Comparison of Retail Industry in China and Australia

Retailing Industry 1
A Comparison of the Retail Industry between China and Australia.
Name
Course.
Name of the Professor.
Institution.
Date

Retailing Industry 2
Introduction
Countries in the Asia Pacific region have continued to witness a fast growth in
their economy. Asia, which accounts for more than 60% of the world population with 4.3
billion (United Nations-ESCAP, 2013) people is a diverse economic region with different
levels of advancements in terms of economy and diverse cultures which affects the
retailing power of the countries in the region. The Asia Pacific region also consists of the
world richest nations with reference to per capita income. They include Australia, Japan,
China, and Singapore. In 2013, the Asia Pacific region had a GDP of $22.6 trillion which
was a third of the world’s total GDP (Economists Intelligence). The retail market in the
Asia Pacific region is the largest with China experiencing the highest growth rate of 11%
in 2013.
The large market size in the region together with economic strength are the
drivers of the increased expansion of international retailers in the region (Gaffney, Fung,
Fong, and Murray, 2014). In addition, the increased number of the urban population with
a rise in income has increased consumer demand potential. The urban population in
Australia accounted to 86% in 2017 with China having 58% of its population
concentrated in urban areas (The World Bank, 2018). The Asia Pacific countries have a
third of the world’s middle class with the number expected to rise to 46% by 2020 (The
Brookings Institute, 2012). The middle class mean that the region has a high
consumption rate.
The high growth in the tourism Industry is also a contributor to increased retailing
in Asian Pacific nations. For instance, Asia Pacific witnessed a total of 248 million
tourists which was almost a quarter of the total world tourism (United Nations World
Tourism Organization, 2014). Tourism is an important industry when it comes to the
promotion of local, regional and international goods.
The retailers can be referred to as the individuals who act as a link between the
producers or manufacturers and the consumers. Effective retailers ensure that the
consumers are able to access goods of their choice at fair prices (Productivity
Commission, 2011). In the retail industry, the retailers are not only involved in the selling

Retailing Industry 3
of goods but also, they help consumers to access new products in the market and their
prices.
Retailers in Australia and China
Australian has more than 150,000 businesses that deal with retailing of products
and services. The businesses employ a population of more than 1.5 million employees
which adds up to 11% of the total population working in the country. The retail industry
has also contributed greatly towards the economy. More than $54 billion dollars were
generated from the industry in 2009-2010 which was 4% of the total GDP (Productivity
Commission, 2011). On the other hand, China is far much above Australia in terms of its
retail base. It is now the second largest in terms of retailing in the world.
The total consumer retail sales totaled $1.6 trillion dollars in 2008 and the
number doubled in 2013 with $3.6 trillion dollars increase (Fung Business Intelligence
Centre, 2014). The consumer market in China is increasingly growing as the income
increases, the demand for quality products and services increase (Fung Business
Intelligence Centre, 2013). China has had a transformation in its retail market, the
traditional department stores are being replaced by shopping malls. The sales in retail
are still expected to grow rapidly as they have not yet met the potentiality (Chin, and
Chow, 2012). This will lead to more expansion of retail base in China.
Domestic and International Retailers.
In history, Australia has been cut from international retail . This is because of the
geographical location of the country. The large physical distance from Australia to other
countries acted as a barrier for foreign retailers. The small retail market in Australia also
acted as a natural barrier among other barriers making the country to have an isolated
market(Jones Lang Lasalle, 2013). Most of the products in Australia were also bought
from domestic producers protected by the government (Sammartino, 2006). In recent
times, more international retailers have been entering the Australian market especially
those dealing with Luxury products, sporting, music, and books (Productivity
Commission, 2011). Some of them include Zara from Spain (fashion retailers) and
American Costco and Gap. The entrance of Zara in Australia in 2011saw many

Retailing Industry 4
shoppers visiting the retailer. The high number of customers in the shop cleared the
shelves.80% of the stock at Zara had been cleared in an hour (Lewington and
Speranza, 2011).
On the contrary, China’s Location on the map has had a positive result when it
comes to retailing. More people have been willing to establish retail stores in the country
but this has not come without challenges. Foreign retailers in China face problems such
as poor treatment of individual foreign retailers by the government, high prices of retail
products than those offered domestically, and also high rental charges for stores in
China. The sale of retail products in China have been concentrated on the Eastern and
the coastal regions of Zhejiang, Guangdong, and Jiangsu. The coastal region had sales
adding up to 60% of the total sales in 2001.
Main Retail Formats
Department stores
The department store in China has developed from time to time with the sector
being dominated by the regional retailers. The players in the department stores have
struggled to keep the retail market pace in recent years with the introduction of
shopping malls, online retailers and specialty stores. The department stores offer a wide
range of consumer good categorized in departments. Some of the top department
stores in China include Shanghai Friendship Group, which had sales totaling 570,000
million yuan, Dakian Dashang Group, Chongqing Department store, and Golden eagle
retail group among others.
Following the fierce competition in the department store, some stores have
started to reform their stores targeting the premium consumers. The department store
players have also incorporated entertainment and catering departments in an attempt to
differentiate themselves from others.
There were a number of department stores in Australia in the 20th century but the
number has continued to decline with the emergence of new forms of retailing (Fung
Business Intelligence Centre, 2013). Departments in the stores include clothing and
textile, furniture department, sporting goods, home appliances, and electronics among