Global retailers stay focused on China

Warc, 29 May 2014

HONG KONG: Global retailers expanding into Asia Pacific continue to regard China as their priority market for new store openings a report has said.

The latest edition of How Active are Retailers in Asia Pacific?, from global property adviser CBRE, found that 62% of retailers surveyed planned to open a new store in China this year. That was almost twice the proportion intending to open stores in Vietnam, Hong Kong and Singapore, all of which ranked equal second on 33%.

Indonesia and Malaysia followed in equal third on 31%, while Taiwan, the Philippines and Thailand were together in fourth (22%) and Australia (20%) completed the top ten.

Jonathan Hsu, CBRE Director, Asia Pacific Research, said retailers were attracted by the growth in consumer spending and the appetite Chinese consumers were displaying for western fashion products and services.

"Consumer sentiment remains the highest in the world and retail sales growth is expected to reach 13.4% in 2014," he stated. "Retailers continue to view this market as having significant upside potential as the government plans to further boost domestic consumption and double household income by 2020."

CBRE also examined which cities retailers were looking at for possible store openings. While Greater China dominated the list (Beijing, Shanghai, Hangzhou, Hong Kong, Nanjing and Guangzhou), Vietnam also featured strongly with three cities in the top ten – Hanoi, Ho Chi Minh City and Danang.

"Vietnam has seen a steady flow of new overseas retailer entrants in recent years, including the likes of Starbucks and McDonald's," said Sebastian Skiff, executive director of CBRE Retail. "This trend is expected to gather pace as other retailers position themselves to enter this market following the relaxation of foreign direct investment for wholly-owned businesses, which takes effect in 2015," he added.

The report further noted a significant divergence in how respondents saw the outlook for Asia versus Pacific: 74% anticipated good to excellent expansion opportunities in Asia but just 32% felt that way about the Pacific.

Skiff attributed this to the relatively smaller market sizes of Australia and New Zealand. But he added that retailer attitudes were changing as leading global retailers, particularly those in the value fashion sectors, entered the Pacific market.

Data sourced from CBRE; additional content by Warc staff