1. Retailing in China and Japan Aleece Kopczenski Leilei Zhang

2. Retailing in China China’s Retail Industry Overview one of the most lucrative and rapidly growing retail market in the world. one of the most lucrative and rapidly growing retail market in the world. Despite economic downturn, China’s retails sales hit $1.8 trillion in 2009. Despite economic downturn, China’s retails sales hit $1.8 trillion in 2009. The average per capita disposable income reached $2,515 in urban areas and $3,810 in economically advanced cities. The average per capita disposable income reached $2,515 in urban areas and $3,810 in economically advanced cities. Changes in household spending: from basic needs to pursing a higher quality of life. Changes in household spending: from basic needs to pursing a higher quality of life.

3. China’s Retail Market Structure

4. China’s Retailing Ownership

5. Restrictions for Foreign Investors Under WTO accession agreement, China committed to gradually eliminate market access barriers for foreign enterprises. Under WTO accession agreement, China committed to gradually eliminate market access barriers for foreign enterprises. Restricted products Restricted products Complicated licensing process Complicated licensing process

6. Retail Sector Opportunities for Foreign Companies E-commerce E-commerce Online-only retailers Online-only retailers Multi-Chanel retailers Multi-Chanel retailers Third-party E-commerce platforms Third-party E-commerce platforms Non-fuel service at fuel station: value-added service such as shopping, food, and auto maintenance Non-fuel service at fuel station: value-added service such as shopping, food, and auto maintenance Drug retailing: strengthened administration and other released documents encourage foreign investments. Drug retailing: strengthened administration and other released documents encourage foreign investments.

7. Best Practices to Succeed Understanding relevant PRC regulations and policies: licensing process and market access limitations. Understanding relevant PRC regulations and policies: licensing process and market access limitations. Work with local business partners: valuable resources such as business networks, government relations, and knowledge of local market conditions Work with local business partners: valuable resources such as business networks, government relations, and knowledge of local market conditions Offer third-party services: third-party logistics, distribution, wholesale services, and supply chain management solutions. Offer third-party services: third-party logistics, distribution, wholesale services, and supply chain management solutions.

8. Summary China’s retail market is rapidly developing but highly fragmented. China’s retail market is rapidly developing but highly fragmented. PRC government regulations restrict foreign investment in certain sectors but offer opportunities in others such as E-commerce, fuel stations, and drug retailing. PRC government regulations restrict foreign investment in certain sectors but offer opportunities in others such as E-commerce, fuel stations, and drug retailing. To succeed in China’s retail market, foreign investors should familiarize themselves with government policies and consider working with local business partners. To succeed in China’s retail market, foreign investors should familiarize themselves with government policies and consider working with local business partners.

9. Retailing in Japan Japan’s economy valued at about $1.28 trillion (Barboza, 2010) Japan’s economy valued at about $1.28 trillion (Barboza, 2010) Japan just passed by China to become the world’s second-2010largest economy (Fackler & Tabuchi,2010) Japan just passed by China to become the world’s second-2010largest economy (Fackler & Tabuchi,2010) According to the World Bank, Japan has held that spot for most of the last 40 years According to the World Bank, Japan has held that spot for most of the last 40 years

10. History After WWII Japan’s economy grew due to close alignment with government and large manufacturers (Fackler & Tabuchi,2010) After WWII Japan’s economy grew due to close alignment with government and large manufacturers (Fackler & Tabuchi,2010) In the 1980’s there was discussion that Japan’s economy might some day take over the United States economy In the 1980’s there was discussion that Japan’s economy might some day take over the United States economy In the 1980’s Americans pushed up the price of the yen (Leonhardt, 2010) In the 1980’s Americans pushed up the price of the yen (Leonhardt, 2010) Trade deficit with Japan went to $108 billion in 1987, from $94 billion in 1985 Trade deficit with Japan went to $108 billion in 1987, from $94 billion in 1985

11. Future Plans After WWII Japan’s economy grew due to close alignment with government and large manufacturers (Fackler & Tabuchi,2010 ) After WWII Japan’s economy grew due to close alignment with government and large manufacturers (Fackler & Tabuchi,2010 ) Free trade zone in Asia by 2020 (Tabuchi, 2009) Free trade zone in Asia by 2020 (Tabuchi, 2009) Haneda Airport in Tokyo a 24-hour hub for international flights (Tabuchi, 2009) Haneda Airport in Tokyo a 24-hour hub for international flights (Tabuchi, 2009) Less reliant on the United States Less reliant on the United States Bolster economic ties in Asia Bolster economic ties in Asia

