Chen Huici a lady from Taiwan was in Beijing on business. She
chatted online with her boyfriend into the small hours. At 4am she
went downstairs to go out into the city to buy a coke. After
walking for a full 20 minutes she just couldn't find a store open
anywhere.
"Bookstores, supermarkets and food markets that stay open 24 hours
a day are to be found everywhere in Taiwan," she complained.
"Beijing has so few. It's not at all convenient."
According to Li Shunli, vice director of the Beijing Municipal
Commerce Commission, Beijing has fewer than 300 convenience stores
and of these, only 100 are open right round the clock. These
include supermarket chains like Good Neighbor, Timetone, Golden
Elephant, Sagawa Express, Wu Mart and PriceSmart. Most convenience
stores open 17 hours a day or just have rather longer opening hours
than usual. In Shanghai it's a different story with some 3,000
stores operating on a 24-hour basis.
Limited Goods and Services
The 24-hour retail sector has been developing rather slowly in
Beijing despite the otherwise rapid pace of life of this bustling
capital city with its growing consumer demand. Many 24-hour stores
are limited to a single product range like food or daily
necessities.
Few convenience stores sell the regular non-prescription medicines
which are so often exactly what people are looking for when illness
strikes at all hours of the day and night. Many customers have to
wait until morning to get something to make them feel better. In
Japan such medicines are easily found on the shelves of almost any
round-the-clock store.
Chen says Taiwan is well provided for with 24-hour stores so city
dwellers can shop, get a book, see a movie or go to a restaurant
even after finishing work at midnight. If they want they can also
find a laundry open or access FAX and other business services. All
these would be difficult to find in Beijing. Even after walking
several blocks one would be lucky to find a convenience store open
at all and if there was one, it would likely have a very limited
range of goods on offer.
Setting up Shop
Beijing is lagging three to five years behind Shanghai. China's
second city saw its first supermarket in 1991 when Beijing was
still operating within the framework of the planned economy. By
1994 Shanghai's network of convenience stores was already becoming
well developed while Beijing was just starting to see them
introduced. In addition most providers in Beijing are still in a
pilot phase and only testing the market, so there is only patchy
coverage across the city.
Beijing clearly offers a huge potential for the convenience store
sector. Many domestic and overseas retail groups that had hoped to
establish themselves in the market have found things are not
turning out as smoothly as they originally anticipated.
7-Eleven with its 24,000 outlets is the largest convenience store
retailer in the world. But even after several years of effort,
there is still only an expectation that 7-Eleven will open in
Beijing some day.
The Shanghai based Hualian Group had planned to open 200 outlets in
Beijing but so far it has managed a mere 30. They have run into
difficulties in getting the necessary certificates not to mention
problems dealing with the relevant departments and taxation
issues.
Many supermarkets have found that it is no easy matter to adapt to
and cope with local market conditions in the capital.
Eight Bottlenecks
Prof. Liu Jipeng of the Capital University of Economics and
Business speaks of the eight areas that militate against the
development of 24-hour stores in Beijing.
- High rents especially for stores in commercial areas dominated
by luxury office buildings pose considerable difficulties for the
retail industry. The current urban per capita Gross Domestic
Product (GDP) of US$3,000 is insufficient to support high-rental
convenience stores. GDP would need to climb to say US$6,000 for
them to become viable.
- Beijing's main streets don't actually have the necessary retail
properties available.
- The capital's harsh cold winters tend to keep its residents
indoors making it a relatively quiet city by night.
- There is room for improvement in the way convenience stores are
operated in the city.
- Extant distribution systems can't yet meet the needs of the
widely scattered, smaller convenience stores. However Beijing has
this year launched a project to address problems of the large-scale
delivery of goods in the city.
- The convenience store sector would benefit from further support
from policies and measures aimed at promoting implementation.
- Opening a new outlet involves complicated administrative
procedures. Many different departments are involved and it is often
a lengthy process. Consumers expect convenience stores to carry a
full range of goods. However in Beijing it is not easy to put new
items on the shelves. An enterprise must have 5 million yuan in
registered capital to get a license to sell newspaper and
magazines. Its customers could raise whole families while it tries
to get the 16 different certificates it needs to sell
contraceptives.
- Then finally there are the restrictions on the range of goods
and services that can be provided by convenience stores. Currently
it is not just contraceptives but also pharmaceuticals, books,
newspapers, magazines, audio and video products and even
photo-copying services that are strictly controlled.
Convenience stores, especially those that open 24 hours a day
haven't become the norm in the capital even though the people of
Beijing would naturally embrace the improved level of service which
they could provide. Li Shunli, vice director of the Beijing
Municipal Commerce Commission sees this as largely attributable to
the city's climate. He points to Beijing's significant fluctuations
in temperature. 24-hour stores don't do well in long freezing
winters.
Potential for 2,000 Stores
"What consumers want most is to be able to get the goods they need
when they need them," said a member of staff at the 24-hour Wu Mart
where goods retail at some 15 percent above the prices in regular
supermarkets.
The capital's huge population holds out the prospect of a lucrative
growth market for the convenience retailing groups. Vice President
Wu Jianzhong of Wu Mart suggests that a catchment population of
3,000-4,000 people can support one convenience store. Beijing city
proper has 8 million residents who could be expected to support say
2,000 such stores but to date there are fewer that a hundred
24-hour convenience stores in the city.
Vice Director Gong Li of the Beijing Municipal Commerce Commission
pointed out that in 2003 Beijing would see growth occur not only in
the large convenience stores and supermarket chains but also among
the smaller convenience stores serving their local communities.
(China.org.cn Edited by Guo Xiaohong April 22, 2003)