THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE

BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S.

GOVERNMENT POLICY

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Date:

GAIN Report Number:

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Report Highlights:

This report discusses the opportunities and constraints for U.S. food and beverage products in the

retail sector of Southwest China. U.S. constituents may request a curtesy copy of the full report

by emailing atochengdu@fas.usda.gov.

Voluntary Internal

04/08/2016

Chengdu

The People’s Republic of China

Retail Foods in Southwest China

Exporter Guide, Retail Foods

Morgan Haas, Agricultural Consul

Staff

Table of Contents

Section I: Market Summary: Southwest China

A. Regional Profiles A.1 Sichuan A.2 Chongqing Municipality A.3 Yunnan A.4 Guiyang A.5 Tibet Section II: Major Food Retailers in Southwest China

Large “Lifestyle” Retailers with Central Procurement

Large “Lifestyle” Retailers with Local Procurement

Other Large Notable Retailers with Central Procurement

Other Large Notable Retailers with Local Procurement

Local Convenience Store Chains

Specialty Stores

E-Commerce

TV Shopping Network Section III: Marketing U.S. Retail Products in Southwest China

Find a Buyer

Trade Shows

Penetrating Direct to Southwest China Appendix

Executive Summary

With a burgeoning middle class and uninterrupted economic growth, Southwest China remains a steadfast market for U.S. agricultural exports. This report focuses on the region’s retail food sector. The region’s rapid urbanization rates are moving families away from subsistence farming and into the supermarkets, but what are the major supermarkets in Southwest China? Who is shopping at which markets? What types of imports are most successful in this region? What are the primary entry points for U.S. goods? These are some of the questions this report answers in an attempt to paint a clearer picture of this region’s retail food sector. As the Southwest region of China’s population moves away from subsistence farming and into urban areas, they have more exposure to low-end retailers, high-end retailers, and specialty stores with more foreign imports. With food safety as a constant concern in China, the U.S. is seen as a trusted place of origin for food and beverage shoppers. Thus, U.S. agricultural exporters should actively maintain and promote this reputation. Older shoppers in the region tend to be more frugal with their money, and may prefer to continue shopping at traditional wet markets. However younger shoppers are more willing to spend extra for better quality, and, therefore, may prefer to consume U.S. imports. The region’s overall urbanization rate increase from 2008 to 2012 was over 18% with Tibet at the lower-bound (4%) and Guizhou at the higher-bound (25%). When deciding which parts of Southwest China to enter, factors like disposable income and urban population size are critical, but must be considered in relation to other parts of the sub-region and not in relation to the coastal region. Getting products placed in high-end retail and specialty markets is important; however developing relationships with larger chains that have fewer imports gives the import greater brand recognition with an entirely different income bracket. Chinese consumer’s larger trend of buying more products online should be considered in order to answer questions like: How can U.S. agricultural product exporters target regions like Southwest China with only an online presence in the area? Or, which foreign imports can benefit if the O2O movement significantly expands rural parts of China?

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Guizhou

Sichuan

Tibet

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I. Southwest China

Southwest China is the fastest growing regional market for food and beverage expenditures in China. The Southwest consists of Sichuan, Yunnan, and Guizhou Provinces, the Chongqing Municipality, and the Tibet Autonomous Region, totaling a gross domestic product (GDP) just smaller than Canada’s and a population of nearly 200 million people. The region is also home to above-average consumption of food and beverages as the population chooses to spend a large portion of their disposable income in this category. The local food culture is multi-faceted due to significant minority populations, but it is still most famous for hot and spicy Sichuan cuisine. Demand for imported food as well as total cash expenditures on food among Southwest China consumers has risen in step with disposable incomes. Regional consumer preferences for imported foodstuffs are similar to other parts of China. Imported products, especially those from developed countries, provide the consumer innate assurances of safety and quality as well as the sense of an elevated lifestyle. Southwest China total urban household spending on foodstuffs rose roughly 20 percent in 2012. How?

1. The urban population grew 4.9%. This translates to four million new urban residents annually – equivalent to the size of the San Francisco Metropolitan Area.

2. Increased economic prosperity in Southwest China has driven household disposable incomes 13.5% higher, which in turn drove growth of urban household cash expenditures on food of 11.8%.

In the future, China should be expected to maintain double-digit growth in urban food demand despite slowing urban household cash expenditures on food since China’s urbanization policy is likely to continue relatively unchanged. Southwest China’s economy, while unlikely to maintain its reported double-digit GDP growth, is still positioned to lead national GDP growth as development continues to move inland under the government’s “Go West” policy. Also, both China’s “Go West” and urbanization policies support increased urban populations in Southwest China. First, regional economic development is holding more of the local workforce in Southwest China rather than driving migration to the coast. Second, Southwest China’s urbanization rate remains a laggard at 46% when compared to the national average of 55%. The impact of China’s urbanization policy cannot be understated as Southwest urban households also outspend their rural counterparts by 150 percent or a 5:2 margin on foodstuffs. Improved infrastructure and logistics that will need to come with increasing food demand pressures will directly aid access to and competiveness of U.S. foodstuffs.

Southwest China’s major urban centers (in ranked order of importance) are Chengdu, Chongqing, Kunming, and Guiyang, all of which are considered second-tier cities and offer reasonable access to imported retail foodstuffs. Combined, these city centers are equivalent to Shanghai in population and urbanization rate as well as account for 25 percent of Southwest China’s total urban population. These cities also serve as distribution hubs, including for imported products, in their respective provinces. In recent years, improved living standards have resulted in imported products beginning to penetrate deeper into Southwest China’s 3rd and 4th tier cities, where a significant number of local retailers also now have devoted imported food sections. However, where supply chain constraints in brick-and-mortar retail continues to limit choices for Southwest China urbanites – and especially for the 75 percent of urbanites who reside outside Chengdu, Chongqing, Kunming, and Guiyang – consumers are increasingly turning to e-Commerce to purchase food and beverages.

Figure 1: Key Statistics for Southwest China by Region, 2012

Region

Population Per Capita Per Urban Household (Per Capita)

Total Urban GDP Retail Sales

Disposable Income

Cash Expenditures on Food

million million ‘12/11Δ % Total US$ US$ US$ ‘12/11Δ US$ ‘12/11Δ

China (CN) 1,354.04 711.82 3.0% 53% $6,157 $2,177 $3,937 12.6% $968 (323) 9.7%

Southwest China (SW) 194.72 83.69 4.9% 43% $4,374 $1,358 $3,328 13.5% $957 (333) 11.8%

Provinces

Sichuan (SC) 80.76 35.16 3.9% 44% $4,745 $1,589 $3,254 13.5% $973 (342) 9.0%

Chongqing (CQ) 29.45 16.78 3.7% 57% $6,236 $1,898 $3,681 13.4% $1,101 (416) 17.5%

