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Simple analysis on Xiamen local retail industry

See our most recent update on the economy of Xiamen.

As we all know, Xiamen is a place full of wonderful scenery and market opportunities. After the opening up of Chinese retail industry, Xiamen’s fast speed of development and good investment environment soon attracted sights from other side of the world. Many international retail industry tycoons have entered into Xiamen’s market since 2000, such as Carrefour, Wal-mart and Metro. Apparently, it has caused great impact on traditional market emporiums, which changed the structure of Xiamen retail industry greatly. Moreover, the competition of local retail market is becoming more and more aggressive under the converging attack of powerful companies from both domestic and overseas; as a result, the intensity of retail market is getting higher.

Here we use SWOT analysis method to discuss local retail industry’s environment.

1 Strength: Overseas investment enter into local market in great number doesn’t mean there is no room for local retail industry to survive. We should see the advantages from different aspects, such as culture and history.

In Xiamen, the tempo of life and work is much more placid than in Shanghai or Beijing. Besides, Xiamen is relative small city with comfortable lifestyle, citizens prefer to “go shopping in leasure rhythm’. As a result, some local retail company could gain enough place to survive by taking appropriate strategies.

2 Weakness: retail industry tycoons from overseas have many advantages over local companies, such as wide import channel, advanced conception of management, abundant capital, meticulous logistics system, giant scale of operation… The giants who entered into the market early have already made a high-effectiveness supply chain, which brings them magnificent advantage on operation and price . On the other side, local retail companies usually have difficulties on financing and scale.

3 Opportunity: As the accessing of investment from overseas, advantage level of retail market in Xiamen is getting higher. To be more specific, the opportunity is in the “catfish effect” and “radiation effect”.

1)Foreign company brought advanced marketing method, for example: Wal-mart’s “Every Day Low Prices” and the conception of “One-stop shopping”

2)As so many foreign companies enter this market, “technology spillover” is inevitable. Many people learn advanced knowledge of management during working in foreign companies and spread them in the industry.

4 Threat: There is an old saying that opportunity and threat always walk together. As the competition is getting more severe, original structure of local retail industry may be broken. When facing the war with Chain Giants from both native and overseas, small retailers with single unit always went down quickly. Without “scale effect”, retailers with single unit might break down fast once they have problem in capital chain.

By SWOT analysis, although local retailers in Xiamen have a huge gap with foreign retailers in financing and skills, they have advantages in culture and location. In conclusion, how to mining advantage to seek point of strength in market is the main purpose of local companies.

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