Retailers reshuffle
Lan Xinzhen

On October 29, a Saturday, when employees of many companies were off enjoying one of Beijing’s fine autumn days, Trust-Mart employee Li Xiaomei was feeling exhausted and insecure. “We know that Trust-Mart has been acquired by Wal-Mart, but our boss has not told us yet,” said Li. Wal-Mart, by acquiring Trust-Mart for about $1 billion (the agreement was reached between the two companies and it may take a while for the agreement to take effect), had made Li’s already difficult life-working six and sometimes seven days a week-more stressful, not knowing whether she would be laid off soon or simply have new management.
In many respects, Li’s walk on eggshells reflects the same stroll the retailing industry is taking these days in China. As an industry marked by consolidation, many companies-both domestic and foreign-are being swallowed whole by others. Trust-Mart is a case in point of why that is so. Security and profitability will likely go to those retailers that can grow through acquisition.
Trusting in Trust-Mart
The value of Trust-Mart to Wal-Mart isn’t apparent judging by surface appearances. The supermarket Li works for is small with narrow corridors. The goods are not arranged in an orderly way, although they are classified to some degree. Overall, the store’s look and feel is completely different from Wal-Mart’s grander layout and comfortable shopping environment. Trust-Mart, a Taiwanese supermarket registered on China’s mainland in 1997, has only four branches scattered in Beijing. They are utterly incomparable to Carrefour, Wal-Mart, White Goat Supermarket and Merry Mart.
Many Beijingers said that they’ve never heard of the company. However, in south China, Trust-Mart is known to nearly all. The top 300 chain store list in the first half of this year conducted by the Ministry of Commerce showed that Trust-Mart ranked 11th. Currently, Trust-Mart’s chain stores number more than 100, most of which are located in southern cities like Guangzhou, Shanghai and Hangzhou. It has not been long since Trust-Mart made its way into Beijing and Tianjin in 2003.
Thus, the distinct advantage Trust-Mart brings to Wal-Mart is its large number of chain stores. After acquiring Trust-Mart, the number of Wal-Mart’s stores in China will boost to 170, up from the current 66. This will help bridge Wal-Mart’s gap with Carrefour, which has more than 200 stores in China. After withdrawing from the Japanese market in 2005 and from the South Korean market in 2006, Carrefour has been particularly keen on the Chinese market. But Wal-Mart’s bold move is just one recent highlight among a growing number of mergers and acquisitions in China’s retail industry which is seeking a competitive edge in a cutthroat market.
Acquiring advantage
Since China fully opened its retail market in 2004, international retail tycoons have been strategizing hard to penetrate the market. Certainly, part of that strategy is developing new stores. B&Q, the U.K.’s leading do-it-yourself and garden center retailer, plans to boost its store count by 10 to 15 annually, with its target fixed at 126 by 2010. It currently has 51. At the same time, Holland Makro hopes to open 50 stores by 2010, although it currently only has five. But the model for grabbing market share is changing from one of development to one of acquisitions.
“In the past, foreign enterprises tended to set up more stores to grasp the Chinese market,” said Di Jiankai, an official with the Ministry of Commerce. “However, such a method of development was time-consuming and required at least two or three years. Fully opening up the retail industry included urging foreign businesses to adopt an easier and a more convenient way to expand their businesses: Acquisition.” Today, acquisitions are spreading like wildfire.
From early this year until now, there have been nearly 10 retail acquisition cases surpassing tens of millions of dollars each in China. Gome Electronics acquired Yongle (China Paradise Electronics Retail Ltd.). The Wangfujing Department Store swallowed up Xuzhou Hualian. Best Buy took over Five Star Appliance. And the list continues. In the case of Gome, after having acquired Yongle, its store number should reach 697, three times more than that of rival Suning Electronics, which owns only 224 stores. The sales volume of Gome also is slated to surpass the combined sales volume of Suning and Best Buy.
Di believes that mass acquisition is a natural market trend. Several years ago, he said, retail market access was easy, resulting in a surging number of supermarkets throughout the country. There are currently over 60,000 supermarkets, selling centers and neighborhood stores nationwide. But, as the competition in the retail industry became fierce, many retailers began to lose money. Some supermarkets hence sought acquisition. Despite the competition, China’s retail sector should grow steadily by 8 or 10 percent each year for the foreseeable future, according to statistics from the Ministry of Commerce. Further, there are more than 3,000 foreign retailers in the Chinese market.
Foreign privileges
Currently, foreign retailers enjoy more favorable government policies than domestic enterprises in this realm. The tax rate of domestic companies is 33 percent while that of foreign companies is 15 percent. Meanwhile, domestic companies are taxed store by store, while foreign companies are taxed on an overall operation basis. This means foreign companies can deduct individual store losses from their taxable income, whereas domestic companies cannot.
Hence, He Jihai, President of China General Chamber of Commerce, noted that the net profit rate of the Shanghai-based Lianhua Supermarket Holdings Co. Ltd.-the largest domestic supermarket company-is 1.5 percent, while that of Wal-Mart and Carrefour is 3.3 percent and over 3 percent, respectively. Meanwhile, domestic retailers are suffering from a sort of copycat syndrome: imitating foreign retailers-from operations to management-without ever being successfully original.
The lack of uniqueness and creativity results in undifferentiated market solutions, leading to over-competition among many retail companies of the same grade and the same style in the same region. Foreign retailers are not sympathetic to the pleas of unfair competition or of their floundering domestic counterparts. “Competition is fierce,” said Trust-Mart’s Li Xiaomei. “Before our supermarket opened, there were two small supermarkets in this community. But both of them were shut down because of us.”
The future: Mega-mart?
In June 2005, Ernst & Young conducted a study of retailers’ road to success in China. Its report pointed out that in the five years ahead, the Chinese retail market would look completely different, with the strong becoming stronger. Among the winners, they hypothesized, would be domestic Shanghai Brilliance (Group) Co. Ltd. and Gome, and foreign retailers like Wal-Mart and Carrefour. Due to competition, mergers and acquisitions, many of China’s current 60,000 retail companies will disappear, the report predicted.

