Local touch

Better Life founder Wang Tian is proud of one of his recent moves, opening his stores as early as 6 am, just as many Chinese outdoor markets do. He's happy to see grandmas and housewives pop in to buy freshand fruit and vegetables .

It is one of the measures that he adopts to compete with multinationals such as Carrefour and Wal-Mart who dwarf his business.

Wang uses domestically contracted vegetable and fruit farms and low-cost logistics to keep his produce prices low.

"Multinationals would not be able to afford an operation like this, but it has been proven to be popular among grandmothers and housewives in our own communities," says Wang.

It is one example of how Wang's Better Life still manages to maintain a stable development amid the fierce competition of China's retail sector.

"China is a huge country. It is impossible for foreign retailers to learn about the details of each market, and take good care of all the customers," says Wang.

"As long as we find the right target client, and operate differently than our competitors, we will find opportunities," he says.

Retail is one of the fastest developing industries in China as per capita income increases and rising urbanites have more money to spend. In the first half of 2008, the total retail sales of consumer goods amounted to over 5 trillion yuan, up 21.4 percent year-on-year.

Given China's vast GDP increase, and potential consuming capability, the retail market has even larger potential. According to a survey carried out by UPS last year, China is expected to surpass the US and become the largest consumer market within the next decade.

However, there has not been a domestic player that operates in the national level. For instance, foreign companies operate more than 90 percent of the hypermarkets in Shanghai.

In contrast, multinationals including Carrefour and Wal-Mart have been expanding rapidly throughout the country since China fully opened up the retail market at the end of 2004. The world's largest retailer Wal-Mart opened its 100th store in China at the end of last year, and the number of its stores doubled to 204 after the acquisition of local supermarket chain Trust-mart.

Wang says the multinational retailers were in a good position to compete from the very beginning since in the opening up process, many of them managed to get the best locations and they also got many favorable policies as local governments sought to lure foreign investments.

"It is like we have given the best weapons to the foreign retailers, who already own advanced management experiences and have vast capital to spend, and native retailers have to fight in the mud," says Wang.

Filling the market that foreign retailers haven't tapped has also proved to be a successful strategy. Better Life has opened stores in 30 of Hunan's 80 towns. "In these towns, we always choose the best location and operate as the biggest and best store in each town," says Wang.

"Wal-Mart represents the highest level in the retail business," he says, "if I just follow it, I will lose immediately."

For Wang, the retail business is fundamentally about winning consumers over. "So I will work in my own way and let's see who understands consumers better," Wang says.

(China Daily 11/03/2008 page12)