China's retail and consumer sector will see growing merger and
acquisition activity in the years ahead, according to a report
released yesterday by PricewaterhouseCoopers (PwC), a worldwide
accounting and consulting firm.
China's economic reforms and opening-up policy have improved the
public's purchasing power in retail and consumer markets, said
Sonny Doo, the firm's retail and consumer chief in China.
"Many more foreign retailers will resort to the practice of
mergers and acquisitions as a way to gain efficient and effective
market entry, while domestic players will buy out smaller regional
retailers as a strategy to extend their presence."
The report, based on PwC's global retail and consumer study,
titled "From Sao Paulo to Shanghai", aims to provide a general
picture of the economic, social and cultural environment in which
investors operate.
It also highlights major consumer trends and identifies
challenges and opportunities for companies in the global retail and
consumer goods sector.
Doo said strategic alliances and voluntary chains will be
another trend among retailers especially smaller ones in the coming
years.
"Small and medium-sized domestic retailers need to form
voluntary chain operations to increase bargaining power, pool
resources, enhance sourcing capabilities and share logistics
facilities and information, thereby countering intensified
competition," he said.
Citing the study, Doo said China's middle-class families, which
have an annual income of 60,000 yuan to 500,000 yuan each, will
make up 45 percent of the population by the year 2020, compared to
5 percent today. Those families will be avid consumers of durable
goods ranging from high-end electronic appliances to upscale
fashion to premium home goods.
The report also said the business boom in second- and third-tier
cities and rural areas will attract a growing number of foreign
retailers.
(China Daily April 24, 2007)