(The Daily Mail-Beijing Review Articles Exchange Item)


Corruption free Pakistan
Maham Shahid

Rampant Corruption in our society is now a well know phenomenon. Transparency International Report issued on Friday indicates that despite all efforts by government this maniac still manages to persist in our society. According to recently declared report Police has lived up to it previous reputation and topped the Corruption graph while Politicians stand second and many other important and significant departments in the following zone. We frequently hear our elders complaining about the growing corruption in our society. Just to believe our elders we only have to go out for a while and see it ourselves. O yes! You do not have to go too far in search of the dark realities. Go to a near by mosque with the pure intention of offering your prayers but before going do not blame me if your designer foot wear gets stolen when your return back.
Go to the local Sunday bazaar with the innocent objective of buying fruits for your mom but hold on it is not my fault if you find the side mirrors of your car GONE!!!! And then the all times talented artists standing along the roadside for begging, one moment the beggar is begging desperately for a few pennies enough for buying him a loaf of bread with that cut arm till the elbow, good heavens just look at that sad condition of the poor guy. I would do anything to help him, he’s so shabby and all messed up. But wait a minute oh God! he is unfolding his arm to steel the heavy leather wallet from that gentleman’s pocket; call the police someone!!!!! Just then mom comes by and tells me that this is the outcome of the ever escalating unemployment in country and I should carry on with my shopping. Now this corruption as I should rightly call it is not restricted to this “meagre” lot, it is readily available in every segment of the society.
To save five rupees ticket aunties at public parks would not reveal the real age of their youthful offspring. Or is that guy clad in baggy jeans who can not possibly afford to stay unglued from his cell phone for more then five minutes suppose to be under thirteen??? Does not our relatives acquaintance/friend who happens to be the headmaster / headmistress of a public school sell half of the book sent by the government for poor people? Where we knowing how wrong it is, laugh our heads off on it and congratulate him / her for being so intelligent to actually think of such a smooth way of earning huge money.
Don’t we immediately take out green currency from our wallets and try to stuff it in the pockets of the traffic police when they find out we are an underage driver yet driving proudly our dad’s limousine??? Why there is not any charge on the government official owned sexy and Cruisers with which they crush the minor brood of the underprivileged like autumn leaves? The blacklist goes on and on. And then we see our elders going ballistic ever the ever increasing corruption rate in this part of the world. Ahhhh!!!!! Corrupt people of this corrupt society ruled by the corrupt politicians!!! Have you ever thought that who are these people? What makes up the society and who rules them. Well answer to all these questions is we, we and only we!!!!
We are the people. We make up the society and people from amongst us go up to be the rules, so if the society is corrupt we are corrupt. Yes! Each one of us is corrupt in one way or the other yet we do not cease cursing the society for what it is. The question is, “from where has all this corruption come from? Is it inherited from our fore father or is it something we brought along from India in 1947?” Well…….Emergence of Pakistan on the map of world is the result of the perpetual and honest endeavour of our ancestors and in 1947, Pakistan was the land of sincere and diligent people, who were full of patriotism, not only by speech but by their deeds as well.
In order to convert Pakistan into the land of “sincere and diligent Muslims”, once again, we only have to walk the way of our religion with full devotion and mould our lives according to the principles laid down by the Holy Quran. So why wait? Let’s make those institutions, which are responsible for the accountability and justice system in our country, more efficient and strong in their performance so that all corruption can be eliminated from this piece of land in the world.

