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Business / Policy Watch

New FTZ rules to trigger retail competition

By Wu Yiyao in Shanghai (China Daily) Updated: 2014-07-03 07:18

China's retailers may be facing fiercer competition than ever with changes in the China (Shanghai) Pilot Free Trade Zone, market insiders said at a forum in Shanghai on Wednesday.

The lifting of some restrictions in the FTZ lets foreign-funded enterprises operate online stores within the zone.

The relaxation, which may enable qualified foreign retailers to sell products via FTZ entities to Chinese consumers, may pose challenges to domestic retailers in after-sale services, pricing and management, said Yan Jing, deputy chief of kuajingtong.com, an FTZ-registered online trading platform, at a forum organized by the World Retail Congress.

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Free trade zone-registered retailers not only can assure consumers the quality of imported goods but online trading will extend the advantages of price, service and quality control nationwide, said Yan.

Some importers and retailers already are preparing to launch exhibition and trading centers within the FTZ that are devoted to selling the products of specific countries.

In early June, for example, the Australian National Exhibition and Trading Center opened in the zone. A handful of other shopping areas are also set to open by the end of the year and could expand to online business channels in the near future.

Retailers and traders need to closely watch logistics and warehousing, analysts said.

"We have noticed that the demand for quality warehouses and shipping services peaked in recent months, while the land for industries is limited within the zone," said a research note from Shenyin & Wanguo Securities Co Ltd. "Enterprises should take heed of these aspects."

According to data from Commercial Real Estate Services, a US property services provider, prices of industrial land have skyrocked some 130 percent in the Waigaoqiao area where the FTZ operates after the zone was established in September last year.

Experts said luxury goods in Shanghai may also see a new round of pricing and brand positioning in the face of such changes.

Supply chain conformity is key for retailers and traders amid these shifts, said Zhou Ting, an expert on luxury brand consumption with Shanghai-based Fortune Character, a luxury lifestyle information provider.

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