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Unformatted text preview: cmyk 5 cmyk 4 2004/2005 Global Retail & Consumer Study from Beijing to Budapest PricewaterhouseCoopers Foreword
The following PricewaterhouseCoopers thought leadership study is the 3rd edition of an important regional research project started in 2002. It is also a challenging regional assignment, which has flourished within the framework of “Brand Growth”, one of PricewaterhouseCoopers’ three main Retail & Consumer industry priorities. Objectives The study seeks to provide a broad picture of the economic, social and cultural background to fourteen different countries from the Asia and Central & Eastern European regions, as well as highlighting the challenges and opportunities for retail and consumer goods companies wishing to - or already investing there. Scope The study covers a market of nearly half of the world’s population, living in the economies with the highest growth potential, from Beijing to Budapest: In Asia: China, India, Indonesia, Korea (South), Malaysia, Singapore and Thailand In Central & Eastern Europe: Czech Republic, Hungary, Poland, Romania, Russia, Slovenia and Turkey Take aways The expected take aways of the study are to: • provide a multi-cultural approach, outlining the specificities of each country in both regions; • provide information and insights on the demographic, economic and industry trends in each country; • identify investment opportunities, as well as key consumer targets and winning retail formats in both regions; • share prospective insights on the retail & consumer sector evolution in both regions. Methodology The retail & consumer sector as analysed in the study comprises the following information: • distribution activities (wholesalers, distributors, retailers); • suppliers of consumer packaged goods (CPG); • multinational, regional and local players from both activities; • food and non-food, ie: - for retailers: convenience stores, department stores, supermarkets, hypermarkets, supercentres, specialty retailers (apparel, Do It Yourself, drugs, electricals, homegoods, etc), and on-line retailers; for CPG companies: food, beverage, tobacco, consumer products, household and personal products and luxury goods. - Several abbreviations have been used throughout the report, which are listed in the appendices (page 191 191). The survey was conducted in the fourteen selected countries between April and July 2004, using a generic template. The template was structured around three main investigation topics: 1. Economic overview and regulatory environment; 2. Demographics and consumer behavior; 3. Retail & consumer goods sector: performance, challenges, opportunities and emerging trends The output consists of a series of country reports / case studies which make up a great part of the study. These reports are structured according to the original template. They aim at providing a relatively objective picture of the retail & consumer structure and market potential in each country, from a local perspective, while ensuring consistency of information from one country to another. Sources The survey was completed by PricewaterhouseCoopers local offices in each of the fourteen countries. Complementary research was made using international financial or economic institutions (World Bank, OECD, IMF), national statistical offices as well as economic and industry intelligence services (Economist Intelligence Unit, the World Bank Group). Note that slight discordance in figures may be observed sometimes between the country reports and the executive summary. This is due to the use of different sources. An exhaustive list of all sources used is available in the appendices (page 192-194 192-194). Currencies Within the country reports, key figures and sales turnover have been provided in local currencies, together with an indicative conversion rate in USD and Euro as at June 30, 2004. A conversion table for all fourteen countries is available in the appendices (page 192 192). The executive summary and the updated 14 country reports are available on the PricewaterhouseCoopers Global Retail & Consumer website: www.pwc.com/ growth. PricewaterhouseCoopers 2004/2005 Global Retail & Consumer Study from Beijing to Budapest 3 5 Executive Summary 4 2004/2005 Global Retail & Consumer Study from Beijing to Budapest PricewaterhouseCoopers Executive Summary
FROM BEIJING TO BUDAPEST: NEW RETAIL AND CONSUMER GROWTH PATTERNS IN TRANSITIONAL ECONOMIES
