Carrefour,
the French retailing giant, is stepping up its presence in Xinjiang, a
remote region in northwestern China whose links with Europe go back to
the days of the Silk Road.
At first sight, Xinjiang is not the most promising location for western retailers.It is a large sparsely population area of rugged mountains and desert basins, bordered by Afghanistan and three "Stans" of the former Soviet Union.
Undaunted, Carrefour, whose name means "crossroads" in French, set up shop in Ürümqi, the region's capital, in 2004, becoming the first western retailer to do so. The move, apparently, was a success as the retailer now has two hypermarkets there and has just chosen Ürümqi as headquarters for its operations in the northwestern China, reports ChinaFranchiser.
Xinjiang is trying to get more multinationals to follow the French company's example, stressing the region's rich natural resources and improved in infrastructure.
As well as the two stores in Xinjiang, Carrefour also has a store in Xi'an, in Shaanxi provice, which has traditionally marked the limit of foreign firms' interest in China's vast and untapped northwestern area.
The Economist recently published a good article on how western businesses are muscling in on China's retailing scene, helped by recent liberalisation.
In 2005, over 1,000 new retailers received approval, of which more than half had foreign investors. There are now over 1,000 foreign retailers in China compared with around 300 two years ago.
The rush has meant that affluent consumers in China's coastal cities are spoilt for choice. Shanghai's Gubei district has seven hypermarkets -- one for 34,000 people compared with one for 48,000 in France, where Carrefour invented the hypermarket.
For that reason, retailers are having to look further afield for opportunities, and Carrefour is taking the lead in pushing back the frontiers.
But as retailers move to smaller cities and further inland to escape competition and soaring rents, they face huge differences in taste -- much of Xinjiang's population is Muslim, for example. Also, consumers in these less developed markets are less aware of brands and much more focused on price.
