Retail Growth Story

Details are sketchy, but the scale is staggering: the government of China is subsidizing the establishment of hundreds of thousands of new retail stores. As many as 260,000 convenience stores and supermarkets were opened under the subsidy program in rural Chinese townships and counties between 2005 and last year – and now the pace will quicken!

China plans to double that figure by the end of next year.

According to China Daily, as many as 20 million of what it calls migrant workers have been left jobless as the economy entered its cooling phase last year.

Exports have driven China’s economy for the past 30 years. Now the country has increasingly more reasons to turn inward for industrial development. Building stores lickety-split across the hinterlands makes sense. It will put people to work. And it will put them to work in places where another part of the China stimulus package can reach them.

China is building roads, railways and airports at a pace never before seen anywhere on Earth.

According to a recent New York Times report, the new stimulus program by China’s government enjoys a big head start over its counterpart in the U.S. And China has another advantage – the bulk of this spending on high-speed rail, highways and other construction will be paid not by borrowing, but by spending cash.

The big question for home textile manufacturers not based in China is this: How do we sell into those new retail markets deep within China?

The answers to that question won’t be easy ones, but they will be “interesting.” And they will form a lengthy and challenging discussion for years to come.