INTRODUCTION Transitional economies across the globe show varying degrees of challenge and opportunity for the retail and consumer investor. The perspectives in these highly differentiated markets swing from saturation in some markets, to high growth potential or niche opportunities in others, or to caution elsewhere. In light of an increasingly interdependent world economy, however, the advantages of developing a policy for global spread in the retail and consumer sector, far outweigh the disadvantages in the long term. The growth opportunities in Asia, Central and Eastern Europe (CEE) and Russia have been merged into one study because a modern retail and consumer sector is a “given” in all three regions, whatever the differing stages of development in individual countries. Although the modernization of the retail and consumer sector in the countries covered by the report is for the most part driven by multinationals, all areas are seeing the emergence of regional players. As the retail and consumer offerings in the major cities becomes saturated, these companies can seize the opportunities offered in smaller urban centers. An essential ingredient of a modern retail and consumer sector is the efficiency of its supply chain, and all three regions covered by the study are deploying considerable efforts to build a modern infrastructure to improve the logistics process and match the rapid development of larger stores. All the big multinational players are present in either Asia, CEE or Russia, or in all three as is the case of Metro. Carrefour is the only retailer which has the widest spread, present in ten of the fourteen countries covered by the study, followed by Tesco and Metro which each have operations in eight of the fourteen. In all, twentyseven retailers have operations in the fourteen countries covered by the report. A mix of factors has to be taken into account by the potential investor: the general political, economic and social environment in the targeted country on the one hand; the retail and consumer scene, competition, the degree of foreign penetration and the development stage of local companies on the other. All these countries have to contend with the impact of ageing populations on their economies. In general, consumption patterns are changing rapidly in all the transitional economies, which are on different rungs of the ladder of economic development and social progress. What is certain, is that the retail and consumer companies present are contributing to build a new middle class which is the linchpin of future economic success and social progress in these regions. This year’s study has pinpointed six countries with a “GO” recommendation as far as investment is concerned. PricewaterhouseCoopers 2004/2005 Global Retail & Consumer Study from Beijing to Budapest 5 Executive Summary 1. What’s new in 2004/2005 for Retail & Consumer companies in Asia, CEE and Russia? Russia?
■ EU Enlargement EU and encourage the development of local small and medium-sized entrepreneurial companies – essential ingredients for social progress and stability. It will be a long, but fruitful journey. An open regulatory environment has encouraged foreign direct investment in these countries, with the exception of Romania (which is now a candidate member) where foreigners are prohibited from owning land. All the countries covered by the study are continued investment targets for foreign companies in the retail and consumer sector, with the Czech Republic, Hungary and Romania attracting particularly high interest in the consumer electronics sector. Store trading hours are in general extremely liberal throughout the region. European Union (EU) entry for the Czech Republic, Hungary, Poland and Slovenia will have a mixed impact on their economies. Compliance with EU legislation in such areas as labor, transport, hygiene, food safety and opening hours will push up costs. But entry will also require higher product quality standards which should contribute to an improved export drive and compensate for the higher costs incurred elsewhere. At the same time, entry should generate a more level playing field Area Ranking by country 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Russia China India Indonesia Turkey Thailand Malaysia Poland Romania South Korea Hungary Czech Republic Slovenia Singapore Sub-total (14 countries) US EU (25 countries) World Area (‘000 sq km) 17,075 9,597 3,287 1,919 775 513 330 313 238 99 93 79 20 0.6 34,338.6 9,600 3,930 133,700 Population Ranking by country 1 2 3 4 5 6 7 8 9 10 11 12 13 14 China India Indonesia Russia Turkey Thailand South Korea Poland Malaysia Romania Czech Republic Hungary Singapore Slovenia Sub-total (14 countries) US EU (25 countries) World
Source: The Worldbank Group 2004, http://www.worldbank.org/data, *Eurostat Population (million) 1,299 1,065 212 144 70 62 48 39 24 22 10 10 4 2 3,010 288 456.4* 6,200 Source: World Development Indicator Database, April 2004, http://www.worldbank.org/data 6 4 2004/2005 Global Retail & Consumer Study from Beijing to Budapest PricewaterhouseCoopers Executive Summary Certain countries, such as the Czech Republic, Poland and Slovenia, which are strategically placed sharing borders with several countries - and Romania because of its low labour costs - can play a pivotal role as logistic hubs and a vastly improved east-west supply chain. The food sector in general should benefit new entrants such as Poland and Romania with increased revenues due to convergence with the Common Agricultural Policy (CAP) and the elimination of previous trade barriers. Food exports meeting the required EU quality criteria should explode. Having seen the highly positive impact that Spain has derived from its membership of the EU, these transitional economies have everything to gain if they play the game according to the rules. It is a historical opportunity.
