Due to the implementation of the new Catalogue of Industries for Guiding Foreign Investment (2015 amendment), the business scope as “online retail” was no longer deemed as the restricted item and the power of its approval was further delegated from the municipal level to the district level. At the same time, the online B2C business mode become more and more popular, the foreign investors who were involving in the retailing business are encountering a serious business crisis. However, based on our wide experience among the foreign direct investment industry, we are happy to share some our views which may bring you and your clients ideas to pass such crisis.

Suggestion 1: to have your store for “TRIAL” purpose only. The traditional salesman and warehouse are no longer required. The store is only for products showing and testing purpose only. The total cost of a traditional retail store will be reduced.

The first offline “CLOUD STORE” for SUNING.COM was open in Pudong in April this year. In fact, it is a “Fitting Room” for their online products. It attracted over 20,000 customers on the opening day and the daily turnover was more than RMB 30 millions. The traditional retailer did not want to make the store to be a “Fitting Room” for the online retailer but SUNING.COM makes it. In such cloud store, the customer can test the products before they make online orders. The customers can enjoy the “shopping feeling” at the same time enjoy a lower price and the convenience of the transportation.

Suggestion 2: to make your store more “PERSONAL”.

We learnt that the turnover for the traditional supermarket were reduced as 7.5% while that for the department store reduced as 2.7%, compared with the same period in the last year. However, the turnover for the franchising store or an exclusive store was increased as 3.9% and 9.4% respectively. Although it is not fresh for such stores but we found the local government encourages the store to be more “Personal” and strengthen the specialty of your products or services.

If you want to know more details, please contact our senior consultant.

Ms. Jojo Hu

TEL: 0086-21-68868335 ext 324 / FAX: 0086-21-68868021

Email: jojohu@shanghaiinvest.com