Why are so few Chinese retailers entering the UK?

With China’s economic power continuing to swell it’s perhaps surprising that more Chinese retailers haven’t made their way to the UK.

Menswear retailer Bosideng is gearing up to open its first store on South Molton Street in London, but this is the first Chinese name to make its mark on the British high street and few have tried to crack the market via the web.

But while the general economy may be motoring, China’s retail offer is still relatively undeveloped, meaning most retailers lack the experience to attempt foreign markets.

“The retailers out there simply haven’t got the decades of experience that many of the western brands have got,” says Planet Retail global research director Rob Gregory.

And it’s not just a lack of experience that are putting Chinese retailers off expanding – there’s also the allure of the huge domestic market.

With so much potential growth at home, Chinese retailers will be a long way off needing to look elsewhere for growth – unlike UK retailers, whose domestic growth prospects are decidedly less exciting. “It makes sense to keep adding stores in China,” Gregory says. “It’s a great market and they know the consumers there.”

Once Chinese retailers do reach a stage where they’re ready and willing to expand, they may not even choose the UK. Other Asian countries are more similar in terms of cultural norms and consumer behaviour, making it easier for Chinese companies to make inroads into those markets.

And the UK is no longer the growth prospect it once was. “There’s often a perception that to make it big Asian companies have to have a presence in Europe and North America,” says Gregory. “But 10 to 20 years down the line there’s no doubt the more mature markets are going to be relatively low growth. That’s why everyone’s moving to Asia.”

While Chinese retailers might aim to have a handful of British flagship stores to widen their customer base as well as cater for the growing numbers of Chinese tourists, Gregory says we are unlikely to see large scale expansion in the UK even in the longer term. “The UK is very competitive and relatively low growth,” he says. “I wouldn’t imagine them coming over with a massive expansion plan.”

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Posted on May 29, 2012, in Other. Bookmark the permalink. Leave a comment.

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