Domestic Enterprises

Domestic enterprises are readying themselves as their top ranks in the market come under threat.Shanghai Bailian Group，currently number one in China，has undergone restructuring and made as many acquisitions as possible in an effort todeepen its size advantage.Shanghai Bailian had a total of around 5000 outlets and US $12 billion in sales for 2004.The market remained effectively protected from foreign competitors before 2005，when foreign retailers only accounted for somewhere around five to eight percent of the market.

Higher sales to floor space ratios allow these stores to offer price advantages by as much as 20%.With limited branch options，foreign retailers have been able to make single hypermarket stores far more profitable than most supermarkets.The hypermarket has been a popular choice.Hypermarkets in China take a different shapethan their counterparts in other countries，appearing near concentrations of people in a multi-story arrangement.Most customers arrive on foot，by bicycle，or by way of public transportation，visiting more frequently but spending less per visit.

Another phenomenon is the huge growth in the convenience store sector，but the number of convenience stores in China is still disproportionately small.Lawson’s and Family Mart，both Japanese in origin，are common sights in Shanghai，but are still absent from the vast majority of China’s cities.Eleven already operates over 160 stores in mainland China，but until 2004，limited its business to Guangdong.

Foreign retailers occupy a very small share of the traditional department store sector.The Malaysia-based Parkson has a number of high-end department stores in a few of China’s large and medium sized cities.Huge numbers of outdated state run department stores appear headed for extinction.China’s increasing number of malls may become an important medium for up-and-coming retailers.

As with many other areas of China’s industry，foreign image，service，and efficiency are up against the market dominance of domestic retailers.But opportunities abound.

hancheng

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