China Retail Industry Update Quarter 4 2011

  • August 2014
  • -
  • Business Monitor International
  • -
  • 75 pages

The Q411 BMI China Retail Report projections that the country’s total retail revenues will increase by 73% in local currency terms by the end of the projection period, growing from an expected CNY17.47trn (US Dollar 2.56trn) in 2011 to a projected CNY30.21trn (US Dollar 4.42trn) by 2015. Retail revenues in China doubled between 2003 and 2008, when they broke through the CNY10trn (US Dollar 1.6trn) barrier for the first time. Strong underlying economic trends, population growth and the increasing wealth of individuals are key factors behind retail industry expansion. Regulatory reform following China’s accession to the WTO in December 2001 has allowed foreign retailers to make significant inroads into the industry, contributing to projection average annual retail revenues growth of 14.5% in local currency terms.
China’s nominal Gross Domestic Product is projection to be US Dollar 6.90trn in 2011. Gross Domestic Product growth of 8.3% is projection for the year, with average annual growth of 7.6% predicted by BMI through to 2015. With the population estimated to increase from 1.35bn in 2011 to 1.38bn by 2015, Gross Domestic Product per capita is projection to grow by 59% to reach US Dollar 8,310.
The growth in the overall retail industry will be driven in large part by a growing urban population with high disposable incomes and an interest in aspirational purchasing. According to socioeconomic projection er Global Demographics, more than 30% of all urban households in China had an annual income above CNY40,000 (US Dollar 5,848) in 2007. The National Bureau of Statistics (NBS) estimates that urban retail revenues accounted for nearly 68% of total retail revenues in 2009, down slightly on 2008. Retail segments that are likely to achieve substantial growth over the projection period include over-thecounter (OTC) pharmaceuticals, with BMI projecting revenues of US Dollar 16.38bn in 2011, predicted to rise by more than 68% by 2015 to US Dollar 27.57bn.
Automotive revenues, worth a projection US Dollar 329.21bn in 2011, are predicted to grow by more than 50% towards the end of the period, reaching US Dollar 494.14bn in 2015. In 2006, China overtook Japan as the world’s second largest automotive industry behind the US, following this up in 2007 with a record year in both revenues and production terms.
Sales of consumer electronic products are predicted to increase by 48%, from US Dollar 180.40bn in 2011 to US Dollar 266.97bn by 2015, with double-digit growth predicted for key products such as notebook computers, mobile handsets and video devices.
A sizeable multinational retail presence following the lifting of foreign direct investment (FDI) restrictions in 2001 has ensured the early adoption of modern retail best practices in China. Organised retail – ie Western-style chain outlets, department stores, supermarkets, etc – already accounts for an estimated 23% of the total retail industry, far higher than the 5% in India. Chinese retailers have been grow ing into secondary and tertiary towns and cities. By December 2010 GOME Electrical Appliances Holding, China’s leading retailer of household appliances and consumer electronic products, had 304 outlets in 182 second-tier cities. In its 2010 annual report, the industry player said it believed that first-tier industry s were its fundamental basis, but that ‘second-tier industry s will be the focus of future growth’.
Partnerships between local players and multinationals are allowing for rapid development of the retail industry . In November 2007, Beijing Hualian Group signed a joint venture agreement with British industry player Costa Coffee to open 300 Costa stores in Beijing, Tianjin, Hebei, north east China and other regions in the next few years.
Retail revenues for the BMI universe of Asian countries in 2011 are a projection US Dollar 3.13trn. China and India are predicted to account for nearly 91% of regional retail revenues in 2011, and by 2015 their share of the regional industry is expected to be more than 92%. Growth in regional retail revenues for from 2011 to 2015 is projection by BMI at 71.6%, an annual average 14.4%. India should experience the most rapid rate of growth, followed by China. China’s projection 2011 industry share of 77.6% is expected to decline slightly to 77.1% by 2015.

