Despite the economic fallout from the COVID-19 epidemic, several foreign retail giants are beefing up their presence in the Chinese market to cash in on the rising purchasing power of Chinese consumers.
Among foreign investment deals worth a total of 16 billion U.S. dollars inked in Shanghai earlier this week are investments from U.S. retail giant Walmart and Japanese convenient store giant Lawson.
Walmart's Sam's Club will open a brand-new flagship outlet in Shanghai in 2021 while Lawson is investing a further 29.1 million U.S. dollars to further penetrate the Chinese market.
"We are excited to add the flagship outlet into our rapidly expanding footprint, a testimony of our commitment to our members and China," said Andrew Miles, president of Sam's Club China, adding that the company is expected to have 40 to 45 stores in operation or under construction in China by 2022.
The latest deals came after U.S. retail giant Costco announced in late February the start of the construction of its second store on the Chinese mainland with a total investment of 2.6 billion yuan (about 367 million U.S. dollars).
After tasting earlier success in the world's second-largest economy, foreign retail giants are now setting their eyes on the new opportunities in the Chinese market even impacted by the COVID-19 epidemic in the short term.
"Despite cutting expenses for dining out and amusement, Chinese customers have spent more on other areas such as healthy and fresh materials for home cooking," said Nancy Sun, vice president of Strategic Initiatives of Sam's Club China, noting that recent sales of coffee and ice cream have also doubled from a year ago.
At a Sam's Club outlet in Shanghai's Pudong District, freshly baked croissants were among the best sellers along with easy-to-cook frozen dumplings, pastas and other fast-cooking products. Chefs, who used to teach cooking at the outlet, now design special recipes and hold online cooking classes.
Retailers should seize the new opportunities and innovate fast in accordance with the changing demand trend instead of withdrawing from the vast market, according to Sun.
At Costco's first outlet on the Chinese mainland in Shanghai, some 800 new customers arrived within an hour of opening. The store staff always remind customers to leave quickly after shopping to prevent gatherings, with all cash register counters open to prevent queues.
Chinese people have paid more attention to health and food safety amid the COVID-19 outbreak and increased consumption of seasonings and fresh meat, vegetables and seafood, said British consultant company Kantar.
China's booming e-commerce and logistic system have helped spur a bustling "stay-at-home" economy.
Motonobu Miyake, CEO of Lawson (China) Holdings, said the convenience store chain's online sales increased sharply amid the epidemic and online business will contribute greatly to future growth.
Online sales of Sam's Club outlets in China have seen explosive growth as almost all stores launched online business and offered goods delivery services within an hour during the epidemic period, according to Sun.
"The COVID-19 epidemic has brought us new challenges, but we are confident in the Chinese market in the long term and will continue to invest here," Sun said.
China has released a guideline aimed at boosting consumption and unleashing the potential of the domestic market to cushion the blow of the ongoing epidemic on economic activities.
"With growing purchasing power, Chinese customers have adopted a more open and mature mindset toward consumption," said Richard Chang, senior vice president for Asia at Costco Wholesale.
Retailers around the world have been entering the Chinese market, enriching the choices of the Chinese people as well as seizing business growth opportunities themselves, said Bai Ming from a research institute affiliated to China's Commerce Ministry.