■ Strength and adaptability of Asian economies S trength Local retailers are extremely dynamic in South Korea and Singapore, creating tough competition in these countries for foreign operations. As far as hypermarkets are concerned, this format has been especially successful in Indonesia (Alfa Retail Indo, Carrefour, Makro) and Malaysia (Carrefour, Dairy Farm, Makro and Tesco). At the same time, the traditionally successful Asian department store is reinventing itself in order to compete with new large surface stores such as the hypermarket, for example in Singapore and South Korea where the department stores are ranked in the top 10 retailers. China continues to enjoy an extremely robust GDP growth rate (+9.1%1 in 2003) in spite of the SARS outbreak. The government intends to create 9 million new jobs to lower unemployment rates and focus on stimulating domestic consumption to drive sustainable growth. Foreign groups are using the acquisition or partnership path for entry into China, such as Tesco with the Ting Hsin International Group or Anheuser Busch with the Harbin Brewery. Speciality stores, devoted to product categories such as DIY, household appliances, telephony or cosmetics are seen as being important poles for future retail development in China. There are huge income, lifestyle and consumption disparities between urban and rural populations in Thailand, India and China. The latter two are still very much rural economies with a majority of people still living in the country. Unemployment and poverty are key challenges. The Asian economies are still enjoying strong GDP and sector growth in spite of the negative impact of SARS (Severe Acute Respiratory Syndrome), the Avian influenza and the global economic downturn. The region’s capacity to recover quickly from a recession has already been demonstrated in 1998 during the Asian Financial Crisis. The reports on India and Thailand mention the impact of oil prices on their economies. The Thai economy has also been adversely affected by Avian influenza. India’s economy is benefiting from its highly successful IT service sector, as a primary location for outsourcing from western companies seeking to reduce costs. In Thailand, land ownership is restricted and zoning laws make the development of hypermarkets difficult, but in spite of this, retail expansion is dominated by foreign companies. Indonesia and Malaysia are two other countries in which foreign retailers are making increasingly strong inroads. For example out of the top six retailers in Malaysia are foreign: three North Asian (AEON / Jaya Jusco, Dairy Farm / Giant and Seven-Eleven) and three European (Carrefour, Makro and Tesco). 1 National Bureau of Statistics of China PricewaterhouseCoopers 2004/2005 Global Retail & Consumer Study from Beijing to Budapest 7 5 Executive Summary The presence of multinational food retailers in transitional economies China (Mainland) AEON (Japan) AHOLD (The Netherlands) AUCHAN (France) AVA (Germany) CARREFOUR (France) CASINO (France) Dairy Farm International (Hong Kong) DELHAIZE Group (Belgium) FAMILY MART (Japan) FIBA (Turkey) GLOBUS (Germany) INTERMARCHE (France) ITO YOKADO (Japan) JERONIMO MARTINS (Portugal) KOC GROUP (Turkey) LECLERC (France) LIDL & SCHWARZ (Germany) LOUIS DELHAIZE (France) MAKRO (The Netherlands) METRO (Germany) REWE (Germany) SEVEN - ELEVEN (Japan) SHINSEGAE (South Korea) SPAR (The Netherlands) TENGELMANN (Germany) TESCO (UK) WAL-MART (USA)
Source: PwC Country reports, Observatoire Vigie Czech Republic Hungary India Indonesia X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 8 4 2004/2005 Global Retail & Consumer Study from Beijing to Budapest PricewaterhouseCoopers Executive Summary Korea (South) Malaysia Poland Romania Russia Singapore Slovenia Thailand Turkey X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X PricewaterhouseCoopers 2004/2005 Global Retail & Consumer Study from Beijing to Budapest 9 5 Executive Summary
■ Increased competition and consolidation consolidation I ncreased 2. Priority investments for retail and consumer multinationals
Global retail & consumer barometer Territory
CHINA (MAINLAND) • Emergence of regional players • Towards a more efficient supply chain
In CEE countries, consolidation in the retail and consumer sector is, in general, on the increase, thereby creating regional players who are able to generate the necessary economies of scale to succeed in what is an increasingly competitive market. The same trend is apparent in China, where the retail and consumer goods market is developing at an extremely fast pace – and is also highly competitive. Local champions such as Haier, Konka and Galanz in home appliances, and Shanghai Bailian Group in retailing, are trying to stave off competition from foreign competitors through consolidation. In all the Asian countries covered by the report (with the exception of Singapore – already a sophisticated economy), efforts are being made to improve the highly inadequate infrastructure and to organise professional supply and logistic chains which are essential to a more widespread development of modern business. Retail and consumer companies are investing heavily in their supply chains and Carrefour and Wal-Mart are also using China as a major sourcing hub for both their local and global markets. Cost control and investment in logistics and a more efficient supply chain are also high on the retail and consumer sector’s agenda in CEE and Russia. Organized retail sector situation
