Made in China
If you have never been to China, you probably have a view of what the country is like, as well as 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 provincial capital, my view started to change. This is a beautiful city built along the banks 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 a Chinese city and found it impressive to see that this country is making an effort to help preserve the environment.
The reason for us 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, but 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 realising that as wages increase with the country’s economic improvement, they need to change their focus on the type of product produced. The home market is also 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, was one of the first overseas retailers to enter the category. Their Chinese division was purchased by the UK company B & Q, which reduced the plant category and focused on dry garden products in their stores. The traditional florists on Chinese city High Streets 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. Consequently, a new business opportunity is emerging.
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.
Currently, around 50% of customers are classified as professionals, which includes landscape designers and contractors, as well as hotels and public building maintenance companies. The rest are home consumers. Like many other countries, these consumers are decorators rather than gardeners.
The big challenge for Hongyue 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 who could help them develop the market in China. With a population of one billion increasingly affluent people, who are shackled by the inherent problems of travel in the county, this is an opportunity that should be looked at seriously.
Companies like Hongyue will develop retail chains across the major cities as the public becomes more aware of the beauty of the garden.
John Stanley (www.johnstanley.com.au) is an acclaimed retail consultant and author.