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China Consumers on the Rise

Despite current counter-trends, retail sales in China are forecast by TNS Retail Forward to sustain double-digit growth over the next five years, resulting by 2012 in a $1.4 trillion market that will be the world's second-largest.

"While China's short-term retail outlook is vulnerable because of pressures ranging from inflation to heightened government regulation, the continued entry of new retail banners is evidence that China remains one of the best retail opportunities in the world, with strong growth forecast across retail categories," said Frank Badillo, senior economist and manager of the Global Retailing Program at TNS.

The new study points to what TNS called "the stepped-up expansion plans by a broad spectrum of retailers."

These merchants have encountered mixed results to date. "Carrefour's small-format focus has helped give it an advantage over Wal-Mart's big-format focus," said Badillo. "While Taiwan-based RT-Mart, a partner of Auchan, has quietly built up a sizeable presence in China, Tesco is only now gearing up its expansion. Kingfisher is reorganizing and Best Buy is ramping up slowly," he said.

Local, independent marketers are the dominant form in Chinese retailing today, but Badillo pointed out that "high shopping frequency at hypermarkets, convenience stores and traditional department stores shows strong interest among Chinese shoppers for the new modern retail formats that are fast entering the marketplace."

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