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China Expects Strong Retail Sales Growth in 2010
Jun 28, 2010

The Chinese retail sales are expected to grow dramatically this year on the back of recovery from the economic slump and rising urbanization.
E-commerce, automotive and luxury sales in China are poised to record dramatic improvement this year (2010). According to figures released by the Chinese Academy of Social Sciences, the total domestic retail sales is expected to reach US$ 2.1 Trillion in 2010 against US$ 1.8 trillion in 2009, as per the news published by warc.
In 2008, the sales stood at US$1.5 Trillion and in 2003, the sales had clogged at US$ 732 Billion.
The auto industry is expected to be one the major contributors to the retail sales. The shipments will surge from 13.6 Million units in 2009 to 15 Million units this year (2010).
The rise in retail sales could be attributed to the recovery from economic slump along with the acceleration in urbanization that will raise consumption level. Besides, the social welfare will prompt consumers to spend more on goods. High demand from the rural areas and improvement in services consumption will also boost the expansion.
In view of the huge population and economic growth, China seems to become an important market for luxury goods. At the end of December 2009, the consumption of luxury goods rose to US$ 9.4 Billion, around 27.5% of the global total.
The growth in retail sales has caught the attention of foreign retailers to invest in the lucrative market of China. Nevertheless, the foreign retailers mainly concentrated their attention on the coastal regions when they first ventured into China.
The foreign retailers should move their business into the west and inland to exploit the full market potential. They should also adapt their models according to the spending power and consumer preferences. Fast economic development in western provinces and inland is expected to pick up because the Chinese government is making huge investment in these regions to bridge the economic development gap in different regions.
As per a Senior Research Analyst at RNCOS, “Although the market scale of social consumer products has been rising in China, the consumption rate is still low. To sustain the industry growth, China should have to solve the three problems - the rationality of income and expenditures of the government; the consumption imbalance between urban and rural areas and the differences of consumption among consumers.”
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