Growing Regulatory constraints
Some CZECH REPUBLIC HUNGARY Saturated Non- significant None Maturing Non- significant None INDIA Emerging Still strong Some INDONESIA Growing Some Some KOREA (SOUTH) Maturing Non- significant None MALAYSIA Growing Some Low POLAND Saturated Some None ROMANIA Growing Some None RUSSIA Growing Changing Some SINGAPORE Saturated Non- significant None SLOVENIA Growing Some None THAILAND Growing Still strong None TURKEY Growing Changing Low Source: PwC Country reports, Observatoire Vigie 10 4 2004/2005 Global Retail & Consumer Study from Beijing to Budapest PricewaterhouseCoopers Executive Summary Retail & Consumer challenges / opportunities
Increased competition, supply chain effectiveness / liberalization, diversity of the market, staff and management training Price pressure, trade unions / brand differentiation, regionalisation Continuing concentration / increased purchasing power, logistical hub Winning formats
Specialty stores, supermarkets/ hypermarkets and convenience stores Supermarkets, discount stores and specialty stores Hypermarkets, convenience stores and specialty stores Retail & Consumer emerging trends
Increase in consumer spending, market consolidation, modernization & diversification of retailing Non-food retailing, e-commerce, price sensitivity, potential for private labels EU compliance, investment in middlesize companies, changing supplierretailer relationship Huge opportunities for FMCG companies, caution for foreign retail investment, growth of organized retailing, global sourcing, channel integration Domestic retailers repositioning, increasing market share for foreign retailers Overall recommendation
GO Niche opportunities GO Fragmented market, channel conflicts due to disintermediation, limits to property rights / opportunities in mergers and acquisitions, investment in the Agri-food business, third party manufacturing Changing political and regulatory environment / growing middle class Discount formats, cash & carry and specialty stores GO Hypermarkets, supermarkets and department stores Caution Intense competition / supply chain and category management improvement Discount stores, department stores and e-commerce Rising consumer power, enhanced brand value, e-business and e-commerce, shopping malls Consolidation, development of shopping malls Niche opportunities Price competition / increasing consumer demand (domestic and tourism) Hypermarkets and specialty stores GO Low working costs, large and diversified market, logistical hub, low price and private labels Staff and management training, price competition, mergers and acquisitions, some limits to property rights Discount stores, convenience stores, home improvement retailers and shopping malls Supermarkets, discount stores and shopping/recreational centers Consolidation, increasing purchasing power, development of e-commerce Niche opportunities Foreign retailing development, expansion in regional cities Niche opportunities Struggle for space in Moscow, price sensitivity, supply chain effectiveness / staff and management training, expansion in regional cities Intense competition, service quality, demanding consumer / brand marketing Regional headquarters, high managerial and technical skills, logistic hub Intense competition, regulatory constraints Discount stores, specialty stores and hypermarkets Private labels, development of shopping malls, customer loyalty programs Caution Department stores, supermarkets and specialty stores Shopping malls and supermarkets Hypermarkets and convenience stores Changing geographical shopping patterns, service excellence Privatization, increasing income level, development of larger retail formats Development of department stores, health concerns, customer relationship management Private labels, development of foreign food retailing Niche opportunities Niche opportunities GO Operational effectiveness, increase in consumer spending, modernization of retailing Discount stores and supermarkets GO PricewaterhouseCoopers 2004/2005 Global Retail & Consumer Study from Beijing to Budapest 11 5 Executive Summary ■ High risk versus high reward: China and India reward: H igh HIGH RISKS CHINA Geographical characteristics 23 provinces 5 autonomous provinces 4 municipalities Huge disparity between coastal cities and countryside = GDP per capita varies between Rmb8,075 (USD977) in Chongqing and Rmb46,718 (USD5,651) in Shanghai Not significant Risk of economic overheating Administrative problems between the Government & the provinces Unpredictable policy INDIA 28 states 7 union territories Economic disparity Also huge disparity in India = More than 50% of Indian households live with less than USD82 