According to the Xian Chain Store and Franchise Association, there are currently 119 chain-operated enterprises and 1,857 chain-operated outlets in Xian, covering 23 sectors. Annual sales volume amounts to Rmb12.5 billion and has registered increases of over 30% for four consecutive years, greatly exceeding the average growth rate for consumer retailing in the city. They have become a new growth area in the Xian economy and are seen to be continuously expanding with diverse sectors achieving sustained growth.
Hong Kong's Vanguard Supermarket bought 11 stores of the Aijia Group, the largest supermarket chain in Xian in 2008, bringing the total number of its outlets in Xian to over 32 and making it the local market leader. Global Mart, an Australian company for mergers and acquisitions in the retailing business, purchased the Sea Star Supermarkets of the Xian Sea Star Group. These deals accelerated the pace of merger and acquisition in the chain store sector in the ancient city of Xian and further raised the concentration ratio of the trade. New Mart will formally enter the Xian market with the opening of its Jiefang Road store at the end of this year. Wanda Plaza is also preparing to open a new store across the street. New faces appear on the scene after each integration, merger, acquisition and expansion. The trade wars not only brought the city greater prosperity and advanced marketing and service concepts but made businessmen more aware of their social responsibility. These deals reflect that chain operation has now become the mainstream in the development of the modern circulation sector and the most vibrant mode of commerce in Xian.
The scale of chain operations in Xian has also been steadily expanding in recent years. There are 20 major global and domestic chains in Xian as of today. They include Wal-Mart, Carrefour, Jinjiang and Metro as well as world top 100 retailing groups like Yum, Parkson, Ekchor-Lotus, McDonald's, B&Q, Gome, Suning, Vanguard, and Orient Home. In addition to retailing and catering, chain operation is also well-developed in other sectors, such as real estate agency, housekeeping service, telecommunications, petrochemical, tobacco, medicine, audio-visual, beauty and hair, body toning and fitness, education and training, wedding and banquet service, and stationery. A modern system of chain operations with retailing, catering and services as the three main blocks and supermarkets and specialty stores as major operating entities developing side by side with exclusive stores and convenience stores has taken shape. Hypermarket, building material and home furnishing, and home appliance chains have a leading edge in the country in their operational concepts, management level, modern technology and core competitiveness.
Chain operation now basically covers all aspects of the circulation sector. Chain-operated enterprises are also extending their business from the city to small towns and rural markets. A pluralistic development pattern with the participation of state-owned, collective, private and foreign investment has taken shape and become a new growth area that helps expand the market and boost demand.
However, industry players see the following problems in Xian's fast expansion of chain operations: Local chain-operated enterprises are small in scale and none of them has emerged as the dominant market player so far. Standardisation and standardised services have yet to see further improvement. Centralised distribution remains inefficient and no standardised intelligent distribution centre has yet been built. The rapid development of chain-operated supermarkets has intensified competition in this business. Without strong support from the capital market and without smooth financing channels, chain-operated enterprises are facing a shortage of funds and have difficulty expanding their networks. For these reasons, local chain-operated enterprises are lagging considerably behind their counterparts in foreign countries and other Chinese cities where chain operation is better developed.
Experts with the Xian Chain Store and Franchise Association have come up with the following suggestions for tackling these problems: Proceeding from the overall situation of the development of the circulation sector, Xian must scientifically draw up feasible plans for the development of chain operations in the whole city, guide chain store enterprises in optimising the distribution of their outlets and expanding their networks, raise the level of the large-scale and standardised operation of the chain stores, and accelerate the building of distribution centres of chain stores. It must guide and encourage enterprises to increase investment in network information technology and see to it that enterprises make use of microcomputer LANs in their internal management, operation and market cooperation. It must give greater policy support to chain store enterprises, identify key areas for development, and create a favourable external environment for their trans-regional development. The government and relevant units should give large chain store enterprises with development potential that are targeted for special cultivation as well as sectors with greater malleability more positive support in bank credit, taxation policy, industry and commerce administration, import and export channels and other respects to facilitate their rapid development.
