Emerging Market News

Wal-Mart Doing Good in China

Edward Eng — Wed, 08 Sep 2010 04:02:54 +0000

Wal-Mart has 12 shopping plazas and one Sam’s Club in Fujian province, providing more than 4,000 jobs. Wal-Mart will introduce low-carbon concepts to its malls in Xiamen.

Wal-Mart has built 46 partner farms in 15 provinces, benefiting 479,000 farmers. “Our objective is to build our partner farms to 1 million farmers by the end of 2011,” Christina Lee, senior public relations director of Wal-Mart China said.

Xiamen is also actively exploring the low-carbon development model for local conditions, which is compatible with Wal-Mart’s strategies. Wal-Mart saves energy by promoting energy-saving LED lamps and cabinet freezers, waste heat recovery units, and turning off some lights during non-peak hours.

Selling environmentally friendly commodities is another crucial component of Wal-Mart’s green ambitions. For example, its Partner Farm Program has been helping farmers improve their adaptabilities to markets and guiding their standardized mass production in an environmentally friendly way since 2007.

This not only helps farmers increase their incomes, but also provides Chinese consumers with fresh, safe, tasty, and healthy foods.

The company has also organized a domestic marketing tutorship program for export enterprises and helped them explore domestic markets.

Lee said the program is being carried out in Guangdong, Zhejiang, Jiangsu, and some other regions with developed export industries.

“Thanks to this program, more than 1,000 export enterprises have benefited,” she said. “Products from more than 60 enterprises are on the shelves of Wal-Mart, bringing in more than 50 million yuan ($7.35 million) in sales a year.”

Source: China Daily

Seminar on Picking Good Malls in China

Edward Eng — Wed, 01 Sep 2010 07:11:22 +0000

As the leading market data and intelligence provider in the APAC region, getchee works with international brand owners that are entering or expanding their operations in China and the rest of the Asia Pacific. We are hosting a seminar in Shanghai on October 29, 2010 at Accenture’s facilities to aid brand owners in their shopping mall targeting strategy. We want to take this opportunity to invite you to attend. Please mark your calendars and stay tuned for details.

China’s rapid urbanization and development rate means new shopping malls are opening every week. Learn how incorporating geo-demographic data and location analysis in your mall selection strategy can maximize your return and create a long term successful store in a flourishing mall.

Avoid shopping mall pitfalls. Bigger is not always better. Dongguan, located in southern China’s Guangdong provice, has a population over 6 million. It is also home to one of the world’s largest malls, New South China Mall. The mall has space for up to 2,350 stores but it’s been 99% vacant since opening in 2005. It’s considered a ‘ghost mall’ or ‘dead mall’.

Click here for pictures if you can’t watch the video.

Register for Seminar – Targeting Good Malls in China
Date: October 29, 2010 (Fri.)
Venue: Accenture Shanghai Office (Accenture link)
Address: 31F Zhao Feng Plaza, 1027 Changning Road, Shanghai, China (map)
Registration: philip.tomlin@getchee.com
Reg. Fee: None
Language: English
Feel free to invite interested third parties.

It’s Not All about GDP

Edward Eng — Tue, 03 Aug 2010 08:01:30 +0000

You always come across GDP when dealing with market potential. But what about ‘retail synergy index’? We feel it is also very important to evaluate and focus on the retail penetration within cities. A city with only a high GDP level doesn’t necessarily mean it’s a good market to enter.

The graph below illustrates how getchee’s retail synergy index adjusts the ranking of Chinese cities based on modern retail penetration. Cities such as Wuhan and Chengdu have modern retail synergies comparable to their GDP rankings, whereas cities like Shenzhen and Guangzhou have retail synergies that don’t quite match their high GDP rankings.

Feel free to leave comments below. Thanks.

Northern China – A Place for Sportswear

Edward Eng — Thu, 29 Jul 2010 02:50:32 +0000

China’s big and it’s hard to know who likes what. However, one thing is certain. Research and data from getchee show that people in northern China seem more like sportswear people than those in the south. Based on the major cities in each of the five China regions, take a look at how many people each Nike, Adidas, Li Ning, and Anta store could pack in.

Discussion Questions
1. What will it take to boost sportswear brand penetration in southern China?

McDonald’s & Starbucks in Vietnam?