Yunnan (YN) 46.59 18.36 6.8% 39% $3,557 $1,045 $3,377 13.5% $876 (269) 13.9%

Guizhou (GZ) 34.84 12.69 4.2% 36% $3,152 $806 $2,997 13.3% $801 (258) 9.4%

Tibet (TB) 3.08 0.70 0.2% 23% $3,676 $1,139 $2,889 11.3% $884 (217) 6.4%

Shanghai (SH) 23.80 21.26 1.8% 89% $13,682 $4,589 $6,482 11.6% $1,547 (663) 9.1%

Beijing (BJ) 20.69 17.84 2.7% 86% $14,018 $5,345 $5,882 11.6% $1,207 (517) 9.8%

Greater City Regions

Chengdu, Sichuan (CD) 14.18 9.70 2.9% 68% $9,234 $3,529 $4,261 15.4% $1,101 (386) 9.4%

Kunming, Yunnan (KM) 6.53 4.43 3.5% 68% $7,413 $3,666 N/A N/A N/A N/A

Guiyang, Guizhou (GY) 4.45 2.95 0.1% 67% $6,198 $2,669 $3,493 12.2% $800 (258) 9.4%

City Centers

Chengdu Beltway1 8.48 7.38 3.7% 87% $13,369 $5,169 N/A N/A N/A N/A

Chongqing MDEC2 7.95 6.93 4.8% 87% $9,985 $4,937 N/A N/A N/A N/A

Kunming Beltway3 3.63 3.30 3.1% 91% $9,868 $5,693 N/A N/A N/A N/A

Guiyang Beltway4 3.04 2.53 0.0% 83% $6,890 $3,514 N/A N/A N/A N/A

Sources: China Statistical Yearbooks 2013, 2012, and Respective Regional Statistical Yearbooks Exchange Rate: 1 USD = 6.24 Chinese Yuan; Persons per Urban Household: SC - 2.85 persons, CQ - 2.65, YN - 3.26, GZ - 3.1, TB - 4.07, CN - 3.02; BJ - 2.53, and SH - 2.35. 1 Chengdu Beltway (11 districts and counties adjacent to but not necessarily entirely within the city beltway): Jinjiang, Qingyang, Jinniu,

Wuhou, Chenghua, Longquanyi, Qingbaijiang, Xindu, Wenjiang, Shuangliu, and Pixian; Urban population at the district level was not reported by Sichuan province. Urban population figures are ATO estimates based on registered hukou status, which tend to undercount urban populations by 10-15 percent.

2 Chongqing Metropolitan Developed Economic Circle: Yuzhong, Dadukou, Jiangbei, Sapingba, Jiulongpo, Nan’an, Beibei, Yubei, and Banan

3 Kunming Beltway (5 districts and counties): Chenggong, Wuhua, Danlong, Guandu, and Xishan. Urban population figures are ATO estimates based on registered hukou status, which tend to undercount urban populations by 10-15 percent.

4 Guiyang Beltway (6 districts and counties): Nanming, Yunyan, Huaxi, Wudang, Baiyun, and Xiaohe

Sichuan Sichuan is home to more than 80 million people – 40% of Southwest China’s total population. Chengdu is Sichuan’s political, cultural, and economic center. It is also the largest as well as most affluent and international city in Southwest China. Thus, Chengdu offers the greatest opportunity for imported retail products in Southwest China. Chengdu’s city center of 7.4 million urban residents is one-third the size of Shanghai but boasts better per capita retail sales. Chengdu is particularly passionate about food, and in fact is Asia’s only UNESCO City of Gastronomy. Imported foods are found in a large number of national retail outlets located in Chengdu, including Ito Yokado, Ole, Great, Treat, Wang Fu Jing, and several others. They are also found in a large number of specialty stores, such as Sabrina’s, Momo’s, and Sweetrip. Recently, Chengdu’s local retailers, particularly convenience stores, have also expressed interest in imported foodstuffs, including Wowo and Hongqi. While limited, imported food and beverages are in or believed to be in all Sichuan greater city regions except Garzê and Ngawa. RT-Mart, Wal-mart, and Chongqing Department Store are currently the best-positioned brick-and-mortar retailers to facilitate sales of US foodstuffs in Sichuan’s 3rd and 4th tier cities. With the exception of eCommerce and national retailers with central procurement (e.g., Walmart, RT-Mart, and Carrefour), imported products in Sichuan are sourced primarily through Chengdu sub-distributors with the exception of Panzhihua and Liangshan, which can be better serviced via Kunming traders. Since Chengdu is not located on a waterway, it remains heavily reliant on coastal importers to source U.S. products. Luzhou and to a lesser extent Yibin offer Sichuan waterway access on the Yangtze River; however, water levels prevent significant trade volumes. Low volumes are imported via air to Chengdu; however, Chengdu’s increasing number of international flights, including from San Francisco, have the potential to open direct trade for high-value, perishable products.

1 Garzê

2 Ngawa

3 Mianyang

4 Guangyuan

5 Nanchong

6 Bazhong

7 Dazhou

8 Ya'an

9 Chengdu

10 Deyang

11 Suining

12 Guang'an

13 Meishan

14 Ziyang

15 Leshan

16 Neijiang

17 Zigong

18 Yibin

19 Luzhou

20 Liangshan

21 Panzhihua

Chongqing The Chongqing Municipality is mistakenly referred to as a “megacity” with a total population of nearly 30 million. However, the Municipality is more similar to a small province than a city as it reports directly to the central government, covers expansive territory, and has several non-contiguous urban areas. China created the Municipality in 1997 by splitting off five eastern city regions of Sichuan. Its current urban center is known as the Metropolitan Developed Economic Circle (MDEC) and is an approximate of the former Chongqing city region. The MDEC has an urban population of 6.9 million – a close second behind Chengdu’s city center. Also, total retail sales are 90% of Chengdu’s city center. However, relative to Chengdu and Kunming, the Chongqing consumer is typically considered old-fashioned and less welcoming to imported products. The best retail outlets for U.S. products are Ole and Far East. Opportunities outside the MDEC are minimal and mostly concentrated in the West Chongqing Economic Corridor, including Jiangjin, Hechuan, and Yongchuan districts. Wanzhou district, located in the Northeast, offers the only other opportunity of note. Chongqing is located on the Yangzte River downstream from Luzhou but still upstream from Wuhan, where imported containers often must change to smaller boats. Nonetheless, Chongqing is Southwest China’s best route for direct trade. Municipal officials are active supporters of imports as Chongqing boasts a heavy trade surplus, resulting in empty backhauls. Chongqing’s total agricultural imports grew from $455 million in 2011 to $907 million in 2012. Yunnan Yunnan is an ethnically diverse province with many minorities. It borders Burma, Laos, and Vietnam to the south and therefore has strong trade ties with Southeast Asia. Kunming is Yunnan’s capital and largest city. Like Chengdu, Kunming offers a similar openness to international products and culture. Kunming’s city center totals 3.3 million urban residents and also tops Shanghai’s per capita retail sales. Kunming’s city center total retail sales are 47% the size of Chengdu’s. The best retail outlets for U.S. products are Parkson and Gingko. Imported food products are known or believed to be available, albeit in in limited quantities, in Yunnan’s 3rd and 4th tier cities, including Qujing, Chuxiong, Dali, Baoshan, Mangshi (Dehong), Jinghong (Xishuangbanna), Hekou (Honghe), and Yuxi. Kunming acts as a distribution point for most imported retail products in Yunnan. However, significant volumes of products imported under the China-ASEAN FTA are available directly across the border,

