CHAIN STORES IN CHINA.

Chain store marketing in China is increasing rapidly but still has a long way to go. Supermarkets, for example, began operating in China in the early 90s and quickly posted substantial year-on-year gains, one estimate putting an annual average growth rate for the decade at around 70 percent. As might be expected, gains were most prominent in China's biggest cities: Beijing, Shanghai, and Guangzhou. And by the year 2000, supermarket chain sales amounted to 7 percent of "the total turnover of the whole country," according to an industry report posted on the china-window.com site. Chains did so well that income from some individual outlets surpassed that of China's leading department stores.

Opportunities for general merchandise chains is attracting foreign companies. Although market penetration is still in the developmental stages, some foreign market participants have as many as 20 stores operating in major metropolitan centers.

The size of China's supermarket chains does not compare with chains in other countries. There are approximately 122 chains in China with annual sales over US$6-million (1999). The average number of stores owned and operated by these chains is only 36. The two biggest are the Shanghai Lianhua Supermarket Co. with 606 stores and the Shanghai Hualian Supermarket Co. with 500 stores.

Compared with chain giants such as Ito Yokado (Japan) at 26,442 stores and Daiei (Japan) with 8,750 outlets, or even Carrefour (France) 9,061, and Metro (Germany) 2,144, China's supermarket chains are in their infancy. Improvements in supply chain management and marketing strategies are likely to help China's indigenous chains grow, according to the china-window report