per month (or USD7 per day) and 30% of Indian households live with USD1 and less per day Limits to foreign investment Not significant No single party has majority seats in the Parliament to form government. With a coalition government, regional parties exercise influence on policies which at times tend to meet regional rather than national priorities. Investment limits Financial risks Political instability HIGH REWARD CHINA Demographic Huge and diversified consumer market = The world’s largest population with 1.3 billion inhabitants INDIA Increasing population = Population of over 1 billion which will exceed China population in the coming decades High growth potential in long term Economic WTO accession Still high growth potential Learn fast / Technical and managerial training Resources/skills Availability of skilled managerial / technical manpower at reasonable cost. Large pool of English speaking people. 12 4 2004/2005 Global Retail & Consumer Study from Beijing to Budapest PricewaterhouseCoopers Executive Summary Immediate opportunities in China: GO GO
China is the biggest consumer market in the world and membership of the WTO (World Trade Organisation) will improve business conditions for companies investing there. National and regional brands are still extremely strong, and multinationals have to be aware of the extent to which they need to adapt their products and marketing to the Chinese consumer. One avenue that is being adopted is that of the setting up of alliances with local companies in order to assimilate their market know-how. The Chinese government’s efforts to curb economic overheating, review the banking sector and redistribute the country’s new riches by investing in health, education and infrastructure will be essential components of long-term and sound economic development. and fiscal reform pursued by its predecessors and at the same time it is designing policies to help 300 million of its people, which are among the poorest on the planet. These are encouraging signals for future economic growth and wider prosperity. Partnerships between foreign retail and consumer goods companies with local firms will undoubtedly contribute to the improvement of lifestyles and higher levels of employment and consumption, when this becomes possible in the future.
■ Investment havens: I nvestment Turkey, Thailand, Malaysia, Hungary2: GO GO
The study pinpoints Turkey, Thailand, Malaysia and Hungary as being safe investment destinations which represent general opportunities for development in the short or longer term. Turkey, with its young and growing population, is an obvious target for companies in the retail and consumer sector. A huge effort is being made to modernize the Turkish economy and accession to the EU would make a significant impact on the country’s economic development. Retail and consumer companies can find local partners with whom they can launch their investment programmes for the long-term. But investors should be aware of the current regulatory constraints in the retail sector and bear in mind the unstable political climate in the region. Although regulatory restraints are still an impediment in Thailand, there is plenty of potential for development in this country, which has a population equivalent to that of France. Increasing consumer demand and the existence of a burgeoning middle-class make Malaysia an extremely interesting destination for investment. In addition, a young population, low unemployment and a growing modern retail sector all contribute to this country’s extremely attractive investment climate. Hungary is in the first group of countries to have acceded to the EU and Budapest, its capital, has a tradition of being a financial and managerial hub in the region. Although it has a fast maturing retail and consumer market, there are still opportunities left for investment there for hypermarkets, convenience stores and specialised outlets especially outside the capital.
2 We enumerate the countries by size of population (from bigger to smaller) India as an emerging economy with opportunities for the longer-term: GO GO
The Indian sub-continent, the other potential mass market of the world, has yet to resolve its infrastructure and business regulations in order to fire off a true wave of general economic development – other than its already highly successful IT services sector. This being said, consumer goods companies have already established themselves with success in India; and there is obviously a huge potential for future development as the country modernizes. For the time being, foreign retail and wholesale investment is restricted to cash & carry outlets and, to a lesser extent, e-commerce. It still remains to be seen if the new government will be promoting modern commerce through a more liberal approach to foreign investment from companies in the retail and consumer sector - and also to changing the current limits on property rights. But when modern retailing does take off – and it will – the country’s outstanding capabilities in IT will ensure an extremely rapid and dynamic development with, for example, an immediate assimilation of such technological applications as RFID (Radio Frequency Identification). On the macro economic front, the new government appears to be adopting the same goals for economic