1 West Chongqing Economic Corridor

2 Metropolitan

Developed Economic Circle

3 Ecological

Economic Zone in Three Gorges Reservoir Area

3a Northeast 3b Southeast

1 Kunming

2 Qujing

3 Yuxi

4 Baoshan

5 Zhaotong

6 Lijiang

7 Pu'er

8 Lincang

9 Dehong 10 Nujiang 11 Dêqên 12 Dali 13 Chuxiong 14 Honghe 15 Wenshan 16 Xishuangbanna

2 1

3

3a

3b

particularly at Hekou. In addition to its own overland crossings to Burma, Laos, and Vietnam, Kunming is also a relatively short distance to China’s southern ports in Guangxi and Guangdong provinces. Guizhou Guizhou is one of China’s poorest and least developed provinces, featuring a per capita GDP half that of China’s national average. However, pockets of wealth are present and are demonstrating demand for U.S. retail food and beverages. The greatest opportunity is in the provincial capital Guiyang, where the city center holds 2.5 million urban residents. Guiyang’s city center total retail sales are 24% the size of Chengdu’s. High-end retail outlets are limited to Xingli Department Stores. Opportunities in Guizhou’s 3rd and 4th tier cities are very limited, with best prospects likely in Zunyi via major retailers Vanguard and Xingli. Imported food and beverages are sourced into Guizhou not only from China’s coast but also through sub-distributors in Chongqing, which lies just to the north. Tibet Autonomous Region (Tibet) Tibet offers U.S. food and beverages very few opportunities in the retail sector. Tibet is China’s most remote and almost certainly smallest retail market for imported products. Tibet has only 70,000 urban residents. Lhasa as a whole amasses less than 5% of Chengdu’s city center retail sales. Imported food and beverages destined for Tibet flow through Chengdu distribution.

1 Bijie 2 Zunyi 3 Tongren 4 Liupanshui 5 Anshun 6 Guiyang 7 Qianxi'nan 8 Qiannan 9 Qiandongnan

1 Ngari 2 Nagqu 3 Chamdo 4 Shigatse 5 Lhasa 6 Shannan 7 Nyingchi

II. Major Food Retailers in Southwest China Increasing urban populations have pushed retailer expansion, and rising per capita disposable incomes of urban dwellers is both moving a larger portion of sales from open air markets and mom-and-pop general stores to chain stores as well as resulting in an increasing share of local retailers introducing imported food sections into existing stores. The most luxurious retail stores are considered “lifestyle” stores and feature the greatest variety of imported food products. However, selection, even in lifestyle retailers in Southwest China is still limited compared to first-tier cities Shanghai, Beijing, and Guangzhou. Affluent consumers are also turning to eCommerce for improved selection, affordability, and convenience. TV shopping networks remain a viable but distant retail sub-sector for select products (e.g., health products) targeted toward a specific audience (e.g., middle-aged to elderly consumers). Regardless, a majority of the population (mostly rural and recently urbanized population) has yet to even enter the mainstream retail chains. And while the recently urbanized population is not a likely purchaser of imported goods, the next generation is likely to be.

Sources: 2013 Statistical Yearbooks for Chongqing, Guizhou, and Sichuan. Kunming and Tibet not available.

A. Large Notable “Lifestyle” Retailers with Central Procurement Outside Southwest China CR Vanguard (华润万家超级市场有限公司) operates supermarket chains under the CR Vanguard name

and higher-end brands like Ole’( 精品超市) and blt (精品超市). Chengdu has one CR Vanguard Hypermarket, two Ole’ Premium Supermarkets, and one blt Premium Supermarket. Yibin, in Sichuan, has one hypermarket, as does Zunyi in Guizhou and Kunming in Yunnan. Chongqing has two CR

Vanguard Convenience Stores (华润万家便利超市), five hypermarkets, and three Ole’ Premium Supermarkets. Guiyang has one Ole’ Premium Supermarket.

BHG (Beijing Hualian Group or 北京华联集团) is a Beijing-based company with two business units in the food retail sector. One is BHG Marketplace and the other is BHG Lifestyle. BHG Marketplace tends to be larger than BHG Lifestyle. Both stores have an abundance of imports; however the company

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Figure 5: Southwest China: Annual Urban Household Disposable Income by Percentile, 2012

Chongqing

Guizhou

Sichuan

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Affluent

Mass Middle Class

claims that most of the international foods come from Italy, France, and Japan. Chengdu has one BHG Marketplace and three BHG Lifestyles. Suining and Panzhihua, also in Sichuan, have two and three BHG Lifestyles respectively. Zunyi and Guiyang each have two BHG Lifestyles and Anshun has one. Chongqing also has one BHG Lifestyle. Guiyang and Qujing (Yunnan) have one BHG Marketplace each.

B. Large Notable “Lifestyle” Retailers with Local Procurement

Ito-Yokado (华堂) is a Japanese hypermarket with arguably the largest middle class market share in Chengdu, featuring seven stores. Ito-Yokado opened its first store outside Japan in Chengdu’s Chunxi Road shopping district.

A.S. Watson Group (屈臣氏集團) is based in Hong Kong with a

strong retailer portfolio in Chengdu, including: Park n’ Shop (百

佳), TREAT, and GREAT supermarkets. TREAT and GREAT have a relatively larger share of imported food products with GREAT being the company’s flagship store in Mainland China. TREAT reportedly has over 30,000 items in their Chengdu store, of which 15% are

imported. Watson’s (屈臣氏) is a personal care convenience chain which also sells healthy snack foods.

Parkson (百盛) is a Malaysian department store chain, around 60%of which have supermarkets. Chengdu has three Parkson’s, with three elsewhere in Sichuan, Chongqing has five, and Yunnan has two. Management is highly variable, with Kunming’s store’s reported to be the best.

Far Eastern (远东百货) is a Taiwanese department store that houses a supermarket. Chengdu has three stores, and Chongqing has two, but otherwise its presence in the region is minimal. Far Eastern does not currently offer any direct imports.

A. Other Notable Large Retailers with Central Procurement Outside Southwest China

Wal-mart (沃尔玛公司) operates 415 stores in China, including 19 Trust-Mart Hypermarkets which the company bought in 2012. Wal-Mart also operates 20 distibution centers in China and focues on sourcing products locally. In 2015, the company took ownership of Yihaodian, a Chinese eCommerce platform, to extend its reach to Chinese online consumers. Between 2015-2017, Wal-Mart plans to open 115 new stores in China. The company currently operates 2 stores in Chengdu and 1 each in Mianyang, Yibin, Deyang, Dazhou, Suining, Xichang, Zigong, Leshan, Panzhihuia and Jiangyou in Sichuan; 6 stores in Kunming, and 1 each in Yuxi, Dali, Qujing, and Gejiu in Yunnan; 10 in Chongqing; and 3 stores in Guiyang, 2 in Zunyi, and 1 in Liupanshui in Guizhou.

