Roger, you are right and it is true that a lot of retail stores seem to have more salespeople than they need to. Main reason for this is the labor is cheap<g>. Most of those girls are from rural areas and hired at low wage. Furthermore, only certain percentage (30-50%) of their pay is from the owner (whether they are state-owned or private owned) and the rest of their pay is from commissions from the merchandise they sold.
>>Are there any barriers to a company like Walmart coming in and selling goods at lower prices with minimal sales support?<<
There is no barriers for foreign retail giants to set up chain stores across China. There are many reports talking about Walmart in China. As a matter of fact, there is no Walmart in China, only Sams. I know they are the same owner, but one charges membership fee and the other not. There were 2 Sams in Beijing, and all closed down this year due to lack of members. So the super market business/profit in Beijing is mostly taken by a French-owned chain (JiaLeFu, not sure what is the French name).
>>2. Many indoor malls and outdoor markets had several private merchants selling essentially the same goods right next to each other, in competition but also working together. If one merchant didn't have a shirt I liked in my size, she would take one off her rack and run over to the shop next door to trade, then come back to finish haggling. <<
Yeah, the competition among those small vendors is pretty friendly<g>
>>While I suspect that almost all of the goods sold in these types of stores were made in China, does any significant amount of imported goods make it to these markets?<<
The answer is no. The reason? Few people can afford the expensive imported goods so most of market is only for goods made in China. Yet in high end shopping mall in big Chinese cities, you can see plenty of luxury international brand name stores, and their business is not bad either. Their customers are those beneficiaries of the Chinese economic boom, and they are minority, but they have huge purchasing power. I read that retail stores in Paris and London were surprised by the purchasing power of Chinese tourists, and on average, they spend more than Japanese tourists (although there are more Japanese tourists in general).
Roger, even if in the US, many people could not afford the goods made in the US, how could majority of Chinese afford them?
>>I suspect that retail prices change very slowly to reflect changing currency values. <<
What kind of retail are you talking about? As far as I know, huge percent of plenty of goods around the world are now made in China. Such as 70-80% or more of shoes, leathers, cashmere, toys, coats, silks, small appliances…in the whole world are made in China. And those multinational corporations are making huge profit like never before. They use Chinese cheap labor to reduce their cost, but do not price the reducing cost in the retail price (iPod for example).
For the 7-8 years or so, the economic boom in China has only benefited a minority in China. The wage level, for the majority, has actually gone down instead of going up. So where have most profits gone by using so much of cheap Chinese labor and damage so much China’s environment? To the big corporations.
>>Eventually the RMB will float, or at least revalue versus the dollar or a basket of currencies<<
Yes, but it is hard to say which way. In short term after RMB floats, it should be up, but in a long run? It is still too early to tell. It all depends on how good Chinese leaders are to deal with all the social and economic problems.
>>and the Chinese consumer will have much more purchasing power. <<
Only for those who traveled abroad since imported goods do not have much to do with most ordinary Chinese.
>>What structural features of Chinese retail do you think will help or hinder the ability of foreign goods to do well in the Chinese retail market?<<
It would help to sell the goods at a price most of Chinese can afford<g>, not like a lot of imported goods being sold right now in China, which are out of reach for the majority.
>>I ask this partially as an attempt to understand what it will take to close the US trade gap. <<
One way to close the gap is for the US to lift the trade restriction on high tech product. No, just selling soybeans and corns, and maybe a couple of handful of fancy tools to China won’t close the gap. And another way is China to buy more assets from the US, if they are up for sale<g>.
Policy-wise, the US should put leash on their own multi-national corporations to further export more and more their jobs to other nations.
One question though, I think Japan has a larger trade deficit with the US than China does, so why do you particularly worry about the Sino-US trade deficit?<g>
>>If the US can successfully increase exports to China and other nations, then the gap can be closed without reducing imports too dramatically.<<
Give me some example what do you want to sell to China?
>>If official and unofficial barriers prevent US goods from selling well, then the US trade gap will eventually be reduced more by reducing imports and the standard of living in the US.<<
That seems a possibility. I don’t know if you paid any attention to the net export from China to the US these 2 years. They are down, around 0.5% a year. Yeah, maybe you will say, no big deal. Then you should consider in these 2 years, the total international net export from China has increased leaps and bounds. China now already starts to export more to Latin America, Africa, and Arabs, as well as other parts of Asia. And the consequences of this is to export less to the US.
>>I think the effect of European laws protecting small, local retailers and retail employees tends to decrease the amount of goods consumed, thus encouraging more saving and keeping money within a community. Meanwhile, in the US, Walmart has free reign to suck money out of a community by selling more goods and paying lower wages.<<
I agree. I like European models much better. And I think China has realized that and has switched away from chasing high GDP without thinking about the preservation and other resource and environmental consequences. |
