%-40% compared with the peak of investment cost in the first half of 2008. Secondly, since September 2008, the Ministry of Commerce has delegated all the examination and approval authority of foreign-funded retail enterprises to the provincial commerce authorities. This policy adjustment has further reduced the restrictions on foreign-funded enterprises to open stores and greatly reduced the cost of expansion.

We summarize and analyze the three expansions of foreign-funded enterprises in China, especially the third expansion under the background of the current financial crisis, and do not intend to cheer for the foreign-funded retail industry. On the contrary, we expect local retail enterprises in China to seize the opportunity from the development of foreign retail industry in China, gain some enlightenment from the successful expansion, and learn some experience for coping with the current financial crisis and implementing the "going out" strategy. ▲

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