Bulls Hit the Shops in China

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As the overall economy continues to grow strongly – GDP was reported to be up 9 percent in the past quarter, the 10th in a row at these levels the retail sector has outperformed. Retail sales rose 12.8 percent year-on-year in October, and could reach RMB6.1 trillion for the year as a whole (up 13 percent).

The bull market for retail is expected to continue, as the government tries to boost consumption and as incomes continue to rise – urban workers were reported to have had 9.8 percent more disposable income in the first nine months than a year earlier, while rural incomes rose 11.5 percent. Predictions are that sales will rise a further 12 percent, to RMB6.8 trillion in 2006.

Foreign retailers at both ends of the spectrum, including LVMH and Wal-Mart, have been attracted to the party. LVMH reported that sales of its luxury brands are rising “exponentially”, while Wal-Mart, the mass-market leader, plans to open another 13 stores in China next year, bringing the total to 62.

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