PricewaterhouseCoopers 2004/2005 Global Retail & Consumer Study from Beijing to Budapest 13 5 Executive Summary South Korea, Poland, Romania, Czech Republic, Singapore and Slovenia: Niche opportunities N iche
South Korea, Poland, Romania, Czech Republic, Singapore and Slovenia are already saturated as far as the size of the market is concerned. Although a certain number of general retail development opportunities in these countries still exist, retail and consumer companies would be better advised to focus on niche investments. Singapore and Slovenia’s prosperous populations make them targets for niche opportunities. Romania, with its current limitations on property and land acquisitions and the limited availability of skilled staff and management, also make it a better destination for smaller, targeted retail opportunities. 3. Key consumption patterns in transitional economies
GNI per capita (USD) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Singapore Slovenia South Korea Czech Republic Hungary Poland Malaysia Turkey Russia Thailand Romania China Indonesia India US EU (25 countries) World 20,690 10,370 9,930 5,480 5,290 4,570 3,540 2,490 2,130 2,000 1,870 960 710 470 35,400 22,088 5,120 long ■ Opportunities for the long term O pportunities Indonesia, Russia: Caution C aution
Investment in Indonesia should be subject to caution. Although the retail sector is gradually being liberalized, the changing political and regulatory environment is an impediment to efficient and rapid development for foreign companies. Retail and consumer expansion into Russia should also be viewed with caution and seen as a long-term investment. Russia is a potentially huge mass consumer markets for the investor and boasts one of the highest current world growth rates. At the same time the country is set for the future within what is essentially an extremely fragile economic, political and social framework. The decisions made by its government in a number of areas will have a profound influence on the country’s development in the long term. Source: World Development Indicator Database, April 2004, http://www.worldbank.org/data Ranking by country China Singapore Russia India Malaysia South Korea Thailand Turkey Poland Romania Indonesia Hungary Czech Republic Slovenia US EU (25 countries) World Real GDP growth forecast 2004 (%) 8.9 8.4 7.0 6.5 6.5 6.4 6.4 5.9 5.5 5.0 4.7 3.6 3.5 3.3 4.2 1.0 4.9 Source: EIU (Economist Intelligent Unit) 14 4 2004/2005 Global Retail & Consumer Study from Beijing to Budapest PricewaterhouseCoopers Executive Summary ■ Price versus brand sensitivity P rice ■ The move into secondary cities T he Foreign companies dominate the retail and consumer sector in most CEE countries and all reports mention the pressure that retailers are putting on their suppliers in order to reduce prices for extremely price sensitive consumers – particularly in Slovenia and Turkey. At the same time price sensitivity is contributing to a growing appreciation of brands and private label. Although penetration is as yet low, for example 2% in Poland and 4% in the Czech Republic – compared with an average of 22% in western Europe - the market share of private label is increasing very fast and should catch up with Western European levels in the near future. Asian consumers are still extremely sensitive to local brands, although private label is starting to emerge in both India and Thailand. In India, consumers are still very much attached to their own food culture and multinationals are having to adapt their products significantly to match local tastes.
■ Entertainment retailing E ntertainment As the number of modern retail outlets in the bigger towns saturate, there are significant growth opportunities to be seized in the provinces and smaller cities – some of which are already being taken up by local retailers. This growth can involve very differing retail formats, depending on the specific retail patterns of the country in question. For example in Poland, as big cities become saturated with the hypermarket, supermarkets are being targeted for the smaller urban centers, whereas in Romania the hypermarket appears to be the favored format for regional cities. In China, foreign retailers such as Wal-Mart and Carrefour are starting to move out of the prosperous south-eastern coastal areas, which are reaching saturation, into other regions. In both Asia and CEE, the potential of shopping centers or malls, combining shopping with leisure activities and entertainment, is emerging as an important feature of new retailing patterns. The mega-malls in Malaysia and the entertainment shopping malls of South Korea, for example, will act as poles for retail development in the future. In CEE countries and Russia, the future importance of shopping centers is highlighted in the reports from the Czech Republic, Romania and Russia.
