China's new Richest Man has amassed a personal fortune in retail of US$1.3 billion from his ownership of chain stores. Yuan Jianjun from China Securities Research believes that China will see many new billionaires emerging from the retail trade within the next decade.
Five members of the ‘King of Retail' Walton family have consistently ranked amongst the richest people in the world. This year China's retail trade has found its own representative: Huang Guangyu. Huang, 35, is from Shantou, Guangdong, and owns 97.2% of the GoMe Appliances electronics retail chain. This year Huang has attained the most coveted of goals in China: he is now, according to EuromoneyChina's Rich List, officially China's richest man with a personal fortune of US$1.3 billion.
This is merely the beginning. More Chinese billionaires will be seen emerging from retail within the next 5-10 years.
• There is huge scope for development in China's retail trade market. “Retail is forever growing” is a common saying in China's retail trade circle. The size of China's retail trade market currently places it third in the world, and growing at a healthy 10% a year.
• Private retailers' dynamism and innovation are helping them grab market share. Their innovation gives them an advantage in certain sectors against which their state-owned competitors find it hard to compete. Home appliances, furniture, construction materials, supermarket, and pharmaceutical retail chains are all representative of the innovative sectors in retail. Among them home appliances retail chains stand out prominently: six of the top seven on the retail trade list, a listing of the largest retailers in the country by sales, are non state-owned enterprises, demonstrating their overpowering market strength.
• New trends are emerging in retail. Electronics retail chains have taken the lead. Their sales for the first half of the year have increased by over 50% compared with last year. In one case growth exceeded 100%. This is much faster than the average growth of retail chains and the franchise sectors.
China's electronics retail has already produced its first billionaire. On 50-100% annual growth rates Huang can expect to be worth US$10 billion within 5 to 10 years. But even with these fantastic growth rates, GoMe will still only hold 10% of the market, which is still less than Wal-mart in the US today.
• Private retailers are making strides towards the capital markets. Several of the largest retailers, including Wumart, GoMe, and Suning, have turned to the domestic and international capital markets. Their profits give them appeal to investors, and this financing will help maintain their growth rates as well as make them marketable and transparent. What we are seeing now is just a start. There will be plenty more coming to market in the near future.
• Finally, private retailers have the solid support of the government. Of the twenty government-supported retailers, four are privately owned, and a further two are a mixture of both private and state ownership. Using government resources to support private retailers should be questioned, because a government's resources ought to belong to the public - such resources should not be used to support private enterprises. Nevertheless these four private retailers hold important positions in the market, and the government's support is being given to these retailers from the point of view of the development of the retail industry as a whole. With this support, coming at the point when retail is being opened in accordance with the WTO agreement, domestic retailers will have considerable muscle to flex.
