Return to our Home page Search
Click here for the hotel and hospitality news from around the globe Hotel, Travel and Hospitality Articles Videos and in-depth Interviews
CONCIERGE DESK
Read more now
Read more now
Read more now
China Retail: A changing landscape - Part I: Fast fashion brand.
Tuesday, 31st December 2013
Source : CBRE China Research - Special Report
 

After thirty years of rapid economic growth, China has made tremendous achievements in social and economic development and the living standard of Chinese citizens has improved substantially during the same period of time.

These developments have opened up a lot of opportunities in the domestic consumption market, which has drawn enormous interest from retailers around the world.

4Hoteliers Image Library

Since the turn of the century, China’s economic growth has notably been driven by investments (see Chart below). In contrast, the share of household consumption as a percentage of GDP (household consumption ratio) has been declining, from 46% in 2000 to 36% in 2012.

The RMB 4 trillion stimulus introduced in 2008/09 further elevated the country’s dependence on investment-driven growth. While the stimulus was effective in bringing China back to double-digit GDP growth in the near term, it has created serious issues including excessive liquidity, high inflation, mounting local government debts, redundant construction, and soaring asset prices.

In view of this, the new leadership of Mr. Xi and Li has repeatedly advocated the need to transform the current investment-driven economy to a domestic-consumption-led economy. This bodes well for the growth of the domestic consumption market, which we believe will continue to grow at a double-digit pace in the foreseeable future.
4Hoteliers Image Library

Furthermore, both academic research and international experience have showed that domestic consumption will inevitably become the major and more sustainable economic growth driver as a country (including China) enters the later stages of industrialization.

Against the backdrop of weakening external demand and continuing appreciation of RMB, it is even more critical for China to further develop the domestic consumption market to sustain its economic growth.

In our view, Premier Li Keqiang’s “New Urbanization Program” and the government’s target to double household income by 2020 will significantly enhance household consumption and the propensity for consumers to spend.

Compared to other developed countries, the household consumption ratio in China is extremely low (see chart below), indicating significant room for growth in the coming decades.
4Hoteliers Image Library
We believe the China retail market has enormous potential to be tapped in the years ahead. Yet challenges do exist at this crucial turning point for the retail industry.

For example, we identify competition from e-commerce, homogeneous product offerings, a lack of differentiation, and rising operating costs especially labor costs as primary challenges.

In the face of these, the retail industry will go through many changes in order to maximize the opportunities brought by the changing landscape in China’s retail industry.

1. Nominal growth.
2. Data with asterisk are of 2011 and the rest are of 2012.

Full report

~ Important Notice ~
Articles appearing here contain copyright material. They are meant for your personal use and may not be reproduced or redistributed. While 4Hoteliers makes every effort to ensure accuracy, we can not be held responsible for the content nor the views expressed, which may not necessarily be those of either the original author or 4Hoteliers or its agents.

Learn more about DigiJames - in room technology
Advertisment  
 Related News  (Click title to read article)
Are you ready to enter the global e-commerce markets?
Where in the world are the most expensive office areas?
Upward mobility: Catering to the digital elite.
Economic impact of travel & tourism 2013 annual update.
 Latest News  (Click title to read article)
Top hospitality in New York City continuous growing
Sunday, 13th July 2014

Making proper use of hotel reviews
Sunday, 13th July 2014

Balance of social and economic strengths key to attracting talent to cities
Sunday, 13th July 2014

CPI Hotels is expanding its activities into the European market
Saturday, 12th July 2014

Women and STEM jobs
Saturday, 12th July 2014
 Latest Articles  (Click title to read article)
Amsterdam: 10 Tips to Bike and Blend in Like a Local
Sunday, 13th July 2014

Thirteen Tips to Effective Upward Management
Saturday, 12th July 2014

Eliminating Those 'Friction Points' of the Guest Experience
Friday, 11th July 2014

Are Luxury Hotels Worth the Price?
Friday, 11th July 2014

Execute or Be Executed
Thursday, 10th July 2014
 Most Read News  (Click title to read article)
NH Hotel Group disposes Amsterdam asset
The Chinese Luxury Traveler - How destinations are decided and bookings made
News from around the Asia Pacific region, June 10
Hyatt to develop a luxury hotel within a historic 16th century castle
Alila and Commune create new lifestyle hotel management company

© Copyright 4Hoteliers 2001-2014 ~ unless stated otherwise, all rights reserved.
You can read more about 4Hoteliers and our company here

Use of this web site is subject to our
terms & conditions of service and privacy policy