Edward Eng — Thu, 01 Jul 2010 01:37:09 +0000

Everyone is talking about emerging markets these days and with all this talk we hear China come up a lot. However, David Rubenstein, a founding managing director of The Carlyle Group has made a good point. “If China, by the year 2035, is the biggest economy in the world, how much longer can you call it an emerging market?”

So, what is a true emerging market? CNN’s Andrew Stevens has recently reported on the growing economic might of Vietnam, particularly Ho Chi Minh. The city is booming and has been booming at an average annual growth rate of 7 percent for the past 10 years. More importantly, Vietnam is serious about drawing in foreign business.

We’ve seen electronics manufacturers like Samsung and Canon, big Asian carmakers as well as Ford, and tanning factories that produce shoes for Timberland all move into Vietnam. Why? It’s cheaper. There’s less state intervention when companies follow workplace and environmental standards. Plus, Vietnam has key access to a vast and cheap labor pool across the borders of Cambodia and Laos, according to Stevens.

But what about retail, particularly retail food? Here are some quick facts about retail food and market potential in Ho Chi Minh compared to its Chinese sister city, Shanghai.

What would the demographic makeup of the first McDonald’s in Ho Chi Minh look like?

McDonald’s trade area with an 1100m large radius would include a labor population of 75,544, a female population of 6,228, a male population of 59,125, and a total population of 124,703.

And Starbucks?

Starbucks trade area with a 900m large radius would include a labor population of 74,283, a female population of 5,985, a male population of 56,460, and a total population of 116,320.

And lucky for us, the trade areas of these two retail giants’ first locations in Vietnam overlap.

So what does a trade area analysis reveal?

Discussion Questions
1. Will we see an emergence of foreign brands such as McDonald’s and Starbucks in Vietnam like we have in China? Why or why not?

2. Where in Vietnam would you open the first McDonald’s?

3. Where in Vietnam would you open the first Starbucks?

We’d love to know what you think. Leave your comments below. Thanks. -Eddie

Salsa, Shansu, & Supermarkets

Edward Eng — Tue, 29 Jun 2010 00:39:01 +0000

I never had a chance to try this awesome vegetable, Shansu, until I moved to Taiwan. I think I first tried this light and crispy vegetable at one of the many ‘quick stir-fry’ places here. Most dishes in these places go for about 100NTD (3USD) a piece. Shansu is generally slightly more expensive. It usually maxes out at 150NTD per order.

Browsing a Wellcome supermarket one day, I found a package of Shansu for about a third of the price. On another day, I found it at Jason’s for a little bit more than Wellcome. Recently, I’ve been shopping at wet markets and noticed Shansu is cheaper there than at supermarkets. Surprisingly, I also found it at Costco. It was a decent deal since it was cheaper than the supermarkets and wet markets but not quite as fresh.

Even though the price was right, I didn’t buy it owing to the lack of freshness and the bulk quantity was just too much for me. However, just standing there, I wanted to know how many people were buying that pack of Shansu and who these people were. Many Taiwanese restaurants owners have started shopping at Costco since the prices of things like cooking oil and cleaning products are attractive. But are any stir-fry restaurant owners buying Shansu from Costco now instead of straight from the farms or wet markets out of convenience? How far do these owners travel to get to Costco? How much impact has Costco had on wet markets, supermarkets, and the neighboring RT Mart hypermarket?

I had to stop myself. Not enough information and just too little time to be thinking about this kind of stuff on a Sunday night. I would need geocoded demographic data and wealth intensities, Costco’s point of sales data, and third party purchasing data to answer all those questions. Then again, if a Tostitos Asia brand manager also had all this information, he or she would know that I was going to Costco to buy tortilla chips instead of Shansu for my homemade salsa. Things would be much easier if the Wellcome by my house sold tortilla chips. Oh well.

Also interested in learning about restaurants and supermarkets in Shanghai or Chengde? Local demand for tortilla chips, salsa, and sweet potato? Let me know. Thanks. -Eddie

Retail Trends – Yogurt in Taiwan

Edward Eng — Fri, 25 Jun 2010 08:43:20 +0000

I had a little trouble finding yogurt in Taiwan when I moved here six years ago. At first instinct, I decided to visit the 7-11 across the street from my apartment. With my broken Chinese, I asked where the yogurt was. The cashier pointed me to the back of the store. I was pretty amazed at all the different teas, juices, and soft drinks but I didn’t find any yogurt. The cashier walked by and pointed to a bottle before continuing to stock the shelves behind me with tons of potato chip bags. A tiny bottle with the word Yakult on it was staring at me. “Okay, I’ll try it,” I said. I paid 8NTD (25cents USD) for it then immediately downed it like a shot of tequila. It was sweet, sour, and tasted nothing like regular yogurt or tequila.

