Fierce competition in China’s retail sector urges the loss making retailer Hualian to close stores in Beijing and give up on it’s ambitious plans to set up a chain of 100 stores in the Chinese capital. At the same time E-mart – the hypermarket operation of the South Korean retailer Shinsegae – agressively rolls out its store network across China. “There are many hypermarkets in China but the level of competition is low, mainly on price”, the South China Morning Post quoted an E-mart official.

Competition in China’s retail sector intensified due to the government lifting restrictions on foreign retailers in December 2004, as a result from China joining the World Trade Organisation. The China Chain Store Management Association reported that in 2005 foreign companies accounted for 20 per cent (CNY143.9bn/US$17.5bn) of the total sales of China’s 100 biggest chain stores.

Today the Chinese National Bureau of Statistics published the revised official retail sales figures. Earlier this year a nationwide economic survey was completed, which found that the tertiary (service) sector contributed to a much larger extend to China’s economic growth than originally estimated. This resulted in a drastic upward revision of China’s GDP and consequently a revision of retail sales figures. These appear much higher than originally estimated, especially for the first years of the decade (see table).