Table Of Contents

Executive Summary .... 5
Industry SWOT Analysis 7
China Retail Business Environment SWOT ........... 7
China Political Environment and Risk Analysis ...... 8
China Economic Environment and Risk Analysis .... 9

Industry Analysis ........ 10
Current Trends......... 13
Key Players .. 16

Market Projection Scenario ... 19
Retail Growth Outlook ......... 19
Data : China Retail Sales Indicators, from 2008 to 2015 ........... 19
Data : Projection Retail Sales Breakdown By Key Segment, 2011f 21
Consumer Outlook ... 21

Macroeconomic Data ...... 25
Data : China Economic Activity, from 2006 to 2015 ...... 27
Regional Retail Outlook ........ 28
Asia Pacific Retail Outlook .. 28
Data : Asia Pacific Retail Sales, from 2008 to 2015 (US$bn) ..... 28
Data : Asia Pacific Retail Sales By % Share, from 2008 to 2015 ........... 29
Data : Asia Food Consumption, from 2008 to 2015 (US$$bn) ... 31
Data : Asia Pacific Macroeconomic Outlook, from 2008 to 2015 .......... 33

Environment Overview Outlook ........ 35
Asia Pacific Retail Business Environment Ratings... 35
Data : Asia Pacific Retail Business Environment Ratings .......... 35
China’s Retail Business Environment Rating ........... 36
Limits To Potential Returns ........ 36
Risks To Realisation Of Returns . 36
Mass Grocery Retail .. 38
China Mass Grocery Retail Industry Environment and Risk Analysis ....... 38

Industry Analysis ..... 39
Data : Structure Of China's Mass Grocery Retail Industry - Estimated Number Of Outlets, from 2002 to 2009 .. 42
Data : Structure Of China's Mass Grocery Retail Industry - Sales By Format, from 2002 to 2009 (US$bn) ........ 42
Data : Structure Of China's Mass Grocery Retail Industry - Sales By Format, from 2002 to 2009 (CNYbn) ....... 42
Data : Annual Average Store Sales By Format, 2009 ..... 43

Market Projection Scenario .. 43
Data : MGR Sales, from 2008 to 2015 .... 46
Data : Grocery Retail Sales By Format, 2011 And 2020 46

Industry Developments ......... 47
Consumer Electronics .......... 49
China Consumer Electronics Industry SWOT ....... 49

Industry Analysis ..... 50
Computers........... 50
Data : Computers Sales, from 2008 to 2015 ....... 50
Audio/Video ........ 54
Data : AV Sales, from 2008 to 2015 ........ 54
Mobile Communications . 57
Data : Mobile Communications Demand, from 2008 to 2015 ..... 57

Market Projection Scenario .. 61
Data : Consumer Electronics Sales Overview, from 2008 to 2015 (US$mn) ....... 62

Industry Developments ......... 62
Automotives ... 65
China Autos Industry Environment and Risk Analysis ....... 65

Market Projection Scenario .. 66
Production And Sales ...... 66
Data : Autos Production And Sales, from 2008 to 2015 (million CBUs) 66
Trade ...... 68
Data : Autos Trade, from 2008 to 2015 (CBUs) . 68

Industry Developments ......... 69
Country Snapshot: China Demographic Data ......... 71

Section I : Population ........... 71
Data : Demographic Indicators, 2005-2030 ....... 71
Data : Rural/Urban Breakdown, 2005-2030 ...... 72

Section II : Education And Healthcare .......... 72
Data : Education, from 2002 to 2005 ..... 72
Data : Vital Statistics, 2005-2030 ........... 72

Section III : Labour Industry And Spending Power ...... 73
Data : Employment Indicators, from 2001 to 2006 ......... 73
Data : Consumer Expenditure, from 2000 to 2012 (US$) ........... 73
Data : Average Annual Manufacturing Wages, from 2005 to 2012 ........ 74
BMI Methodology ...... 75
How We Generate Our Market Projections .. 75
Sources ........ 76

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