Merchants close stores in US but expand in China

Updated: 2014-04-22 07:23

By Derek Chen (China Daily)

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The company had retailed products in China for nearly six years when its first store opened in Beijing. It now has 13 stores nationwide with hundreds of reseller outlets and points of sale in the thousands. China is Apple's second-largest market after the US, which it's expected to vault past in the next few years.

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Store rollouts in China don't, however, guarantee success.

US consumer electronics giant Best Buy Co Inc had to exit the Chinese market after several years. MediaMrkt, which sells electronics and appliances and is owned by Germany's Metro AG, met a similar end in China, where the market is increasingly competitive and demands a prudent strategy from newcomers.

Chinese success requires a long-term strategy, tailor-made products and the right locations. Retailers need to be prepared to lose money for the first two to three years. Some retailers enter directly, others through partners, some with a hybrid model.

Product offerings cannot simply be copies of the US version. They must meet Chinese consumers' demands, especially for the fast fashion brands. Location is critical. Some operators closed stores, not because the products were unpopular but because they were wrongly situated.

Smart retailers carry out in-depth research before any international expansion and seek advice or assistance from consultants. Many work directly with agencies to secure the ideal retail space.

From San Francisco to Shanghai, Boston to Beijing, New York to Nanjing, stores close in the US but open in China.

Derek Chen heads up JLL's retail tenant representation business in China. Chen assists international brands to expand into the Chinese market.

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