12. Future Plans cont… $540 billion market for environmentally friendly technology and renewable energy (Tabuchi, 2009) $540 billion market for environmentally friendly technology and renewable energy (Tabuchi, 2009) Employ 1.4 million people Employ 1.4 million people Create 2.8 million jobs in the health and care-giving sectors. Create 2.8 million jobs in the health and care-giving sectors. Triple the number of foreign visitors to Japan, to 25 million by 2020 Triple the number of foreign visitors to Japan, to 25 million by 2020 Create new jobs in a bid to support the country’s ailing tourism industry Create new jobs in a bid to support the country’s ailing tourism industry

13. Future Plans cont… Expand Japan’s economy at an average rate of 2% over the next 10 years (Tabuchi, 2009) Expand Japan’s economy at an average rate of 2% over the next 10 years (Tabuchi, 2009) Increasing gross domestic product to 650 trillion yen, or $7 trillion Increasing gross domestic product to 650 trillion yen, or $7 trillion Bring unemployment rate to 3 percent Bring unemployment rate to 3 percent Analysts say those goals are unrealistic Analysts say those goals are unrealistic In the 1980’s there was discussion that Japan’s economy might some day take over the United States economy (Fackler & Tabuchi,201 0) In the 1980’s there was discussion that Japan’s economy might some day take over the United States economy (Fackler & Tabuchi,201 0)

14. Current Retailing Origin of many Asian trends (JEFRO, 2009) Origin of many Asian trends (JEFRO, 2009) Many opportunities for retailers Many opportunities for retailers Strong revenue for high-end retailers Strong revenue for high-end retailers Premium international brands Premium international brands Consumers very interested in fashion styles and trends Consumers very interested in fashion styles and trends

15. Current Retailing Outside country retailers bring in own style Outside country retailers bring in own style Non-store retail market expanding quickly Non-store retail market expanding quickly Non-store opportunities for foreign companies Non-store opportunities for foreign companies Range of opportunities for entries to the market Range of opportunities for entries to the market

16. Current Retailing High importance on quality High importance on quality Success in Japan means success elsewhere Success in Japan means success elsewhere Japanese consumer feedback highly valued Japanese consumer feedback highly valued 35% of tourists come to shop 35% of tourists come to shop

17. Current Retailing Fashion magazines from Japan very popular in Asian countries Fashion magazines from Japan very popular in Asian countries Top market for luxury goods Top market for luxury goods Sales from foreign companies comparable to home country sales Sales from foreign companies comparable to home country sales

18. Current Retailing Many high-end brands in one shopping location Many high-end brands in one shopping location Apparel specialty stores are prospering Apparel specialty stores are prospering Single company with different brands Single company with different brands Apprx. 2,800 shopping centers Apprx. 2,800 shopping centers Near mass transit stations Near mass transit stations

19. Current Retailing Tokyo’s Ginza Tokyo’s Ginza Famous shopping center (japan-guide.com) Famous shopping center (japan-guide.com) Department stores, boutiques, art galleries, restaurants, night clubs and cafes Department stores, boutiques, art galleries, restaurants, night clubs and cafes 1 sq. meter of land = $100,000 1 sq. meter of land = $100,000 $10 cups of coffee $10 cups of coffee

20. Summary Increase China’s currency Increase China’s currency Continue to attract high fashion as well as diversification Continue to attract high fashion as well as diversification Continue to build up fashion centers Continue to build up fashion centers

21. References Sheng Lu.Understanding China’s Retail Market. China Business Review from http://www.chinabusinessreview.com/public/1005/lu.html Barboza, D. (2010, August 15). China passes japan as second-largest economy. The New York Times, Retrieved from http://www.nytimes.com/2010/08/16/business/global/16yuan.html?pagewanted=1&_r=1&sq=japan&st=Searc h&scp=32 Fackler, M., & Tabuchi, H. (2010, August 31). Japan. The New York Times, Retrieved from http://www.nytimes.com/info/japan/?scp=14&sq=japan&st=Search Japan-guide.com, Initials. (n.d.). http://www.japan-guide.com/e/e3005.html. JETRO, Initials. (2009). Investing in japan - attractive sectors. Japan External Trade Organization, Retrieved from http://www.jetro.go.jp/en/invest/attract/retail/ Leonhardt, D. (2010, September 21). The long view of china’s currency. The New York Times, Retrieved from http://www.nytimes.com/2010/09/22/business/global/22leonhardt.html?_r=1&scp=21&sq=japan%20trade&st =cse Tabuchi, H. (2009, December 30). Japan unveils plan for growth, emphasizing free trade in asia. The New York Times, Retrieved from http://www.nytimes.com/2009/12/31/business/global/31yen.html?_r=1&scp=124&sq=japan&st=Search