STORES Magazine - August 2008 - (Page 26)

COVER PEOPLE EXECUTIVE SUITE / RETAIL STORY Going for the Gold A look at retailing in China as the Summer Olympic Games get underway Wahne Zheng Chairman, Wangfujing Department Stores, and chairman, China Chain Store & Franchise Association Beijing store and that’s changed; chains are growing, and their market share has doubled. The impact of retailing on the economy has increased measurably in that same time frame. How does the Chinese consumer shop the growing number of multi-nationals like Walmart, IKEA or Carrefour? W ahne Zheng’s retailing career began in the Olympic year of 1984, when he joined the Wangfujing Department Stores Group in the government-appointed position of general manager. Today, Zheng is the department store group’s chairman, a position that includes directing the long-term activities of the 18-unit publicly traded chain based in Beijing. Chinese purchasing behavior is very similar to the United States, especially at Walmart or Carrefour. Customers use shopping carts and choose not only to buy a little, but often choose to purchase an entire cart full of goods. Regarding clothing or luxury goods, they go to a department store and spend the time selecting what they want. What are some of the challenges created by the rapidly emerging Chinese middle class? Established in 1955, Wangfujing was known as the “first store of New China.” Wangfujing Group is one of the country’s largest department store chains and is listed on the Shanghai Stock Exchange. It operates large-scale department stores in many of China’s urban centers, including Guangzhou, Wuhan, Chengdu, Baotou, Chongqing, Nanning, Huhehaote, Luoyang, Changsha, Xining and Urumqi. Wangfujing Group also has real estate holdings, a property management arm and interests in the import/export trade, but it derives the majority of its revenues from retailing. In 2004, it was selected as one of 20 key, large-scale retail enterprises supported by China’s Ministry of Commerce. Earlier this year, Wangfujing Group received licenses to sell products at the venues of the Beijing Olympic Games, which take place this month. Zheng also serves as chairman of the China Chain Store & Franchise Association, which represents more than 1,000 member companies. Members include China-based independent, public and private chains, as well as international brands like Walmart, Carrefour, Tesco, Burger King and KFC. Could you describe the current state of retailing in China? The Chinese middle class has increased and so has urbanization. Suburbs of two million people are growing every year as [the peasant class] move to urban areas. Urbanization brings many, many other issues [to the forefront] such as the water shortage, demands on infrastructure and demand for products and services. What advice can you give U.S. retailers interested in entering the Chinese market? They should understand the Chinese market, its culture and customer behavior. We have noticed that some U.S. and European retailers now doing business in China do not offer all the same services and amenities as do their American and European units. What are some common misconceptions about Chinese consumers? The retailing industry has improved or developed dramatically in China. The growth rate is around 11 to 13 percent a year. About 15 years ago, a town might have had a single retail format such as a department store, but now those towns might have many formats, including supermarkets and specialty stores. It used to be Chinese retailers had a single 26 STORES / AUGUST 2008 Many American and European companies think Chinese consumers place price ahead of quality. There were some luxury brands, which I won’t mention, that entered China and ignored their merchandise’s quality. And those Chinese customers who were not satisfied complained. In China, European luxury goods like Louis Vuitton, for example, enjoy the world’s highest market share. As the world turns its attention to Beijing this month, what are your thoughts on China’s chances for Olympic gold? I am confident that China’s athletes will continue [to deliver] excellent performance. StORES — Janet Groeber WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - August 2008

STORES Magazine - August 2008 Contents Executive Editor's Page President's Page The Lure of Free Shipping Walmart’s New Look What Shoppers Think Will Widgets Work for Wheat Bread and Wasabi? 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Store Design Industry Economics Hot 100 Retailers Concept2Watch Mobile Technology Small Store Technology Website Optimization Site Selection Mobile Payments Recycling Merchandising: Cool Sells Merchandising: Merchandising in Mexico Store Construction & Development Human Resources Loyalty Programs Mobile Marketing Loeb Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - August 2008

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