China diary: Beijing retail and doing business the Chinese way

Wednesday, June 13, 2012 | Posted by: Barry Knight
Categories: China | Tags: China, UK, retail, China diary, location, retailers, Beijing, Chinese products, online shopping, hutongs

The retail market in Beijing is quite different from Hong Kong and Shanghai – still international but with more of a Chinese flavour. In our final post from China, Barry Knight, Head of Retail, visits some of the city’s main shopping areas.

The final stop on my trip to China is Beijing. The city has four distinct shopping areas, three of which are very modern. The main shopping street here is called Wangfujing, which is a shorter version of London’s Oxford Street with a mix of good Chinese retailers and Western brands.

Of the cities I’ve visited, Beijing is certainly the one with a higher visibility of Chinese brands and it’s interesting to see the contrasts. Chinese retail strategy feels slightly less sophisticated than in the UK – perhaps giving UK retailers a competitive edge? – but with all the Western stores in such close proximity, they are adapting quickly.

Chinese retailers offer a different array of shops and it’s interesting to note that the stores are based around product category, seemingly irrespective of price. For example, one shop I went into just sold gifts, but the prices ranged from about £1.50 up to £75,000. So whereas we might classify shops as budget, high street or luxury, and then possibly sub-categorise by product, the Chinese tend to focus more on the product offering.

It’s also the first place in China where I have seen higher-end car dealerships alongside regular retailers. This may be explained by the fact that rents are lower in Beijing – compared with Shanghai or Hong Kong – perhaps because there is more space. As a result there are also a lot more open markets to see here.

The other main shopping district I visited was the hutongs area (pictured) in the old part of Beijing. Again the stores are a mix of UK and other Western brands and Chinese retailers, but the product ranges in store are very much focused on Chinese products – particularly things like silk, lace and porcelain – which I haven’t seen in the other cities I visited. So it is definitely important to consider location and the area you are targeting if opening a retail outlet in Beijing.

Although, as previously mentioned, the retail market is maturing rapidly – for example there are around 194 million online shoppers in China – because it is still a more immature market, stores such as bookshops and gaming and DVD stores are still doing well. Five years down the line I wonder whether those retailers will suffer the same fate as some of our well-known UK brands in those areas.

My trip has been informative and eye-opening, and I’m looking forward to talking to clients and contacts about the exciting opportunities available in China, the undoubted issues they would face and how we can help make entry into the market as seamless and successful as possible.

Barry Knight
Head of Retail
For Grant Thornton UK LLP
T +44 (0)20 7865 2150
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Image: (CC) Ivan Walsh

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