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Chinese Retailers Optimistic About Industry Growth
Jun 21, 2007

Consumer goods & retail companies are contributing to further develop a middle-class consumer market in China with development of its middle-class.

In China, consumer goods & retail companies are contributing to further develop a middle-class consumer market. Indeed, it is the development of this middle-class that is changing consumption patterns in retail markets.

China Daily has reported that Chinese retailers are optimistic given the country's strong economic expansion & rapidly increasing middle-class consumers, as per a recent survey by international real estate services firm Jones Lang LaSalle.

37% of those surveyed said they would develop rapidly, 43% were planning for average growth, and 17% aimed marginal growth. The strong and positive results recorded for retailers in the survey reflect the aggressive expansion and modernization of the retail sector in China, as per the statement of David Hand, Jones Lang LaSalle.

Despite this heavy optimism, the Chinese retail industry faces few challenges. 89% of reactants said that locating proper sites for retail stores would not be easy, mainly because of rising rental costs & lack of quality space.

The basic challenges that retailers face are mainly related with costs, which should be controlled so as to provide strong margins. The primary concerns are increasing rents, fuel costs & the tax system. Wide-range spending levels, the strength of the country's economy and tourism are the chief drivers of well-built retailer sentiment in China.

According to China Daily, Hand said, "fostering relationships with key developers and making use of quality retail leasing agents may be a way to gain access to multiple sites or projects and can also make the hunt for new store space easier and more predictable."

"With more mergers and acquisitions happening between Chinese retailers, the retail industry is witnessing strong expansion & consolidation, and hindrances like inadequate supply chain are also being solved out. Also, huge base of strong middle-class is expected to double by the year 2020 that could boost the future growth of China's retail industry as the spending increases," an analyst at
RNCOS said.

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