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countries offer enormous promise to the world's biggest
retailers, but the likes of Wal-Mart Stores Metro and
Carrefour believe China will deliver the goods in the
short term as they wait for India to open up its retail
industry and embrace the western way of shopping.
Global leader Wal-Mart has opened 80 stores in China
to grab a slice of the $892 billion retail market there.
But in India, where modern retail, with its hypermarkets
and one-stop shopping, has only a small share of a splintered
$350 billion industry, U.S.-based Wal-Mart has sparked
political concerns and protests by traders and shopkeepers
even before opening its first cash-and-carry store.
In the biggest demonstration yet against modern retail,
more than 20,000 farmers and shopkeepers gathered in
Mumbai earlier this month, chanting "It's now or
never, Wal-Mart quit India".
"The $10 you put in China is going to give you
a better return in the short term than the $10 you put
in India," said a spokesman from McKinsey's Greater
China Consumer Practice.
"Whatever happens in India, there are significant
barriers to expansion. Mom-and-pop stores and people
complaining about large retailers is one of them,"
he said.
Nonetheless, India's promise is tantalizing. Its retail
industry is forecast to nearly double by 2015, and it
already tops AT Kearney's Global Retail Development
Index as the most attractive market to be in.
But while China opened the door to foreign investment
in retail 15 years ago, India still limits foreign multiple-brand
retailers to wholesale or license and franchise operations.
India 's retail sector is dominated by small family-run
shops, with modern retail making up under 4 percent
of the market.
In China, where retail is growing at about 10 percent
a year and estimated to hit $1.3 trillion in five years,
according to McKinsey, consumers are enthusiastic.
China opened up its retail sector earlier than India,
so we followed the opportunity there first," said
Beth Keck, Wal-Mart's senior director of international
corporate affairs.
"Both countries provide great opportunity in
different ways and we are very optimistic about both
markets," she said.
French rival Carrefour, which enjoyed 53 percent growth
in sales in China last year, opened its 100th superstore
in the country and plans to open 20-25 stores a year.
Tesco plans to open 10 stores a year in China.
Both Carrefour and Tesco have shelved plans for India.
Tesco has even criticized the "frenzy" being
whipped up among foreign retailers about entering India.
Even in China, foreign retailers can't count on a completely
smooth ride. Wal-Mart, which is known to shun unions,
was forced to allow its staff to join the country's
only trade union.
For now, China is streets ahead in the luxury goods
market, as well. It is already the world's No. 3 consumer
of high-end fashion, according to Ernst & Young,
buying more than $2 billion worth a year, a figure that
could top $11.5 billion in 2015.
India is catching up, with the number of people with
over $1 million in investible assets rising nearly 21
percent in 2006.
Luxury brands, including Chanel, Gucci and Louis Vuitton
have opened stores in India to tap a market estimated
to be worth nearly $1 billion and growing at 15-17 percent
a year, according to consultancy Technopak Advisors.
Full Report: http://www.reuters.com
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