26 Nov, 2008 - In 2007, total food retail and wholesale sales in China reached USD 104.4 billion, a double-digit increase over the previous year, as China's economy continued its impressive growth and central government policy encouraged private sector spending in order to shift the economy to a more consumption oriented path.
International retailers in particular have benefited from their reputation for offering higher quality products than most domestic retailers, thanks to stricter quality control in a country where food safety is a major concern.
Overview of the Retail Food Market in China In 2007, total retail sales in China reached RMB 7.50 trillion (USD 1.31 trillion), growing by 13% over the previous year; food and beverage sales accounted for RMB 793.1 billion (USD 104.4 billion) of the total retail sales, a 30% increase over 2006, as China’s economy continues on an upward path. As a result, consumers are likely to enjoy higher levels of disposable income, and likely to spend an ever increasing amount on consumer goods. The central government’s policy is also encouraging private spending, as a way to shift the economy to a more consumption-oriented path.
To accelerate growth in consumer spending, several policy initiatives will be carried out in the near future as part of a greater effort to restructure the economy. These will include further revaluation of the currency, which will lower import prices for consumer goods, deregulation of the banking system to accelerate the development of the consumer credit market, and efforts to develop a secure social system through better healthcare and education, in order to lower China’s high rate of personal savings and stimulate personal spending. Food purchases still account for over 1/3 of average Chinese urban household expenditures.
Metropolitan cities such as Shanghai, Guangzhou,and Beijing still represent the center of business activity for most retailers. Hypermarkets, supermarkets, and convenience stores account for the majority of sales in these cities. While markets in Beijing, Shanghai and Guangzhou are fast approaching the saturation point amid rising rental and manpower costs, many chains are expanding to second and even third or fourth tier cities to attract more consumers. In order to stand out from the competition and strengthen their position, leading retailers continue to put their efforts into merger and acquisition activities. For example, Wal-Mart successfully took a 35% stake in domestic hypermarket operator Trustmart, improving its overall competitiveness in this category.