Carrefour (家乐福), a French retailer, operates over 230 stores in China, including 14 in Chengdu, 1 in Dazhou, 1 in Nanchong, 1 in Suining, 1 in Ziyang, and 1 in Qionglai in Sichuan; 7 in Chongqing; 6 in Kunming and 1 in Qujing in Yunnan; and 1 in Guiyang. Carrefour hypermarkets offer a good selection of imported products. In the face of slowing consumer spending, Carrefour plans to enhance its eCommerce presence and pilot smaller, more localized stores as an alternative to its hypermarkets.

Auchan (欧尚), a French retailer, also has strong presence in China, operating around 230 hypermarkets nationwide. Of these, only four are in the region, all in Chengdu. Auchan operates its own online retail platform specializing in wines, including a number of wines imported from the United States.

Metro (麦德龙) is a German wholesaler currently operating over 80 stores in China. It targets professional customers such as hotels, restaurants, and traders. Chongqing and Chengdu each have two Metro stores, while Kunming has 1. B. Other Notable Large Retailers with Local Procurement

New Century Department Stores (新世纪百货) house more than 70 CBest (重百超市) supermarkets in Chongqing. Both stores are owned by Chongqing General Trading. CBest also has eight stores in Sichuan and one in Guizhou (Zunyi). The stores offered very few imports until recently, when they began doing cross-border e-commerce.

YongHui (永辉超市) is a private Chinese supermarket chain headquartered in Fujian and operating nearly 500 stores throughout China. It currently has 92 outlets in Chongqing, 25 in Sichuan, and eight in Guizhou. The company focuses on providing fresh agricultural products in its stores and uses both central and local procurement. C. Local Convenience Store Chains

Wowo (喔喔) (a.k.a. Wowo Sichuan Convenience Chain Store Management Com., Ltd.) is a Chengdu-based convience store chain with more than 400 stores currently in Chengdu, and plans to expand operations to Chongqing and Kunming in the near future. In May 2014, the store appeared to carry only a few U.S. liquors, Chilean Wine, Taiwanese juices, and various imported snack foods, although Wowo’s CEO has expressed on several occasions that the company would like to increase the presence of imported products. Wowo has a centralized purchasing system. The average customer of these stores is usually middle class individuals from the ages 25 to 35. Most of these stores are open 24 hours a day. Hongqi Chain Store (a.k.a. Chengdu Hongqi Chain Co., Ltd.) is a Chengdu-based company, founded in 2010, which has more than 1200 stores in Sichuan – primarily in Chengdu. The company operates a chain of medium-sized convenience stores that sell packaged food, cigarettes, wines, fresh produce, etc. The company plans to open another 170 new stores, develop e-commerce capabilities (reportedly with Suning Commerce Group), and explore creating its own brands. A vast majority of the products at Hongqi are domestically produced. A recent survey in Chengdu of goods at Hongqi only found Taiwanese fruit drinks (some were milk-based), and two Australian wine brands. Hongqi stores are good at taking on different roles in different

locations. Some stores include a Hongqi Express section, which serves Chinese-style lunches in areas with many large office buildings and employees looking to eat out. This brings younger middle-class customers into the market from 11:30am to 2:00pm. However, Hongqi’s average customer ranges from 25 to 50 years old. The goods are slightly cheaper than convenience stores, so this brings in more frugal middle-aged customers, and the store offers a fairly large selection of rice and cooking oil, which are staples for any Chinese household. Getting U.S. goods into this chain store might be more of a challenge considering its current lack of imports. However, given Hongqi’s strong presence in Sichuan, it could be a great opportunity to increase brand recognition at an integral regional retailer.

D. Specialty Stores Aside from traditional retail markets, there are also many specialty stores in Southwest China. Chocolate and Confectionary For chocolate and confectionary, a Chengdu-based chain called Sweetrip has established a strong presence the region. Sweetrip has more than 300 stores nationally with more than a thousand products from 40 different countries. The company also carries a selection of imported wines. Fruit

Regarding fruit stores in the region, YunPoPo (云婆婆) in Yunnan is a

relatively large retailer of foreign goods and produce. Freshgo (新鲜

果子), based out of Chengdu, has at least nine stores in that city, having established itself as a safe alternative to local fruit retailers. The chain also carries nuts, seeds, and dried fruits. Average customers at these chain stores tend to be younger people more concerned about food safety or seeking a wider selection of fruits. Dairy Small health food stores that specialize in milk-related products are starting to crop up around Chengdu. Some stores will specialize in milk/milk powder specifically from one country (e.g. New Zealand), while others will focus on infant products in general. Most products at these stores are imported.

Independent Grocers Small import grocery stores that cater primarily to expatriates who are looking for “hard-to-find imports” also exist in Southwest China. Sabrina’s Country Store and Vaikee Imported Goods are two examples this type of retailer in Chengdu. Sabrina’s Country Store has two shops in Chengdu with everything from imported candy bars to deli meats and cheeses. Vaikee Imported Goods has one shop, and is trying to expand its online presence with an option for delivery. These types of grocery stores are small enough for regular customers to establish a relationship with the owner/manager in order to directly communicate which goods foreigners in China are having trouble finding.

Momo (么么生活超市) is a fast-growing specialty/boutique chain store in Chengdu specializing in imported foods. They currently have eight stores in the city, but plan to open 11 by the end of 2014 and 20 by the end of 2015.

Source: JD.com

JD.com Distribution Network in Southwest China

Genuine Foods (亿百葩鲜) is similar to Momo is size, however has fewer stores in the region. They are based out of Shanghai, but currently have one store in Chongqing and one in Chengdu. Alcohol The major retailers who specialize in alcohol in Southwest China are: 1919 with nearly 40 stores in

Sichuan and 156 stores in the region; Shangceng Liquor Store (上层酒行) with about 10 stores in