■ The discounters T he Hard and soft discount chains are also expected to play a significant role in the future retail landscape. These formats are already making their presence felt in Hungary, Poland, Romania and Turkey. At the same time Carrefour is expanding its Dia discount format in China. PricewaterhouseCoopers 2004/2005 Global Retail & Consumer Study from Beijing to Budapest 15 5 Executive Summary Major cities above 2 million inhabitants Cities(1)
Seoul Mumbai (Bombay) Delhi Jakarta Kolkatta (Calcutta) Moscow Shanghai Beijing Istanbul Bangkok Chongqing Chennai (Madras) Hong Kong Bangalore Hyderabad Tianjin Ahmedabad Saint Petersburg Wuhan Guangzhou Harbin Shenyang Pune Kuala Lumpur Ankara Chengdu Busan Surat Izmir Bandung Nanjing Kanpur Surabaya Xian Dalian Katowice Qingdao Daegu Jaipur Lucknow Hangzhou Nagpur Number of inhabitants (million)
21.9 19.2 18.7 16.6 4.6 13.5 13.2 10.6 10.0 7.7 7.7 7.4 7.2 6.8 6.5 5.9 5.4 5.2 4.9 4.9 4.5 4.5 4.3 4.1 4.0 3.8 3.7 3.5 3.4 3.2 3.2 3.1 3.1 3.0 3.0 2.8 2.8 2.8 2.8 2.6 2.5 2.4 Country
SOUTH KOREA INDIA INDIA INDONESIA INDIA RUSSIA CHINA CHINA TURKEY THAILAND CHINA INDIA CHINA INDIA INDIA CHINA INDIA RUSSIA CHINA CHINA CHINA CHINA INDIA MALAYSIA TURKEY CHINA SOUTH KOREA INDIA TURKEY INDONESIA CHINA INDIA INDONESIA CHINA CHINA POLAND CHINA SOUTH KOREA INDIA INDIA CHINA INDIA Cities(1)
Zhengzhou Budapest Changchun Warsaw Jinan Shijiazhuang Medan Konya Taiyuan Bursa Kunming Changsha Number of inhabitants (million)
2.4 2.4 2.4 2.4 2.4 2.3 2.2 2.2 2.2 2.1 2.1 2.1 Country
CHINA HUNGARY CHINA POLAND CHINA CHINA INDONESIA TURKEY CHINA TURKEY CHINA CHINA Sources: Th. Brinkhoff : The Principal Agglomerations of the World, 2004, (http://www.citypopulation.de, 2004-08-17); excepted for Turkish cities: State Institute of Statistics.
(1) Important note: according to the above mentioned source, population figures relate to “core cities”. In particular for Chinese cities, these figures may contradict with information from other sources, which may take into account “greater city” populations (eg. “Greater Beijing” amounts 14.6 inhabitants, and Shanghai 17.1, according to the China Statistical Abstract – also refer to sources used in the China country report). ■ Brand reputation and corporate responsibility B rand The transitional economies in CEE are set for unprecedented growth over the next years. But they will have to learn to comply with stringent EU health, transport and safety regulations in order to succeed. In the first instance, this will add to their cost structures, but compliance will ensure long-term viability and success. In Asia, compliance with acceptable health and safety norms, as well as decent working conditions for employees, is extremely difficult to monitor. The multinationals operating in these countries, which are very much under the global consumer’s eye, need to be entirely transparent as far as corporate responsibility is concerned in order to protect their international brand reputation. But it will be some time yet before the intricate web of companies that constitute the Asian economy draw up Pan-Asian norms for corporate responsibility as a whole. 16 4 2004/2005 Global Retail & Consumer Study from Beijing to Budapest PricewaterhouseCoopers Executive Summary CONCLUSION To conclude, three major and common trends emerge from the majority of economies covered by the report - in both Asia and CEE. • Price sensitivity is having a big impact on brand management and the development of private label.
Adapting products and marketing to local cultures is an essential ingredient of future success for foreign retail and consumer companies. Price sensitivity will also be contributing to the successful development of hard and soft discount stores. • As the transitional economies develop, the lives of their populations will open up to discover a whole
new range of consumer goods. Shopping centers with their malls, and the creation of adjacent leisure activities will become one of the important poles of future consumption patterns. • Emerging regional players, as well as the multinationals already present in these countries, will be seizing
