World Retail Voice Blog Post
World Retail Congress Chairman Blog: China - the Global Disruptor
Written by Congress Chairman Ian McGarrigle.
It is barely a year since Dr William Fung, chairman of Li & Fung, addressed the World Retail Congress in Paris and stated that the Chinese government’s declared aim of easing dependence on manufacturing to build a consumer economy will create the next wave of global disruption. Fast-forward to today and we’re certainly experiencing global economic disruption as China’s exports perform at their worse level since 2008 and stock markets around the world remain on tenterhooks as investors adjust to slowing growth rates. Add into that Beijing’s decision to break away from tracking the dollar and to devalue the renminbi and it seems that one of the biggest issues on the global agenda is the China and what it will mean for economies around the world.
William Fung at World Retail Congress 2014 in Paris
When we launched the World Retail Congress back in 2007, the impetus undoubtedly came from the rush for international retail growth. Of the famous “BRIC” economies, China was the market that always excited retailers the most. And still does. This is despite the fact that it has proved far more challenging than some of the world’s biggest and most capable retailers had anticipated.
But what should retailers make of the turmoil in China’s Stock Market and the wider economy? Should retailers be even more nervous about future prospects? One of our opening keynote speakers and veteran of every Congress since 2007 will be Dr Ira Kalish, Chief Global Economist at Deloitte. He will present his ever-popular summary of world economies and his comments on China will no doubt be even more relevant and important than usual. But in a recent conversation with Ira, he emphasised that the real issue for China is the excessive debt in the economy coupled with slowing growth. Just as worrying is the lack of necessary reforms coming out of the Government although he says the currency depreciation was needed. The immediate effects will be felt by those that trade with China says Ira.
For retailers, the worst thing is uncertainty, particularly when it begins to affect consumer confidence. Despite this, what shouldn’t be ignored amongst all the turmoil is the fact that the middle class in China continues to grow and along with it, affluence, wealth and an appetite for international brands. Of course there has been a massive rush to growth with more shopping mall space being built than the market can sustain and this current financial turmoil will no doubt exacerbate a shake-out. Where growth continues is in Ecommerce and Mcommerce. Chinese consumers and the young in particular, are embracing this new retail world in a way and at a pace not seen anywhere else.
This year’s Congress has commissioned Planet Retail’s Shopology consumer insight service and Oxford University’s Institute of Retail Management to research “The retail business model of the future”. Based on 90,000 consumer interviews in 15 countries, including China, it has examined consumer attitudes across a wide range of retail areas. The full results will be presented on day one of the Congress, but what it will highlight in a very powerful way is that the developing markets but led by China, have consumers that are more advanced and more willing to embrace new technology and new ways of shopping. This will undoubtedly be emphasised by our recently added keynote speaker for day 2, Jingming Li, the head of Alibaba’s Ant Financial division in the US.
Current events in China will of course lead to potential “global disruption” as William Fung predicted but the underlying development of retailing in this huge market continue to make it one of the most exciting and dynamic in the world.