Updated: 2011-07-22 12:39
By Wang Chao (China Daily European Weekly)
Domestic firms make hay as shopping spree by middle class consumers keeps cash registers ringing in Nanjing
In the ancient capital city of Nanjing, a retail revolution is slowly shaping the economic engine of modern China. Much like the past when the city - situated 300 km to the northwest of Shanghai - was the preferred capital of several dynasties and colonial powers, it is also the preferred destination for domestic retailers as they have been able to fend off the stiff competition from international retail giants and grow profits.
Every year 20 million customers come to shop in Nanjing, spending more than 10 billion yuan on clothes, cosmetics and home appliances. In 2010, the retail revenue of Nanjing reached 227 billion yuan (24.8 billion euros), an increase of 18.5 percent over 2009 and nearly double the amount in 2005.
Fu Dunxun, general manager of Nanjing Xinjiekou Department Store Co Ltd (Xinbai), still remembers how terrified he and his colleagues were initially when they heard that European retail giant Metro was planning to set up shop in Nanjing during the late 1980s.
"The product layout and advanced point of sale (PoS) systems at the Metro outlet astonished us and left us fearful for the future."
That pessimism stemmed from the fact that Fu's department store and many other Chinese retailers were still reliant on antique techniques to price and sell goods.
Prices were often written down by hand and passed on to another counter from where they were read aloud for the customers to make payment and take delivery of the goods. It was all like a maze, says Fu. During busy seasons, ropes were hanging all over the ceiling, and slips flying overhead like battle planes.
But the Xinbai department store has survived the Nanjing retail revolution to tell its tale along with several other local retailers. The store hires more than 2,000 workers and pays more than 100 million yuan in taxes to the Nanjing government every year. Last year, the store notched up revenue of over 30 million yuan in a single day on Christmas eve.
Learning from international retail giants such as Walmart and Carrefour too has helped the local retailers bring about this revolution.
"Previously we needed to pay airfares to the US or Europe to learn from them, but now they have moved the 'schools' to our neighborhood. We can easily learn their advanced management skills without stepping out of Nanjing," says Fu.
Last year, Suguo Supermarket, a chain of supermarkets based in Nanjing clocked revenue of over 10 billion yuan, while the world's second-largest retailer Carrefour, which debuted in Nanjing in 1999, earned less than 1 billion yuan.
As the capital of East China's Jiangsu province, Nanjing is now well connected with seven other cities in and beyond Jiangsu province through its high-speed train network.
"During holidays, especially Christmas, the parking lots outside the malls are full of cars from outside Nanjing, with some shoppers coming all the way from Anhui province. Nanjing is slowly becoming the buying center for the surrounding cities," says James Kong, general manager of the Nanjing-based Golden Eagle International Retail Group.
According to data from the Nanjing Commission of Commerce, Nanjing's retail revenue reached 227 billion yuan in 2010, nearly 50 percent of the total retail revenue of the eight cities nearby. The service industry contributed 50.7 percent of Nanjing's gross domestic product (GDP), which totaled 508.6 billion yuan.
Despite its proximity to Shanghai, Nanjing has tried to be not overshadowed by its metropolitan neighbor, and has instead gone in for a distinct positioning.
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