Foreign supermarkets find competition tough in China

Foreign supermarket chains are struggling to compete on the mainland and should expand their online sales platforms to boost their revenues, industry insiders say.

Against a backdrop of declining sales last year as the mainland economy slowed and shopping habits changed, foreign retailers slowed their previously aggressive expansion.

"Sales at physical outlets will continue to drop, and foreign retailers should expand their presence online," said Shi Jun, a senior partner with Beijing-based consulting firm Alliance PKU Management Consultants who specialises in advising clients in the retail sector.

It was a difficult year for foreign supermarket chains last year. British retail chain Tesco closed four stores in August, while French supermarket chain Carrefour shut two and United States giant Wal-Mart shut five, according to a report in the Southern Metropolis Daily.

Domestic operators were better able to weather the downturn because they enjoyed supportive measures from local governments, chiefly by securing the best locations for their stores, Shi said.

"Local governments tend to allocate more resources to local companies to foster their growth," he said.