Taipei 101 was also new during this time so I took a look. I was taken aback by all the people and amount of restaurants in the food court. Then I spotted Jason’s supermarket hidden in the back corner. Jason’s prices seemed a bit higher than other supermarkets like Wellcome. I looked around real quick and bought a small package of sushi before I left.

A few years later, a friend told me that he was going to pick up some yogurt. “Yakult at 7?” I asked. He quickly replied and told me he was going to Jason’s. We went over there and he showed me a nice four-pack of yogurt for about 150NT (about 5 bucks USD). Nice!

A couple more years rolled by and I started to notice a few frozen yogurt stores popping up. One of the stores, Yofroyo, belongs to my friend. I tried a cup for about 60NT (around 2USD). And from 2009 till now, I’ve tried a few of his competitors. To be honest, they’re all decently tasty but what I really noticed was that business is pretty good. I think we’ll continue to see decent growth in yogurt sales in Taiwan as consumers are becoming more health conscious. Stay tuned for more info on healthy food products in Taiwan.

Want to know about the yogurt market in Dalian, China? Let me know. Thanks. -Eddie

Soccer Unites Everyone in Beijing

Edward Eng — Wed, 23 Jun 2010 09:09:41 +0000

One man. One ball. One love. His name is Lucky. He is determined to bring the fever out in everyone. World Cup fever. Lucky has decided to kick a ball around Beijing’s inner city subway line also known as Line 2. He will unite business people, general consumers, and children. With all the banks, convenience stores, and schools he’ll pass, Lucky won’t run out of money, water, or places to rest.

On his path, Lucky’s efforts will touch the hearts of over 740,000 people in at least 260,000 households. Way to go Lucky!

Feel the same passion as Lucky? Want Lucky to ignite the World Cup spark in your city? He’d be happy with the chance to visit your hometown.

Hypermarket Situation in China 2010

Edward Eng — Mon, 21 Jun 2010 07:06:04 +0000

Hypermarkets are a retail store format that has taken China by storm. They’ve given mom and pop shops, convenience stores, and supermarkets a run for their money. Moreover, foreign hypermarkets have grabbed the bull by the horns and fiercely planted their feet in the market.

We saw a nice spurt of growth during the mid-1990s. Then Tesco entered the market in 2004, expanding rapidly with 82 locations in just 6 years. However, many first and second tier cities in China have become saturated with hypermarkets. Will we see similar growth and expansion in lower tier cities over the next ten years?

Additional Questions
1. Will newer players in the market like Jusco be able to compete?
2. What retail store formats will give hypermarkets a challenge?

Where to go next in China?

Edward Eng — Mon, 14 Jun 2010 09:44:16 +0000

Helping Hand

Filling you in on our recent seminar.

The getchee seminar on retail and distribution solutions for China’s lower tier cities was held on Wednesday, June 9. For all the persons who could not attend, we would like to give you a short summary. The seminar was fully attended by representatives from:

+ 3 of the top 5 sporting goods brands
+ 2 of the top 10 QSR brands
+ The top home furnishings brand
+ Internationally recognized retail brands

Seminar Summary

A quick recap of what happened.

The first presentation gave us great insight into real experiences of hypermarkets expanding in China. James Grigsby, Vice President at getchee, then presented a methodology for sizing China’s lower tier cities to establish market potential.

The last presentation was given by Hsiang-Yun Chu, the Shanghai General Manager for Geopro, on city network planning with limited data. We will make our presentation slides available in pdf format. To receive a copy or to schedule a consultation, please feel free to call us anytime at +886.2.7718.0700 or send a message to philip.tomlin@getchee.com.

Contact Us

It’s our pleasure to answer your questions.

James Grigsby, Vice President
T: +886.2.2766.5100 ext. 103
E: james.grigsby@pacific-geopro.com

Howard Hsiao, Vice President of Sales
T: +886.2.7718.0700 ext. 523
E: howard.hsiao@getchee.com

Philip Tomlin, CRM Manager
T: +886.2.7718.0700 ext. 575
E: philip.tomlin@getchee.com