China's Super Consumers: What 1 Billion Customers Want and How to Sell it to Them

Chapter 14Channels

The number and type of sales channels that became legal and then proliferated, from roughly 2000 to 2010, were a key growth driver of the Chinese consumer boom. As we have seen, an early impediment to the growth of consumer culture was that it was at first limited to a number of state-owned shops. This was followed by a period where joint ventures provided a model, but a risky and less than ideal one, to sell products.

There were two keys to the creation and proliferation of channels, which gave birth to hyperconsumption leading into the 2000s:

1. Government rules, regulations, and laws opening the way for relatively easy entry and establishment of retail entities and entry into existing sales channels by foreign companies.
2. The already-in-place foundation of traditional Chinese retail and sales channels that could be engaged with, built upon, and partnered with.

Today, China is the top market in the world for new retail space construction, accounting for more than half of global shopping center development.

It is important for brands and retailers to understand all of the distribution channels available to them in China and to understand the pros and cons of each. There are traditional distribution channels and new channels. Retail sales in some of the new channels are experiencing rapid growth.

“With the unprecedented pace of urbanization and a rising middle class, there is an increasing demand for modern shopping facilities in China,” says Frank Chen, executive ...