The chain supermarket boom started in the early 1990s in China and developed at an annual increase rate of 70%. The development of chain supermarket industry is especially fast in those well-developed areas such as Beijing, Shanghai and Guangzhou. By the end of 2000, the sales volume of chain supermarkets all over China amounted to 7% of the total turnover of the whole country. The operational income of some supermarkets has surpassed that of some top department stores and became the flagship in the retail industry. The outstanding performance of chain supermarkets has attracted the most attention in the last ten years.
Top international or transnational general merchandise store (G.M.S.) companies have begun to worm into China's market. Some of these companies have already set up more than 20 stores in some big cities in China. With their excellent operation, their market share is increasing continuously. China's retail market tends to be saturated and the sales of large merchandise stops to increase. Such being the case, the entrance of foreign supermarkets will pose great pressure to their counterparts in China.
China's retail enterprises are big in number, but small in scale. Scale-effect is almost impossible for them. Take the 122 companies with an annual sales of more than RMB50 million in 1999 for example, the average number of stores owned by these companies is only 36. Among them, Shanghai Lianhua Supermarket Co. and Shanghai Hualian Supermarket Co. are the largest ones. The former had 606 stores and the latter 500 stores in 1999. However, compared with top international stores, they are too small. Wal-Mart from the U.S. has 3,989 chain supermarkets, Carrefour from France has 9,061 chain supermarkets, Metro from Germany has 2,144 stores, Ito Yokado and Daiei from Japan has 26, 442 and 8,750 stores respectively.
In the coming ten years, China will be the largest market and the hottest international business competition will be in China. To excel from the hot competition, China's chain supermarket companies must be clear their strength and weakness and learn from those top international companies. They need to develop appropriate strategies and increase their finance sources. By improving their purchasing management and distribution strategies, information strategies and the overall marketing strategies, the operation and competitive ability will be better.