Chengdu; Sichuan Chuanshang Liquor Chain Store (四川省川商酒业连锁有限公司) with over 20 stores

in Chengdu; Aussino (富隆) with 13 stores; VATS Liquor Chain Store (华致酒行连锁管理股份有限公司)

with 45 stores; and Everwines (咏萄) with 3 stores in Chengdu. E. E-commerce E-commerce represents Southwest China’s fastest growing subsector within food and beverage retail. In 2014, China’s online retail market for all goods was valued at $2 trillion, with online-to-offline e-commerce representing 25% of the total1. Online sales of fresh produce alone are expected to grow to 40 billion RMB ($6.42 billion USD) by 2018. Consumers perceive several online-to-offline platforms as more trustworthy, convenient, and affordable than traditional brick-and-mortar retail. They are especially important in third and fourth-tier cities, where retailers have limited imported food sections. E-commerce platforms generate massive sales on Chinese shopping holidays such as Singles Day (11/11) and 12/12. In 2015, Alibaba alone generated $14.3 billion on Singles Day2. National online retailers have a stronger presence in Southwest China than local online retailers. JD.com’s Southwest China fulfillment center is based out of Chengdu, which is also home to one of its major customer service centers. Alibaba-owned Tmall, Walmart-owned Yihaodian, and Cofco-owned Womai.com also provide Southwest China consumers access to imported foods and beverages. China’s largest delivery company, Shunfeng Express, for example, picks the produce from the farm themselves and delivers everything directly to the customer. While these platforms offer imported fresh food, some may not distribute these products within Southwest China. For example, Womai.com only delivers its fresh products in coastal cities. Some national specialty online retailers like Fruit Day do deliver in Southwest China, including some U.S. imports, but are limited to a few types of products. Local E-Commerce

In August 2012, Chongqing was approved to be the pilot city of cross-border trade e-commerce services by National Development and Reform Commission and China Customs ( 7 in total now, the other five are Shanghai, Hangzhou, Zhengzhou, Guangzhou, Shenzhen & Ningbo). The state

1“《2014 年度中国电子商务市场数据监测报告》发布” http://www.56ec.org.cn/news/hyzx/2015-04-

08/1357.html 2 “Alibaba Tops Singles’ Day Sales Record Despite Slowing China Economy,” The Wall Street Journal, Nov. 11 2015.

owned Chongqing cross-border trade e-commerce service platform http://www.cqkjs.com/ has started its operation in January 28th, 2014. This platform provides one stop service for cross-border e-commerce companies who are willing to do the registration in Chongqing and import products through Chongqing port. Consumers can easily find the name of all cross-border e-commerce companies on this website. With the government support, three major start-up cross-border e-commerce companies were set up in Chongqing and all of them have government backgrounds:

www.igetmall.com: Igetmall is owned by Chongqing Free Trade Zone Committee. Relying on its existing warehousing and logistics resources, it provides customs clearance, warehousing, sorting, packaging etc.

www.sjgo.com : This e-commerce platform was operated by Chongqing General Trading E-Commerce Co., Ltd., which is a subsidiary of Chongqing General Trading (Group) Co., Ltd. As the biggest state owned retail group in Chongqing and the 7th largest retail enterprise nationwide, Chongqing General Trading has high expectations for the development of this platform. At current stage, the monthly sales revenue of sigo .com is about $ 2.3 million.

www.xgqqg.com : This platform was operated by Chongqing Yuou. Yuou is initiated by Chongqing Foreign Economic and Trade Group, with the support of the state council. xgqqg.com is pure cross-border e-commerce platform and nothing is related with general trading. Current monthly sales revenue is about $1.2 million.

Chengdu has several local food-related e-commerce platforms, including Kuaijiankang. A local dairy company operates the platform and, relying on its well-established delivery system, it provides one hour express delivery service to local customers. Kuaijiankang offers a variety of products, from dairy to fruit

to meat. However, for online platforms without pre-established distribution networks, delivery is a big barrier. Due to the limited cold chain system in Southwest China, selling fresh and frozen products on-line is quite difficult in this region. Moreover, local e-commerce platforms lack price advantage because most imported food products clear customs in the coastal areas. Another Chengdu online food retailer, Sanjialiu, is experimenting with new delivery methods. Customers who purchase frozen food online have the option of picking it up at one of the company’s free-standing refrigeration units currently installed in several Chengdu neighborhoods. These freezers operate like vending machines, keeping the food frozen until the customer arrives to pick it up by keying in their order information. Which SW China retailers use online platforms? C-Best (Chongqing) Xingli (Guiyang)

Renhe (Chengdu) Hongqi (Chengdu) – App only Chengdu ATO’s networking with the local wine industry at various wine events shows that the three

most popular wine buying websites in the region are jiu.womai.com (我买酒), yesmywine.com (也买

酒), and wine9.com (品尚红酒). As one can see in the following section, online retail is becoming important force in the Chinese market. Price Comparison: Yihaodian vs. Carrefour

Source: Kantar Retail China Online vs. Offline Pricing Study (2013)

F. TV Shopping Network

The major television shopping network in the region is one called Dongfang CJ (东方购物), with customers who are mostly older, but of a higher income bracket.

III. Marketing U.S. Products in Southwest China A. Find a Buyer With some growing exceptions, most U.S. products sold to Southwest China consumers are still sourced via sub-distributors. These Southwest China sub-distributors generally prefer to buy from coastal importers rather than buying from U.S. exporters. Why?

Being land-locked, Southwest China presents logistical difficulties to direct trade opportunities, some of which are precluded by local government regulations.

Southwest China volumes are significantly smaller than 1st tier cities Beijing, Shanghai, and Guangzhou, and are expected to remain so for the foreseeable future. Therefore, importing full containers presents a challenge to inventory turn-over.

Importing direct presents increased financial risk and paperwork hassles to current sub-distributors.

The above approach, while often the most successful, has known faults.

Sub-distributors are at the mercy of the importer’s inventory management and sound financial standing. This often results in local sub-distributors and retailers complaining about unreliable U.S. supplies.

Additional handling fees and mark-up costs are passed on to the retailer and consumer, which ultimately lower sales.

There are exceptions to the above rule.

A limited number of Southwest distributors do have purchasing departments and/or import agents they work through on the coast. However, these individuals are often particularly price-conscious and prefer to work directly with manufacturers rather than consolidators.

Some large retailers located in Southwest China can purchase directly from a central purchasing department located on the coast, including Auchan, Carrefour, and Metro (Shanghai); CRV and Wal-Mart (Shenzhen); and Yonghui (Fujian).

As in other parts of China, business culture is often relationship-based and requires personal meetings. ATO Chengdu routinely leads Southwest China distributor delegations to visit USDA endorsed trade shows, such as SIAL and FHC in Shanghai. However, Southwest China distributors rarely exhibit, so they can be difficult to find on your own. Southwest China distributors also seldom attend U.S. trade shows. Therefore, if U.S. exporters do not plan to actively seek out new channels within inland China, they should be prepared to provide adequate marketing support to current import partners as brand ambassadors. Southwest China events may be used as successful platforms to meet regional distributors if done correctly. International exhibitors often receive discounted or free booth space just for participating in regional trade shows. However, the ATO recommends meetings be scheduled in advance with local distributors and retailers rather than relying on the trade show alone to attract quality buyers to one’s booth. Most Southwest food and beverage trade shows rarely fulfill promises of a professional business-to-business environment. To varying degrees, most are ultimately shopping festivals for the

Exporter Importer Sub-distributor Retailer Consumer

general public by the last day. On the plus side, they do offer a central meeting point to meet multiple contacts in an abbreviated period of time. B. Trade Shows The most important Southwest China trade events where U.S. food and beverage may be featured including the following:

Sichuan Spring Festival Fair, Chengdu

Chinese name: 新春年货购物节 Official website: < http://xcnhj.asiaexpogroup.com/ > Location: Chengdu Time: January Description: In January 2016, the Sichuan Chamber of Commerce will hold its 20th annual Spring Festival Fair. The exhibition includes food and beverages, as well as household furniture and appliances, clothing, jewelry, and other gifts. Products within the food category included imported food, organic food, frozen and packaged products, candies and preserved fruits, alcoholic beverages, and food processing machinery and packaging materials. In 2015, the event occupied 80,000 square meters with over 2,100 companies from 47 countries and 34 Chinese cities and provinces exhibiting nearly 200,000 different products. Organizers estimated the event generated nearly $652 million in sales. China Food and Drinks Fair (Tangjiuhui)

Chinese name: 全国糖酒会商品交易会 《糖酒会》 Official website: http://www.qgtjh.com/ Location: Chengdu Time: March Description: The China Food and Drinks Fair (CFDF), while featuring all food and beverage categories, is mostly prominently known as China’s most economically important trade show for wine. CFDF’s formal Spring 2014 event occupied 125,000 square-meters, featured 2,653 domestic and international exhibitors, and generated an estimated $3.3 billion in sales as a result of the event. This excludes a significant portion of sales generated from the various and widely popular pre-show activities held days before the event in Chengdu. Organizers estimated total wine, beer, and spirit sales at $1.81 billion; food and beverage sales at $1.2 billion; ingredients and condiments sales at 180 million; and food machinery and packaging sales at $140 million. The USDA endorsed the China Food and Drinks Fair beginning in 2015. HOTELEX Chengdu Chinese name: Official Website: Location: Chengdu Time: August Description: HOTELEX debuted in Chengdu in 2014 after 24 successful years in Shanghai. The show features catering equipment and other hotel appliances and furnishings, as well as food and beverage categories such as coffee and tea, bakery and ice cream, and wine and spirits. In

2015, show organizers reported the show occupied 25,000 square meters and attracted over 10,000 industry professionals and buyers. HOTELEX includes international pavilions for non-Chinese companies. Show events include a variety of food and beverage competitions in areas such as bartending and gelato and pizza making. China Food Expo

Chinese name: 中国食品博览会 Official Website: Location: Chengdu Time: September Description: The China Food Expo covers an exhibition area of 80,000 square meters and features areas dedicated to meat and aquatic products, wines and beverages, grains and oils, food materials and ingredients, food catering equipment, and third party services. This fair focuses on small and medium enterprises and enables them to apply to exhibit at the show for free. Western China (Sichuan) Import Expo & International Investment Fair

Chinese name: 中国西部国际博览会 Official Website: http://import.wcif.cn/EN/ Location: Chengdu Time: October Description: The Western China International Fair has been held every year since 2000, when it was inaugurated to implement the Western China Development Strategy put forward by the Chinese Central Government. In 2013, the Western Expo took up 180,000 square meters of exhibit space and included representatives from 72 countries and over 4,000 enterprises. Founded by the Chinese government, this expo is an important platform for investment promotion and trade cooperation in Western China. In 2013, participants signed 462 new investment project agreements. In 2014, the Chinese government decided the Western China International Fair would be held every two years, making room for the Western China Import Expo and International Investment Fair during the off years. While this fair emphasizes technology and equipment, it also features international goods such as dairy products, alcohol, and other daily consumption goods. Sichuan Agricultural Expo & Chengdu International Urban Modern Agricultural Expo

Chinese Name: 四川农业博览会暨成都国际都市现代农业博览会 Official Website: http://agr.wcif.cn/EN/12149/index.shtml Location: Chengdu Time: November Description: This agricultural expo features modern agricultural technologies, fresh products, processed agricultural products, raw materials, and rural tourism. It aims to modernize Sichuan’s agriculture and drive agricultural investment. The 2015 expo had a planned area of 100,000 square meters and was expected to attract exhibitors from over 40 countries. Chongqing Western China (Chongqing) International Agricultural Product Fair (CWIAPTF)

Chinese Name: 中国西部（重庆）国际农产品交易会 Official Website: http://www.cciapf.com/ Location: Chongqing Time: January Description: The Chongqing International Agricultural Product Fair is a platform for investment and trade promotion of agricultural products and technology. In an effort to introduce more international agricultural innovations to Western China, this fair includes forums on trade promotion and cooperation and business matchmaking sessions for foreign investors. In 2015, the exhibition focused on pollution-free and green food, deep processing, and agricultural machinery and technology. The fair offered 33,000 square meters of exhibit space and included over 1,700 companies from 11 countries and 28 provinces. Sales at the fair amounted to $34 million and participants signed $1.28 billion in purchasing agreements. Spring Festival Fair, Chongqing

Chinese Name: 中国 (重庆) 新春年货购物节 Official Website: http://xcnhj.asiaexpogroup.com/about/about-57.htm Location: Chongqing Time: February Description: Chongqing’s Spring Festival Fair typically includes a large exhibit area devoted to food and beverages, including international products. Alcoholic drinks and agricultural products each have a devoted area. Products within the food category included imported food, organic food, frozen and packaged products, candies and preserved fruits, alcoholic beverages, and food processing machinery and packaging materials. In 2015, this annual New Year shopping festival included over 600 businesses from 12 countries and 30 Chinese provinces and municipalities. China Chongqing International Investment and Global Sourcing Fair (CCISF)

Chinese Name: 中国（重庆）国际投资暨全球采购会 Official Website: English version <http://www.ccisf.com/en/index.aspx> Chinese version < http://www.ccisf.com/> Location: Chongqing Time: May Description: CCISF 2015 focused on promoting investment opportunities in countries along “One Belt and One Road”, highlighting new advanced manufacturing, modern service industry, and household consumption products. Over 6,600 businesses participated, including 1,700 multinational corporations, from 46 countries and regions. The fair generated an estimated $211 million in trading and sourcing contracts.

Yunnan Spring Festival Fair, Kunming

Chinese Name: 昆明新春欢乐购物节 Official Website: http://www.ynsnw.com/exhibit/show.php?itemid=115 Location: Kunming Time: January Description: Kunming’s 2015 Happy New Year Shopping Festival included over 1,800 exhibitors from 12 countries and 12 Chinese provinces and cities. The fair encourages foreign companies to exhibit and provides opportunities to discuss joint projects and investment. Some products exhibited include brand-name goods, flowers, clothing, furniture, and local cuisine.

