Avid shoppers may be aware that there are three Sogo shopping malls in the Zhongxiao E Road neighborhood, but few visit the Japanese garden on the 9th floor of the Fuxing outlet.
The setting of a Japanese residence, a bridge, rockery and bushes in a 100-ping (330.5m²) space, provides the perfect place for shoppers to take a breather and soak in the garden landscape after a shopping spree.
Over at Sogo’s Tienmu outlet, the lighting in the restroom is solar powered and another system recycles rain to water plants and for cleaning.
Sogo is aiming to create a niche that allows it to stand out in the highly competitive retail business and it is also applying such “green concepts” to its malls in China.
“This ‘New Life’ model has attracted the attention of our competitors,” Pacific Sogo Department Stores Co (太平洋崇光百貨) chairperson Sophia Huang (黃晴雯) said.
“We created a trend where more and more new malls in China are focusing on building a ‘greener environment,’” she said.
Huang made the remarks at a forum on Friday, where retail bigwigs from Taiwan and China gathered to share views on the booming retail industry across the Taiwan Strait.
CROSS-STRAIT FORUM
Organized by the Taiwan External Trade Development Council (外貿協會) and the Association of Economy and Trade across Taiwan Straits (海峽兩岸經貿交流協會), forum speakers included top executives from Beijing Wangfujing Department Store Group Co (北京王府井百貨), China Resources Retail Group (華潤零售集團), Wuhan Zhongbai Group Co (武漢中百集團) and Uni-President Enterprises Corp (統一企業).
“We are not letting our guard down in the competitive landscape in China. We plan to expand the scale of our operations by opening at least one new mall in China every year,” Huang told the audience.
Pacific Sogo is not the only Taiwanese firm vying for a share of the booming retail market in China, which is projected to overtake Japan as the world’s second-largest economy this year and has a rising number of consumers with deep pockets.
FRANCHISES
Statistics released on Thursday by the China Chain Store & Franchise Association (中國連鎖經營協會) show gross sales for the top 100 franchise firms in China grew 13.5 percent year-on-year to 1.36 trillion yuan (US$0.2 trillion) last year.
That was the lowest growth recorded in 11 years, a result of the financial crisis, the group said.
The top three chains were: Suning Appliance Co (蘇寧電器), GOME Electrical Appliances (國美電器) and Bailian Group (百聯集團). Taiwan’s RT-Mart (大潤發) was sixth.
Owned by Taipei-based Ruentex Industries Ltd (潤泰), RT-Mart has every reason to celebrate. The company overtook French rival Carrefour for the first time last year, by taking in 40.4 billion yuan — 17 percent more than the 33.6 billion yuan recorded by Carrefour.
Average sales per outlet for RT-Mart was 330 million yuan last year, compared to Carrefour’s 230 million yuan and Wal-Mart’s 190 million yuan, said Peter Huang (黃明端), RT-Mart CEO for China operations.
“This is the first time we beat Carrefour, which moved into the China market earlier than any other hypermarket operator,” he said, adding that this year RT-Mart will seek to boost revenue by 25 percent to 50.5 billion yuan and expand its number of outlets to 160 from 125.
CLOSING THE GAP
Taiwanese operators may enjoy an advantage over their foreign peers due to cultural and language advantages, but the competitiveness gap between Taiwan and Chinese operators is also closing, Peter Huang said.
It is not easy to cater to sophisticated Chinese appetites, but Taiwanese firms have know-how in personnel management, logistics management and the constant flow of innovative ideas, he said.
“CEOs from foreign operators are based in China for a three-year term. They spend the first year exploring, aim to do something in the second but are then getting ready to go home by the third year … But for us, we are staying there and developing our business for the long term,” Peter Huang said.
Chinese executives welcomed better synergy from their Taiwanese peers.
“Domestic consumption in China is booming, people have more money to spend,” said Zhang Xuan Song (張軒松), chairman of Yonghui Superstores (永輝超市).
“Now is the best possible time to move into China and sell consumers upscale products.”
However, how to cater to divergent consumer tastes in different Chinese provinces remains a tough issue, he said.
LOCATION, LOCATION
Meanwhile, Beijing Wangfujing’s CEO Liu Bing (劉冰) suggested that those who want to venture into China should choose first-tier cities, such as Shanghai, Beijing, Shenzhen and Guangzhou as their first stop, as citizens there are more receptive to foreign brands. Initially, they should also engage a local distributor to test the water in China before investing more capital, she said.
Children’s garment retailer Les Enphants Co (麗嬰房) is cautiously expanding its operations in China, where it had 1,429 outlets at the end of last year.
“Too many competitors in our field expanded too fast, and forgot the importance of service quality,” Les Enphants CEO James Wang (王國城) said.
“How fast you expand your business depends on how ready you are … We are very careful with every move we make in China. It is always better to be safe than sorry,” he said.
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