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Sandy Li

Hong Kong retailers operating in China could lose ground to other international players following the mainland's entry into the World Trade Organisation, according to GK Goh Securities.

Chu Siu-wah, GK Goh head of research, urged SAR retailers to move a step ahead of their competitors, saying they should step up efforts to expand into China's inland areas from coastal regions to increase their market share.

Mr Chu expected China's retail market to attract big names internationally, which could put severe pressure on SAR retailers.

He said that with strong financial backing and an international presence, the big-name retailers should have no problems taking much of the market in the coastal cities.

The niche position of Hong Kong retailers gradually would be eroded as the market underwent a dramatic change about three years after opening to international competition.

However, it would be easier for SAR retailers to penetrate inland despite telecommunications and language barriers, he said.

'Some Hong Kong retailers have already expanded to the central and western part of the mainland to expand their customer base,' he said.

Mr Chu believed Hong Kong retailers would increasingly depend on the China market due to the state of the SAR's economy.

The best-performing market of casual apparel chain-store operator Giordano International was China, which had overtaken Hong Kong and Taiwan, he said.

Giordano now has 430 outlets in China, up from 340 in 2000.

Mr Chu expected Giordano's China operations to post a sales increase of at least 19 per cent for the year to December 31.

The sluggishness of the Hong Kong and Taiwan retail markets had also prompted retail and fabric knitter Texwinca Holdings to focus its retail operation on China, he said.

Texwinca's 54 per cent-owned Baleno unit has 760 stores in China, giving it the largest presence among Hong Kong retailers.

Mr Chu said Texwinca intended to open 150 to 200 more Baleno stores in the mainland by the next financial year.



Inland expansion seen crucial for HK stores to stay ahead of rivals