Where Am I?
 
More In This Section
 
Tag Cloud
 

CBBC Insights: Retail | Changes in Chinese retail market bode well for British companies

BritCham / CBBC
Do you like this article? Share it with your friends!  
Like! Tweet! Weibo Share on LinkedIn
 

By Demi Ping
Retail Sector Lead (China)
China-Britain Business Council
 
Retail sales are contributing significantly to China’s economic growth as the government adjusts to a consumption-led model. Consumer goods sales rose 10.2% year-on-year in July, with total sales reaching RMB 2.7 trillion, according to the National Bureau of Statistics. 
 
But with the explosion of online retail and cross-border e-commerce, especially on mobile devices, offline retailers are being forced to change their strategies. They are turning to young designers from the post-1990s generation to design their shopfronts, and entering alliances with online players and social media to expand their reach. Social media, local supply strategies and mobile apps – the so-called SoLoMo model – are enabling them to create an omnichannel, online-to-offline shopping experience to embrace the consumer boom even as offline retailers struggle. 
 
Current China trends 
It is no longer a question of online versus offline. Take an average young Chinese family. The wife may search online for the latest fashion and skincare products, while the husband scans social media or fan-sites for electronics. They will compare prices, features and functionalities, and read the reviews. They will then go in person to their local shopping centre to test the product in-store, before placing an order online. In most cases, however, they will linger in the shopping centre for entertainment, perhaps a film or dinner. Thus the online and offline offerings complement one another. 
 
In addition, the Internet of Things (IoT) has enabled online Chinese retailers to go beyond PCs, tablets and smartphones. Shopping centres and store owners have applied elements of IoT, such as QR code payments, e-terminals and RFID (radio frequency identification), to improve their services. This enables offline and online stores to be synchronised, meaning retailers can customise their products and services and get first-hand feedback from a fast-paced market. 
 
As the Chinese market continues to grow, traditional store-based retailers such as Walmart, IKEA or Suning will engage more online while also integrating their online and offline operations. Companies such as Alibaba, JD.com and Dangdang, which began online, are expected in turn to open physical stores.
 
Flexible market opens doors for UK companies
Because of regional disparities and the urban-rural gap, China’s retail market is highly fragmented and includes many small and medium-sized retailers. There is wide variance in household income, purchasing power and consumer expectations across different parts of the country. Through the SoLoMo phenomenon, retailers have a chance to cater to these varied requirements, providing localised products, tailored services and online social communities where consumers can share ideas and comments. It is about relationship building and experience sharing.
 
There is an opportunity for UK retailers to benefit from this flexible market structure, using SoLoMo to test the market, identify key regions and consumer groups and localising their products and services accordingly. Some are already making headway: the British department store House of Fraser, which was bought out by the Chinese conglomerate Sanpower in 2014, will shortly open in the second-tier city of Nanjing, with the fashion and furniture brand Laura Ashley also set to enter the market this autumn with the help of Alibaba’s Tmall website. The current environment provides excellent opportunities for other UK retailers, as well as law firms, e-commerce platforms, designers, digital media companies and translation, logistics or payment-service providers, to follow suit.
 
How CBBC can help you
CBBC has dedicated retail teams in the UK and China to assist British companies enter or grow in the Chinese market. In the UK, we help brand owners and retailers conduct market research, assessing their readiness to export and providing referrals to connect them with Chinese importers and distributors. In China, we run a programme which includes identifying export opportunities for companies in the UK, and organising an annual series of ten-day sales exhibitions, the Great British Brands Festival – this year in eight cities all over China – at which UK retailers can showcase and sell their products and make direct personal connections with local business partners and consumers. The next festival is in Shenzhen from 26 October to 13 November.
 
To learn more about how to develop your business in China, please contact the author in China at demi.ping@cbbc.org.cn or Fenella Barber in the UK at fenella.barber@cbbc.org.
 
More information
 
Follow us