China South Asia Expo (a.k.a. China Kunming Import and Export Fair)

Chinese name: 中国 – 南亚博鉴会 Official website: English version < http://english.csaexpo.cn/ >;

Chinese version < http://www.csaexpo.cn/ > Location: Kunming Time: June Description: In 2015, Kunming hosted the 3rd China South Asia Expo and the 23rd China Kunming Import and Export Commodities fair, which yielded $127 billion in direct foreign investment. During the event, 903 overseas businesses signed agreements to start or expand operations in Yunnan. The expo attracted around 3,000 businesses from 70 countries and regions. Guizhou International Food Industry Exhibition

Chinese Name: 中国（贵州）国际食品工业博览会 Official website: http://www.gifie.com.cn/ Location: Guiyang Time: June Description: The first International Food Industry Exhibition in 2014 had an exhibition area of 9,700 square meters and attracted 285 exhibitors from 11 countries and regions. The exhibit showcases a variety of food and beverages including health foods and imports, as well as food additives and ingredients, oils, and packaging and manufacturing machinery. Some imported food on display included chocolate, puffed cereals, nuts, preserved fruits, meat, seasoning, beverages, and alcoholic beverages. International Agricultural Products Expo

Chinese Name: 贵阳国际特色农产品交易会 Location: Guiyang Time: August Description: The International Agricultural Products Expo is a three-day event that showcases fruits, vegetables, livestock products, aquatic products, tea, traditional Chinese medicine, and agricultural technology. Over 700 companies exhibited at the 2015 fair, which encompasses 25,000 square meters of exhibition space. Products on display included fruits and vegetables, livestock products, aquatic products, tea, specialty grains, processed agricultural products, and agricultural technology from China and abroad.

C. Penetrating Direct to Southwest China Aside from a few exceptions, ATO Chengdu does not recommend U.S. exporters to pursue direct sales in Southwest China. Regulatory barriers, geographic remoteness, and market size result in Southwest China representing less than 0.5% of China’s total imports of U.S. agricultural, fishery, and forestry products.

Table 1: China’s Agricultural, Fishery & Forestry Trade (US$ billion) Importer China Southwest China

Source World United States World United States

Imports Exports Imports Exports Imports Exports Imports Exports

2011 $117.0 $71.1 $25.2 $9.2 $1.0 $1.3 $0.127 $0.051

2012 $130.8 $74.8 $30.1 $10.2 $1.3 $1.3 $0.092 $0.032

2013 $140.4 $79.8 $28.8 $10.5 $2.0 $1.4 $0.088 $0.020

%Δ ‘13/12 7.3% 6.7% -4.3% 2.9% 55.4% 14.0% -4.3% -37.5%

Source: GTIS In fact, Southwest China’s customs clearance of processed foods, a category of trade most likely to enter the retail market space, totaled only $3 million in 2013.

Table 2: SW China Imports of Agricultural, Fishery & Forestry Trade, 2013 (US$ million) Total Sea Air Auto Comment

Agricultural, Fishery & Forestry

$92.223 $86.752 $1.332 $0.002 Soybeans, forage products, in-shell walnuts, hides/skins, forestry products, cotton, wine, shelled almonds, ginseng

Processed Foods $3.106 $1.988 $1.119 $0

--Sichuan $1.301 $1.215 $0.86 $0 Wine, food preparations, prepared/ preserved fruit, raisins, prunes, breads/pastries/cakes, spirits

--Chongqing $1.071 $1.003 $0.68 $0 Ginseng, wine, alcoholic beverages, juices, yogurt, sugar confection, cocoa preparations

--Kunming $0.731 $0.704 $0.27 $0 Prepared/preserved fruit, raisins, wine, other food preparations, chocolate

--Guiyang $.003 $0.003 $0 $0 Wine

--Lhasa $0 $0 $0 $0

Source: GTIS Over 50% of all Southwest imports of agricultural, fishery, and forestry products are traditionally transited via automobile, most bringing Southeast Asian products into China via Kunming. Railways connecting Chongqing and Chengdu to Europe are also largely unavailable to support U.S. trade competiveness. The Yangtze river offers Chongqing Cuntan Customs and to a lesser extent Sichuan – via Luzhou or Yibin – access to direct imports of U.S. products. Historically, both Chongqing and Sichuan have only been permitted to import non-perishable processed products. However, Chongqing recently received permission to import both raw meat and poultry products as well as fresh fruit. Fresh fruit trade has commenced early in 2014 while infrastructure is still under development to facilitate future meat and poultry trade. Moreover, varying water levels complicate the Yangtze’s navigability, especially in Sichuan, which often requires containers to be reloaded onto smaller vessels downstream. Historically, air shipments have been logistically difficult and generally cost-prohibitive. Costs have limited air shipments to ginseng, which accounts for three-quarters of all Southwest China imports of U.S agricultural, fishery, and forestry products, followed by planting seeds. The first direct flight

between the United States and Southwest China opened in July 2014, connecting Chengdu to San Francisco on United Airlines. This first-ever shipment of U.S. fresh cherries arrived in Chongqing in May 2014. Logistical Costs The average cost of shipping a 40ft container from the U.S. to China is roughly $3,000. Once the shipment has reached China, goods can be shipped by air, train, or truck. Below are the rough costs for each shipping method:

Air Train Truck Refrigerated

Chengdu 2.8-3 元/kg 450-500 元/MT 700-750 元/MT

600 - 700 元/MT

Other 650 - 850 元/MT

Guangdong Ports Shanghai

Ports

Chengdu 500-700 元/MT

600-800 元/MT Chongqing 300-600 元/MT

Guiyang 200-600 元/MT

Kunming 200-500 元/MT Source: ATO industry contact

Cold Chain Storage Chengdu currently has two major cold chain storage facilities: Hai Ba Wang Western Food Logistics Park

(海霸王西部食品物流) is one owned and operated by a Taiwanese company; and Chengdu Silverplow (

成都银犁冷藏物流). A recent ATO Chengdu visit to Chengdu Silverplow uncovered that 40% of their products are imports. Imported meats consist of poultry, beef, and pork from the U.S., Canada, India, Chile, Australia, New Zealand, and Germany.

Chongqing has a 930 square meter cold chain storage facility called (中国西部农产品冷链物流中心) Challenges Cold Chain Logistics Cold chain logistics remains a problem in Southwest China because many these companies do not use temperature control throughout the entire supply chain. According to one industry expert, 50% of the fruits going through Shanghai to Southwest China are expiring prior to arrival in the marketplace. This is particularly concerning considering that it is difficult to notice which ones are rotten and which are ready for consumption. Brand Building Many Southwest China distributors seek marketing funds from the U.S. exporter/manufacturer to build brands. This extends to their prominent desire to seek regional exclusivity agreements.