India: Shame or shine
Shamsa Ishfaq

The Republic of India is the second largest country in the world, having Pakistan as her neighbour in the west, Myanmar in the east and China, Nepal, Bhutan and Bangladesh cordoning her frontiers in the north-northeast. An estimated figure shows that approximately 400 million of India’s population are the children of 0 to 18 years of age. Although hastening up of economic growth has ranked India among 10 fastest on the rise countries, however the country’s per capita income is constantly at a standstill drooping towards lower side and ironically 26 per cent of the population is presently living below the poverty line. India’s looming HIV catastrophe and its imminence to out pace Africa as the world’s largest reservoir of the virus petrifies the rest of the world. Nevertheless, merely the mushrooming of HIV is not a threatening problem which could be solved with the help of enough drugs, strict precautions and the heavy bevies of doctors. This epidemic is a phenomenon of greater magnitude and intricacy which is at the dispersion due to India’s vast, murky, semi-criminalized and semi-tolerated trafficking of girls from economically marginalized states into bullied and browbeaten marriages, bounded labour and dreadful prostitution.
Trafficking is an issue that obliges for an attention amidst India’s overburdened social policy muck-up. India is simultaneously a starting place, transit and a destination country for men, women and children trafficked for the purposes of forced labour and commercial sexual manipulation. The Ministry of Home Affairs estimates that 90 per cent of India’s sex trafficking is internal. Reportedly,Bangladeshi and Nepali women are trafficked through India for sexual exploitation to the other parts of South Asia. Almost every brothel district of India is crowded with 14 year old girls who were kidnapped off the street, dragged out of their homes or lured into so-called jobs of maids but eventually sold into a world that they often break away from only by dying of AIDS.
Naive young girls from the Northeast are being forced into prostitution in the metropolises after being lured by structured underworld syndicates who promise them the glamorous careers and lucrative jobs ahead. The situation is extremely serious as the smart operators have flooded the northeastern cities for hunting good looking young feminine for modeling or call centers jobs by promising them attractive salaries. But in reality most of these women are pushed into the notorious world of prostitution.
Over the past five years there has been a rise in the reports of missing girls from the remote region of eight states, and the authorities believe that this increase is due to trafficking. According to police, at least 700 girls from the region have been reported missing over the last five years while 300 of them disappeared in 2005 alone. However in reality thousands of girls disappeared every year, but most of the missing cases are not reported by families due to the stigma of the sex trade linked with it. Traffickers are mostly women , often well-known in their respective villages, who promise poor, rural families good jobs for their daughters, most of whom are between 12 and 16. But in reality, they vend the girls to brothel owners in towns and cities like New Delhi, Pune, Mumbai and Kolkata, earning between 20,000 ($440) and 40,000 rupees for each girl. According to the police estimates around 20 percent of the girls in India’s big city brothels come from the northeast whereas Agra is the biggest supplier city of girls to brothels across the country.
At least one million Indian girls and women work in India’s sex industry which is estimated to be worth around 400 billion rupees ($9 billion) annually, according to the UNODC. The rise in number of girls disappearing from states like Assam, Meghalaya and Arunachal pradesh is partly due to tighter surveillance on India’s northeastern border with Nepal, where most girls were being smuggled from in the past. Slavery is not dead in India. Fuelled by trafficking, it is spreading far and wide. Thousands of Indians especially women and children are trafficked throughout the country for living a bonded life for one or the other reason. They survive in brothels, factories, guesthouses, dance bars, farms and even in the homes of well-off Indians, for illegal adoptions, organ transplants, and the entertainment, with no control over their bodies and lives. This is the real face of “Shining India” . Notwithstanding these bitter realities, India is promoting herself as righteous contender for Security Council seat. The trumpet of largest and true democracy is another tool of self-promotion of India.