Title: CHINESE RETAIL MARKET: REAL POTENTIAL TO BECOME THE GREATEST WORLDWIDE BEFORE 2020
Abstract: 1. IntroductionStarting with the crisis of 2008-2009 that affected most Western countries, the main markets for Chinese products, Chinese authorities began to increase domestic consumption as a solution to reboost growth based until then mainly on production and exports.Increasing domestic consumption was a way to absorb the unsold production designated for Western markets, but also the consequence of increased revenue of native population. Urban population has grown with a steady trend in recent years contributing strongly on the increase of domestic consumption. Finally, strong investments in the last 20-30 years have led to increased labour productivity and, therefore, increased income, with the consequent enhance of the consumption.There is therefore a virtuous circle between domestic consumption growth and overall economic growth, this shift in economic paradigm representing a path followed by other countries (Japan, South Korea, Hong-Kong), a few decades ago. As in these countries, the transition from the development model based on investment, production and exports to one based on production and domestic consumption is difficult. Some analysis show that such transition entails that compliance would be univocal from economic growth to domestic consumption growth, not vice versa - (Yukon Huang 2015). However, those countries have shown that this approach may be followed successfully.The primary economic objective enshrined in 2011-2015 five-year plan of the Chinese government, directing the governing of the economy on a more sustainable direction is changing the country's development strategy from overdoing investment and exports to domestic consumption.Considering, therefore, the assertion that the increase in domestic consumption in the longer term will lead to sustainable economic growth, we expose below the main trends and characteristics of the retail market in China. The market has experienced high growth in the last 6-7 years.2. Evolution of the Chinese retail market in the last few yearsThe volume of retail sales in the Chinese market rose steadily, from 11.48 billion RMB in 2008 to 18.39 billion RMB in 2011 and 26. 20 billion RMB (approx. 4.30 billion $) in 2014 (China Daily 2014 and China Internet Watch, 2015-1).Although the growth rate of retail trade declined gradually from a peak of 18.3% in 2010 to 8.8% in 2014, for China, however, the analysts forecast a large increase in annual retail sales, 8.7% both in 2015 and in 2016 (see Table 1). As will be observed from the table data, goods retail sales in China was consistently high during 2011-2015 and they are expected to remain so in the next three years, being the highest and constant annual increase registered compared with those of the presented Asian countries. According with the latest projections (China Internet Watch, 2015-2), in 2018, China will be the largest retail market in the world, surpassing almost two times the capacity of US market.In the urban area, sales reached 22.6 billion RMB, 11.8% more than the previous year, while in rural areas it reached 3.6 billion RMB, 12.9% higher than in 2013.Food and beverage purchases have increased in China in 2014.. In the first half of 2014, transactions in the sector have reached 17% of all retail transactions in the Chinese market. Sales of tobacco and alcohol must face austerity campaign promoted by the Government, but manufacturers have begun to implement measures to counter this trend. Revenues from sales of catering industry reached 2.8 billion. RMB in 2014 (9.7% vs. 2013) and the remaining consumer goods recorded sales amounting to 23.4 billion RMB with 12.2% more than the previous year.It is estimated that sales of services will also increase due to increased consumption of products. Spending on information goods and services have become particularly important in the retail sales, the most dynamic segments of this market being Internet and mobile phones sales, which achieve an annual growth rate of approx. …
Publication Year: 2015
Publication Date: 2015-12-01
Language: en
Type: article
Indexed In: ['doaj']
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