Manufacturing News

Int'l retail giants eye China's third/fourth tier cities

A senior official from Walmart Asia recently announced that it will open its first store in Liuzhou, in Southwest China's Guangxi Zhuang autonomous region. This move follows the announcement last month by the world's largest retailer that it will expand its business in China's third and fourth tier cities, China News Service reported on Wednesday.

Walmart Stores Inc said in October it will open up to 110 new stores and invest in distribution centers over the next three years in China's third and fourth tier cities, which will create about 19,000 job opportunities. Of the new stores planned as of the end of this year, 80 percent are in third and fourth tier cities.

Walmart entered China in 1996 when it set up its first shopping plaza in Shenzhen, in south China's Guangdong Province. For a prolonged period the company only opened stores in downtown areas in first and second tier cities of Chinese mainland.

However, with rising rent costs and increasingly fierce competition, large retailers are gradually losing their price advantages. In October, Walmart announced at its annual investor conference that it will close 30 stores in China, mostly in first and second tier cities like Shanghai, Shenzhen and Wuxi.

While there is fierce competition in the big cities, China's rapid urbanization is providing tremendous opportunities in small and medium-sized cities. Some retailers are therefore shifting their business focus in China from first and second tier cities to third and fourth tier cities.

METRO, the world's third largest retailer after Walmart and Carrefour, is also increasing its footprint in third and fourth tier cities. The company opened its 70th shopping mall in the city of Xiangyang, in central China's Hubei Province, on November 20.

Over the past 30 years, China's urbanization has attracted more than 400 million people to the cities. At present, China's urban population accounts for 52 percent of the total. Former small and medium-sized cities have gradually developed into large cities. This concentration of population and the gradual improvement of infrastructure are also attracting the attention of the international retail giants.

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