China = such a crazy country for any industry ~ Sounds + Food 'n' Retail

China = such a crazy country for any industry

This morning I got two stories in my s+f&r reading list, both on China. One is that the country is building 100s of hotels in anticipation of the Olympic Games next year and the World Expo in 2010. And two, that China is retail heaven.

For the first story, Misset Hotel is reporting (in Dutch, I'm afraid) that around 109 hotels are currently being built, varying in size from 80 to 4000 rooms. Last year it already reported on a monster-hotel being constructed in Shanghai, housing 3500 rooms. Now it put together a ranking-list (click dutch link; 'kamers' means 'rooms') of hotels being built, with the largest, the Sheraton Macao, housing around 4000 rooms also, on a surface area of 140.000 m2. Macao, which is an island, is attracting a lot of attention, because it features a mild tropical climate.

The second story, which is only a Business Wire excerpt from a pretty expensive (but standard) report, analyses the Chinese retail-industry through a PEST (Political, Economic, Social and Technological issues) framework. The current annual growth-rate for retail is 14%.

But clearly, while China is a big target, it is not a risk-free market. There are many concerns whether this boom will last for very long, though China is certainly betting on this being true. In terms of retail, you are of course dealing with issues of piracy, though a local presence can only be a good thing there. And there is the issue of cultural sensitivity. I remember reading that Starbucks, which is doing very well in China, had to close one of it's locations near the Forbidden City, as it was meeting with a lot of protest.

Whatever people do in China, it helps to have deep pockets to deal with the problems that will certainly arise. And it helps to do your homework. I remember doing some research on Chinese Guanxi 7 years ago, which may not be nearly as relevant today as China becomes more and more Westernised. However, it is important to bear in mind that social relationships in the country are very different from what business-people from other countries are used too. There is the emphasis on saving face and showing proper respect to business-partners. 

And there is the risk of showing too much respect and being cheated in the process. At that time, at least, and I'm not too familiar with the current legalese, there were many situations where contractual breach was not perceived as a real crime, and many businesses had to withdraw with big losses or prepare themselves for a long negotiation-period.

Update: New York Times just posted an article on Macao as well (free reg. required)!

The picture depicts Macao @ Night and is courtesy of Dan Suit on Flickr.


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