Statistics from the Beijing Commerce Commission revealed that during the first two months of this year, the capital city's retail sales were worth 26.89 billion yuan (US$3.24 billion).

Overseas-funded retailers contributed 1.07 billion yuan (US$128.9 million), only making up 3.98 per cent of the total.

Apart from the 100 million yuan (US$12.05 million) earned by Hong Kong, Macao and Taiwan-based firms, local commercial enterprises took 95.62 per cent of the retailing market in Beijing.

In contrast to their market share, the growth rate of overseas-funded companies reached 28.3 per cent from the same period last year, 8.9 percentage points higher than the local retailers.

Experts explain this growth by pointing to the opening up of the commercial sector, which means that businesses from overseas are gaining more opportunities to explore the market and develop faster.

Besides the plans of Carrefour and Price-Mart to expand in Beijing, Wal-Mart, the world's top retailer, has ambitions to enter the market this year.

To maintain their dominant position, local rivals are beginning to pull their socks up and make themselves more competitive via mergers, acquisitions and consolidations.

For instance, Shanghai Hualian has joined hands with Beijing Xidan and Chaoshifa to set up a retail group that plans to open 100 chain stores in the capital city.

Some insiders are pessimistic, but others believe domestic retailers will keep the upper hand in the future.

"Individual foreign retailers might be doing well, but the market will remain dominated by domestic companies,'' said Huang Hai, director of the market trade department of the State Economic and Trade Commission.

So far, overseas companies control a 3 per cent share of the Chinese retailing market as a whole, a figure that has hit 8 per cent in Shanghai, China's largest commercial city.

"Even if they were to occupy 20 to 30 per cent of the market, local counterparts would still have room to develop,'' Huang said, arguing that this was possible because of China's vast market potential and the opportunities open to domestic retailers both in China's remote areas and overseas.

(China Daily 03/28/2001)