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Made In China by John Stanley

If you have never been to China you probably have a view of what the country is like and perceptions of what retailing is like. Travel to China and you will be surprised at some of the aspects of retailing and business.

We arrived at Shanghai’s new airport and travelled west to Hangzhou, as expected the traffic was awful and you could smell the pollution, all the aspects of the journey were what were expected.

Once in Hangzhou, the Province Capital, my view started to change. This is a beautiful city built on the side of West Lake, which is looked on as a paradise on Earth by the local population. We also visited the only urban wetland conservation area in China in a city and it is impressive to see what this country is doing to help preserve the environment.

The reason to travelling to this city was to present at a national conference and trade show on retail trends in lifestyle retailing.  I expected the focus to be on the international export market and this was the first of many false impressions I had about this country.

Exporting cost effective product to the western world is still a major focus for this region of China, but, there is a strong movement to build better brands and to develop a better quality product.

Some manufactures are realizing that as wages increase as the economy improves in this part of the world they need to change their focus on the type of product produced.

Secondly, the home market is increasing rapidly due to consumers becoming more affluent and this is becoming another focus for manufacturers.

I was expecting to focus on retailing overseas and was amazed to find the star of a garden retail industry in China. Obi, from Germany ,were one of the first overseas retailers to enter the category, there Chinese division was purchased by the UK company B & Q who reduced the plant category and focused on dry garden products in their stores.

The traditional florists on the High Street focus on flowers and indoor plants and have been the retail source of “live” product. That is now changing and although the majority of city dwellers live in apartments there is a growing affluent population with gardens and therefore a new business opportunity is emerging.

At this stage there are around five “true” garden centres in the country, three of these are owned and operated by the Hongyue Company based in Zhejiang, near Hangzhou. This family owned business was started ten years ago as a seed and bulb producer and four years ago they started to expand into garden retailing. Already they have formed partnerships with German and American product suppliers and identified that the consumer does not always want the cheapest offer.

As you would expect the indoor plant and container department is the largest and in my view the most professional in retail terms. The retailing we saw was world class. The outdoor department is less sophisticated, plants are raised by nurseries in the cooler south of the country and the majority of plants are delivered bare root and then potted and labelled by the retailer. Large plants are coming from Italy with large topiary a favourite with the local consumer.

At this stage around 50% of customers are classified as professionals, this including landscape designs and contractors as well as hotels and public building maintenance companies the rest being home consumers. Like many other countries these consumers are decorators rather than gardeners.

The big challenge for the company is retail management, there is a lack of garden retail skill in the country and this has become a challenge that is slowing down expansion. The company produces a magazine for the industry and one for consumers .Traditional marketing is still a key driver in the business and in retailing in general, this is due to a ban on social media in the country by the government.

Garden retailing will be a growth category in the country and the company is looking for other supply partners from abroad that could help them develop the market in China. With a population of one billion who are becoming more affluent and the inherent problems of travel in the county this is an opportunity that should be looked at seriously. Companies like this will develop retail chains across the major cities and the public are becoming more aware of the beauty of the garden

John Stanley (CSP) is one of the top 10% of speakers in the world today, an acclaimed retail consultant, WA Entrepreneur of the Year 2009 and author. His book “Just About Everything a Retail Manager Needs to Know” has been called the “retail bible”. His company is WA Small Business Champion 2009 – Educational Services. www.johnstanley.com.au