the significant potential for expansion from the increasingly saturated major cities into smaller, regional urban centers. As certain retail and consumer investors take their breath after a first phase of investment in these economies – particularly in light of the recent world economic downturn – local players will be capitalizing on their increasing knowledge of modern retailing and their intimate understanding of local cultures to make their presence felt more forcefully. This, together with the consolidation of local and foreign retailers’ investments, will toughen the competitive environment considerably in the future. Jacques-Etienne de T’Serclaes PricewaterhouseCoopers Global Retail & Consumer Leader Email: [email protected] PricewaterhouseCoopers 2004/2005 Global Retail & Consumer Study from Beijing to Budapest 17 5 AN INTERNATIONAL NETWORK
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Finland Marko Korkiakoski +358 9 2280 1220 [email protected] France Christian Perrier + 33 1 56 57 83 90 [email protected] Germany Gerd Bovensiepen + 49 21 19 81 29 39 [email protected] Greece Vassilios Goutis + 30 210 6874 620 [email protected] Hungary Andrew Simonds + 361 461 9551 [email protected] India N. V. Sivakumar + 91 80 2558 56 63 [email protected] Indonesia Irhoan Tanudiredja + 62 21 5296 3830 [email protected] Ireland Kevin Egan + 353 1 662 6069 [email protected] Italy Roberto Adami + 390 422 542726 [email protected] Japan Koji Kobayashi + 81 3 5532 2375 [email protected] Korea Moon-Ki Chung + 82 2 709 04 06 [email protected] Lithuania Christopher C Butler + 370 5 239 2303 [email protected] Malaysia Phoon Soon Keong + 60 3 2382 0913 [email protected] Portugal Jose Vitorino + 35 12 1319 7111 [email protected] Romania David Trow +40 21 202 8812 [email protected] Russia Chris Skirrow + 70 95 967 6390 [email protected] Singapore Teck Soon Chew + 65 6236 3328 [email protected] Slovak Republic Maria Frühwaldova + 421 2 5441 4101 [email protected] Slovenia Francois D Mattelaer + 386 1 4750 160 [email protected] South Africa Diederik Fouche + 27 11 797 4291 [email protected] C entury Retail & Consumer Reporting in the 21 st Century Jacques-Etienne de T’Serclaes + 33 1 56 57 80 70 [email protected] Retail & Consumer IFRS Transition Christian Perrier + 33 1 56 57 83 90 [email protected] Brand and Product Accountability Thierry Raes + 33 1 56 57 82 37 [email protected] Retail & Consumer Tax Services Clare Bolton + 44 161 247 4032 [email protected] Mexico Manuel García + 52 55 5263 6102 [email protected] Spain Máximo Ibáñez + 34 91 568 47 44 [email protected] Poland Julie Duthoit + 48 22 523 42 25 [email protected] Pawel Peplinski + 48 22 523 44 33 [email protected] Philippines Ador Mejia + 63 2 459 3008 [email protected] Norway Leif Arne Jensen + 47 23 16 01 02 leif.a.jensen @no.pwc.com New Zealand Robert Harris + 64 3 374 3139 [email protected] Switzerland William Wright + 41 21 711 82 43 [email protected] Taiwan Dexter Chang + 886 227 295 222 [email protected] Thailand Paul Stitt + 66 2 344 1119 [email protected] Turkey Adnan Akan + 90 212 326 61 04 [email protected] United Kingdom Martin Hodgson + 44 20 7213 5345 [email protected] United States and Americas John Maxwell + 1 973 236 4780 [email protected] Uruguay Richard Moreira + 59 82 916 1243 [email protected] Netherlands Peter Jongerius + 3120 568 61 64 [email protected] Hans Bod + 31 10 4008 480 [email protected] Sweden Anna-Carin Bjelkeby + 46 8 555 333 07 [email protected] PricewaterhouseCoopers Global Retail & Consumer Leader (Paris) Jacques-Etienne de T’Serclaes +33 1 56 57 80 70 [email protected] Argentina and South America Gabriel Martini + 54 11 4319 4713 [email protected] Australia Mike James +61 3 8603 6898 [email protected] Austria Ian Murdoch + 43 1 313 770 [email protected] Belgium Peter Van Staaij + 32 32 593 303 [email protected] Bolivia Norberto Rodríguez + 59 12 240 8181 [email protected] Brazil Luis Marini + 55 19 3794 5400 [email protected] Bulgaria Jean-Pierre Vigroux + 359 2 9355 238 [email protected] Canada Ross Sinclair + 1 416 228 4000 [email protected] Central & Eastern Europe George Johnstone + 36 1 461 9292 [email protected] China and Hong Kong Carrie Yu + 852 2289 1386 [email protected] Czech Republic Thomas Linder + 420 2 51 15 20 14 [email protected] 2004/2005 Global Retail & Consumer Study from Beijing to Budapest Denmark Michael Nielsson + 45 89 325 5520 [email protected] 5 Ecuador Luciano Almeida + 59 34 228 1777 [email protected] www.pwc.com/growth
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This note was uploaded on 04/05/2011 for the course BUSINESS 404 taught by Professor Kast during the Spring '11 term at Wilfred Laurier University .
- Spring '11