China's retail traders should upgrade their management and build business credit to compete with coming foreign retail giants, said an article in Outlook Weekly.
Recently, some domestic chain stores have closed down one after another, while France-based Carrefour, the US retail giant Wal-Mart and other foreign retail stores are seeing flourishing business in the Chinese market.
Among the top 50 retailers in China, France-based Carrefour ranks third and the US-based Wal-Mart comes in fifth, though their China operations have only a six-year track record.
Currently, the door to China's retail market has been opened much wider, compared with the situation in 1992 when foreign retailers were first admitted to the Chinese market, the article said. Today, foreign retailers can open outlets in more cities, extend their business to wholesale operations and even be the holding party in joint venture companies.
Thus, the domestic retail industry has to face tough challenges.
Although now, in general, joint venture retailers hold only 5 percent of the total retail market share, they are likely in the long term to gain an upper hand over domestic rivals with their advantages of capital, technology and management.
China's retail enterprises have much to do to catch up with their foreign competitors, said the article.
For example, a shake-up in their managerial systems is urgently needed. To avoid vicious competition, stores of a similar scale and business should be restrained from opening.
On the other hand, necessary services such as free parking should not be neglected by domestic retailers. Excellent services will bring many conveniences to customers and more business opportunities in return.
Domestic retailers can also resort to modern technology to upgrade their operations, including the purchase of supplies and logistics.
However, the most urgent need is for China's retail industry to improve its creditability for both suppliers and customers, noted the article.
Since most supermarkets are allowed to purchase commodities first and then pay suppliers two months later, some domestic retailers with poor credit have taken advantage of this practice to delay their payments to suppliers by six months or even a year. This wrongdoing not only hurts the interests of suppliers but also damages the long-term interests of the retail industry.
(China Daily April 30, 2002)
