Historically speaking, it has not been easy for U.S. retailers (or any foreign players) to establish a strong presence in the Chinese market. However, many have been working hard to overcome the barriers and do business in the Far East, and some progress has been made.
Meanwhile, although many products around the world bear the “Made in China” stamp, that doesn’t necessarily mean Chinese brands have had an easy time setting up shop away from home. There, too, some progress is being made.
U.S. retailers Walmart and Sam Edelman are expanding in the Chinese market, while The Children’s Place makes its debut, GAC Motor is trying to bring its vehicles to American consumers and, within China, Alibaba has been busily acquiring smaller companies in the constant race to maintain its edge over competitor Tencent.
Of course, all these efforts will be affected by the escalating trade war between the two countries, and likely not for the better. The U.S. last month announced tariffs on approximately $50 billion worth of Chinese imports, and China is now promising to match that with tariffs of its own, levying a 25 percent fee on 106 types of U.S. products — worth, yes, $50 billion.
For the U.S., tariff increases will affect categories such as consumer electronics and home appliances but will not directly target clothing and shoes — although these items could become more expensive due to increasing tariffs on the machinery used to produce them.
For China, the tax hikes target everything from soybeans to aircrafts. The country has also increased tariffs on many imported U.S. food and agriculture goods, including fruit, nuts and pork.
In 2016, $2.19 trillion worth of goods were traded between China and the U.S. China’s trade surplus with the U.S. is valued at $375 billion. $7.6 billion worth of emerging market stocks and bonds were purchased by foreign investors in March — an “impressive” investment value according to the Institute of International Finance, considering what a volatile month it proved to be.
It is unclear how those numbers will look going forward, however, nor how significant trade agreement overhauls could affect the plans of companies such as…
The U.S. big box retailer just opened a small-format supermarket in the Chinese city of Shenzhen, carrying thousands of items as varied as fresh fruit and clams — most of which are also available from Walmart’s website and can be delivered within two kilometers of the store as soon as 29 minutes from the time the order was placed.
In-store customers get to skip the checkout line using a program within the Tencent-owned platform WeChat. Walmart recently announced it would be using WeChat Pay at all of its stores in China’s western region.
It seems that, like the rest of the country’s retailers, Walmart had to pick a side between China’s two eCommerce giants: Either Tencent or Alibaba, both of which have been investing heavily since 2017 in efforts to dominate the mobile payment market.
Walmart previously partnered with Alibaba and will now be replacing its Alipay digital mobile payment system with WeChat Pay. Since WeChat Pay came into use in 2016, it has been steadily gobbling up market share from Alipay. Tencent reported a few weeks ago that it had reached the 1 billion account threshold.
Customers also have the option to pay via mobile, plastic or good old-fashioned cash.
American footwear brand Sam Edelman is expanding its presence in China with the launch of three new stores-within-stores at Lane Crawford locations in the urban hubs of Hong Kong, Shanghai and Chengdu.
The boutiques will reportedly reflect the company’s U.S. retail brand flavor with design elements such as reclaimed wood walls, vintage furniture and inlaid gold accents against the company’s signature green coloring.
The Children’s Place
This New Jersey-based retailer will be opening 300 retail locations in Greater China through an exclusive licensing agreement with the parent of China’s largest specialty kids’ apparel retailer — Balabala being the retailer and Zhejiang Semir Garment Co. Ltd. being the parent.
Semir will stock the 300 Children’s Place locations with apparel, footwear and accessories and operate the brand’s regional eCommerce business. The deal was projected to drum up between $125 million and $150 million in sales by 2022.
China’s young children’s apparel market is estimated at $24 million, according to Footwear News, and it’s growing fast — a pace that will only accelerate as the country moves to a two-child policy for families.
Another thing that’s growing fast in China is the middle class, which the publication notes is one of the driving forces behind the consumer revolution drawing U.S. retailers like this one to the market.
The Chinese auto manufacturer may be swimming upstream against a history of substandard offerings from the region, but GAC Motor has nonetheless set its sights on becoming the first Chinese auto manufacturer to sell its own brand vehicle in the U.S.
The company has performed well on J.D. Power quality studies in its home country and has seen robust sales in that region, moving 500,000 units of its Trumpchi brand in 2017. However, to succeed in the U.S., it will need a multi-term strategy, launching into high-volume segments with products that can compete in both price and quality.
GAC Motor plans to enter the U.S. market with a premium SUV, reports WardsAuto, with leasing assistance comparable to what customers could find from competitors. Its first U.S. launch is slated to hit the market in 2019.
It may be a homegrown player rather than an international implant, but it would be remiss not to mention the impact Alibaba has on the playing field for competitors in the Chinese market, regardless of whether they’re coming from local roots or from abroad.
The Chinese eCommerce giant has been busily acquiring smaller companies to increase its presence and influence in the region. Most recently, the firm announced it would be buying all remaining shares of the online delivery and local services platform Ele.me, which is primarily known for its food deliveries.
TechCrunch noted Alibaba has been making efforts to expand its physical retail presence in a bid for omnichannel relevance. The goal is reportedly to simplify the process of moving and spending money between digital and physical businesses.
In the race against Tencent, Alibaba is clearly still holding its own.