Retailing in China and Japan

Aleece KopczenskiLeilei Zhang

Retailing in China

China’s Retail Industry Overview

one of the most lucrative and rapidly growing retail market in the world.

Despite economic downturn, China’s retails sales hit $1.8 trillion in 2009.

The average per capita disposable income reached $2,515 in urban areas and $3,810 in economically advanced cities.

Changes in household spending: from basic needs to pursing a higher quality of life.

China’s Retail Market Structure

China’s Retailing Ownership

Restrictions for Foreign Investors

Under WTO accession agreement, China committed to gradually eliminate market access barriers for foreign enterprises.

Restricted products

Complicated licensing process

Retail Sector Opportunities for

Foreign CompaniesE-commerce

Online-only retailers Multi-Chanel retailers Third-party E-commerce platforms

Non-fuel service at fuel station: value-added service such as shopping, food, and auto maintenance

Drug retailing: strengthened administration and other released documents encourage foreign investments.

Best Practices to Succeed

Understanding relevant PRC regulations and policies: licensing process and market access limitations.

Work with local business partners: valuable resources such as business networks, government relations, and knowledge of local market conditions

Offer third-party services: third-party logistics, distribution, wholesale services, and supply chain management solutions.

Summary

China’s retail market is rapidly developing but highly fragmented.

PRC government regulations restrict foreign investment in certain sectors but offer opportunities in others such as E-commerce, fuel stations, and drug retailing.

To succeed in China’s retail market, foreign investors should familiarize themselves with government policies and consider working with local business partners.

Retailing in Japan

Japan’s economy valued at about $1.28 trillion (Barboza, 2010)

Japan just passed by China to become the world’s second-2010largest economy (Fackler & Tabuchi,2010)

According to the World Bank, Japan has held that spot for most of the last 40 years

History

After WWII Japan’s economy grew due to close alignment with government and large manufacturers(Fackler & Tabuchi,2010)

In the 1980’s there was discussion that Japan’s economy might some day take over the United States economy

In the 1980’s Americans pushed up the price of the yen (Leonhardt, 2010)

Trade deficit with Japan went to $108 billion in 1987, from $94 billion in 1985

Future Plans

After WWII Japan’s economy grew due to close alignment with government and large manufacturers(Fackler & Tabuchi,2010)

Free trade zone in Asia by 2020 (Tabuchi, 2009)

Haneda Airport in Tokyo a 24-hour hub for international flights(Tabuchi, 2009)

Less reliant on the United States

Bolster economic ties in Asia

Future Plans cont…

$540 billion market for environmentally friendly technology and renewable energy(Tabuchi, 2009) Employ 1.4 million people

Create 2.8 million jobs in the health and care-giving sectors.

Triple the number of foreign visitors to Japan, to 25 million by 2020

Create new jobs in a bid to support the country’s ailing tourism industry

Future Plans cont…

Expand Japan’s economy at an average rate of 2% over the next 10 years(Tabuchi, 2009)

Increasing gross domestic product to 650 trillion yen, or $7 trillion

Bring unemployment rate to 3 percent

Analysts say those goals are unrealistic

In the 1980’s there was discussion that Japan’s economy might some day take over the United States economy (Fackler & Tabuchi,2010)

Current Retailing

Origin of many Asian trends (JEFRO, 2009)

Many opportunities for retailers

Strong revenue for high-end retailers

Premium international brands

Consumers very interested in fashion styles and trends

Current Retailing

Outside country retailers bring in own style

Non-store retail market expanding quickly

Non-store opportunities for foreign companies

Range of opportunities for entries to the market

Current Retailing

High importance on quality

Success in Japan means success elsewhere

Japanese consumer feedback highly valued

35% of tourists come to shop

Current Retailing

Fashion magazines from Japan very popular in Asian countries

Top market for luxury goods

Sales from foreign companies comparable to home country sales

Current Retailing

Many high-end brands in one shopping location

Apparel specialty stores are prospering

Single company with different brands

Apprx. 2,800 shopping centers

Near mass transit stations

Current Retailing

Tokyo’s Ginza

Famous shopping center (japan-guide.com)

Department stores, boutiques, art galleries, restaurants, night clubs and cafes

1 sq. meter of land = $100,000

$10 cups of coffee

Summary

Increase China’s currency

Continue to attract high fashion as well as diversification

Continue to build up fashion centers

References

Sheng Lu.Understanding China’s Retail Market. China Business Review from http://www.chinabusinessreview.com/public/1005/lu.html

Barboza, D. (2010, August 15). China passes japan as second-largest economy. The New York Times, Retrieved from http://www.nytimes.com/2010/08/16/business/global/16yuan.html?pagewanted=1&_r=1&sq=japan&st=Search&scp=32

Fackler, M., & Tabuchi, H. (2010, August 31). Japan. The New York Times, Retrieved from http://www.nytimes.com/info/japan/?scp=14&sq=japan&st=Search

Japan-guide.com, Initials. (n.d.). http://www.japan-guide.com/e/e3005.html.

JETRO, Initials. (2009). Investing in japan - attractive sectors. Japan External Trade Organization, Retrieved from http://www.jetro.go.jp/en/invest/attract/retail/

Leonhardt, D. (2010, September 21). The long view of china’s currency. The New York Times, Retrieved from http://www.nytimes.com/2010/09/22/business/global/22leonhardt.html?_r=1&scp=21&sq=japan%20trade&st=cse

Tabuchi, H. (2009, December 30). Japan unveils plan for growth, emphasizing free trade in asia. The New York Times, Retrieved from http://www.nytimes.com/2009/12/31/business/global/31yen.html?_r=1&scp=124&sq=japan&st=Search