China Now Asia’s Largest Retail Market as Consumption Grows

China is now Asia’s largest retail economy with sales of US$1.7 billion forecast for 2013, making the country the primary target for expanding international retailers, according to a report published today by real estate consultancy Cushman & Wakefield.

The report, “Uncovering Opportunities in Asia’s Shifting Retail Landscape” which surveys retail activity region-wide, found China to be the key market for global brands.

While joining the rush to sell in China is attractive to many retailers, the report finds that understanding the differences between the developed urban centres and emerging cities is important to assuring success.

Annie Lei, National Director of China Consulting at Cushman & Wakefield commented, “Tier 1 cities such as Beijing, Shanghai, Shenzhen and Guangzhou have the most wealthy and brand-conscious consumers and now show retail sales growth of 9% to 16%. However, major tier 2 cities, such as Chengdu, Wuhan, Nanjing, Shenyang and Chongqing, retail sales growth is higher ranging from 13% to 17%.”

Potential for Oversupply of Shopping Space

While growth in retail demand is unprecedented, the report finds that the surge in supply is stronger still, and as a result, many major cities in China have the potential for some measure of oversupply.

Particularly in the case of suburban projects or those by less experienced developers, there is real potential for high vacancy rates and project failures, despite the overall rapid growth in retail consumption.

Positive Outlook for China’s Retail Future

Still Cushman & Wakefield expects this potential oversupply to have little impact on prime rents, as retailers compete for key locations to define their brand in China and chase the high revenues provided in the more successful locations.

Randall Hall, Executive Managing Director of Greater China at Cushman & Wakefield commented: “The retail growth story in Asia, especially in emerging markets like China, is real and likely to continue over the longer term.”

Top retail centers in China including Shin Kong Place in Beijing, Grandview Plaza Guangzhou, MixC Shenzhen are reported to have achieved sales of around US$ 1 billion per annum and rising.

(Click the link to download the full report: UNCOVERING OPPORTUNITIES IN ASIA’S SHIFTING RETAIL LANDSCAPE)