Table: Per Capita Annual Cash Consumption Expenditure of Urban Households by Region for 2012 on Food (USD)

Region Gra

in

Star

che

s an

d T

ub

ers

Be

ans

and

Be

an

Pro

du

cts

Oil

and

Fat

s

Me

at, P

ou

ltry

an

d

Pro

cess

ed

Pro

du

cts

Eggs

Aq

uat

ic P

rod

uct

s

Ve

geta

ble

s

Co

nd

ime

nts

Suga

r

Tob

acco

Liq

uo

r an

d

Be

vera

ges

Dri

ed

an

d F

resh

Me

lon

s an

d F

ruit

s

Cak

e

Milk

Pro

cess

ed

Pro

du

cts

Oth

er

Foo

d

Chongqing 66.95 9.61 13.30 42.79

255.50

21.71 42.72 127.9

3 22.14 12.00 51.85 39.22 73.91 13.69 50.96 15.96

Guizhou 63.56 5.00 9.43 26.83

184.13

12.70 15.90 89.60 10.79 9.79 49.56 35.68 65.55 11.98 27.27 13.96

Sichuan 66.31 11.87 11.56 31.45

242.77

19.34 29.76 114.0

2 18.61 10.28 45.54 40.43 68.34 12.55 43.34 10.55

Yunnan 65.63 7.84 6.55 24.91

182.74

11.19 18.72 119.5

6 10.52 8.30 73.26 23.09 67.81 25.02 34.67 9.57

Tibet 74.24 4.33 1.69 22.99 193.3

8 6.59 8.18

109.55

9.52 8.61 79.66 48.05 50.65 5.40 63.97 25.05

National Average

73.60 8.68 11.67 25.92 189.9

8 19.10 65.64 95.02 12.22 8.84 43.57 47.28 81.27 19.74 40.70 15.03

Source: China Statistical Yearbooks 2013 Note: 1 USD = 6.24 Chinese Yuan

Table: Percentage of Imports of Select Commodities from Major Retailers in Southwest China

(% of Total Foreign Imports (% of Total U.S. Imports))

Retailer

Po

rk a

nd

Po

rk

Pro

du

cts

Po

ult

ry M

eat

and

Pro

du

cts

(ex.

Egg

s)

Dai

ry

Pro

du

cts

Fre

sh F

ruit

Pro

cess

ed

Ve

geta

ble

s

Fru

it a

nd

Ve

geta

ble

Juic

es

Tre

e N

uts

Ch

oco

late

an

d

Co

coa

Pro

du

cts

Snac

k Fo

od

s

Win

e a

nd

Be

er

No

n-A

lco

ho

lic

Be

vera

ges

7-Eleven

Auchan 欧尚 10 (0)

5 (3) 20 (3)

20 (8)

5 (1) 70 (55)

30 (0)

8 (2)

20 (3)

2 (<1)

Carrefour 家乐福 20 (0)

5 (3) 30 (2)

20 (6)

5 (1) 70 (55)

30 (0)

10 (2)

30 (3)

2 (<1)

CRV 华润万家 5 (3) 20 (2)

15 (5)

2 (1) 60 (40)

20 (0)

5 (1)

20 (2)

2 (<1)

Family Mart 全家 30 (0)

20 (10)

30 (0)

15 (1)

80 (5)

Honghuabianli 红华

便利

Hongqi 红旗连锁 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 5 (0) 2 (0)

Huhui Supermarket

互惠超市

Ito Yokado 伊藤洋华

堂

10 (0)

5 (3) 20 (0)

30 (10)

2 (<1)

70 (55)

30 (0)

30 (2)

70 (4)

2 (<1)

Lawson 罗森便利店

Lianhua 联华

Lotus 卜蜂莲花

Metro 麦德龙 50 (0)

10 (7)

60 (0)

20 (7)

5 (5) 50 (0)

40 (4)

80 (4)

10 (2)

Renrenle 人人乐 20 (0)

4 (0) 10 (0)

Wal-Mart & Trust Mart

沃尔玛公司 与 好又

多

10 (0)

10 (7)

20 (5)

20 (7)

2 (<1)

70 (55)

20 (0)

10 (2)

30 (5)

2 (5)

Wowo 哦哦 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 20 (0) 0 (0) 0 (0) 0 (0) 10 (2) 0 (0)

Yonghui 永辉超市

`Wudongfeng 舞东

风

0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0)

10 (0)

0 (0)

Source: ATO Chengdu Office Survey

Retailer Name Owner Store Type

CQ GZ SC YN TB Total

(China

Headquarters)

Wal-Mart 沃尔玛公司 US/Taiwan (Shenzhen) Hypermarket

13 8 21 19 0 61

Carrefour 家乐福 France (Shanghai) Hypermarket 7 1 19 10 0 37

RT-Mart 大润发 Taiwan Hypermarket 1 2 6 2 0 11

Auchan 欧尚 France (Shanghai) Hypermarket 0 0 4 0 0 4

Metro 麦德龙 Germany (Shanghai) Wholesaler/ Discounter

2 0 2 1 0 5

CBest 重百 Chongqing

123 1 8 0 0 132

New Century 新世纪 Department Store

Parkson 百盛 Malaysia (Shanghai) Department Store 5 3 6 2 0 16

Ito Yokado 伊藤洋华堂 Japan (Chengdu ) Department Store 0 0 6 0 0 6

Wangfujing 王府井 Beijing Department Store 3 0 2 1 0 6

Xingli 星力 Guiyang Department Store 0 7 0 0 0 7

Far East 远东 Taiwan (Shanghai) Department Store 2 0 3 0 0 5

Renhe 仁和 Chengdu Department Store 0 0 3 0 0 3

Jingko 金格 Kunming Department Store 0 0 0 4 0 4

Isetan 伊势丹 Japan (Shanghai) Department Store 0 0 1 0 0 1

Vanguard 华润万家 Hong Kong (Shenzhen)

Supermarket 5 1 2 0 0 8

CRV 华润万家 Guangzhou Supermarket 6 1 2 0 0 9

Ole’s Guangzhou Supermarket 3 1 2 0 0 6

BLT Guangzhou Supermarket 2 0 0 0 0 2

Yonghui 永辉超市 Fujian Supermarket 92 8 25 0 0 125

Renrenle 人人乐 Shenzhen Supermarket 6 0 21 0 0 27

ParknShop 百佳 Hong Kong (Shenzhen)

Supermarket 0 0 5 0 0 5

Great Hong Kong Supermarket 0 0 1 0 0 1

Treat Hong Kong (Shenzhen)

Supermarket 1 0 0 0 0 1

BHG 北京华联 Beijing Supermarket 1 6 8 0 0 15

Lotus 卜蜂莲花 Thailand (Shanghai) Supermarket 4 0 0 0 0 4

Hongyan 红艳超市 Chengdu Convenience Store 0 0 300 0 0 300

Wudongfeng 舞东风 Chengdu Convenience Store 0 0 700+ 0 0 700+

Wowo 喔喔 Chengdu Convenience Store 1000 0 2000 1000 0 4000

Hongqi 红旗连锁 Chengdu Convenience Store 0 0 1600 0 0 1600

Huhui Supermarket 互惠

超市

Chengdu (Owned by Hongqi)

Convenience Store 13 0 600 0 0 600+

7-Eleven Japan (Guangdong) Convenience Store 100 3 200 1 0 304

Lawson 罗森便利店 Japan (Shanghai) Convenience Store 110 0 0 0 0 110

Honghuabianli 红华便利 Guiyang Convenience Store 0 75+ 0 0 0 75+

Momo Chengdu Convenience Store 8 0 0 0 0 8

Sources: Respective retailer websites and map.baidu.com

Notable Third and Fourth-tier City Supermarket and Department Store Chains

Sichuan Yunnan Guizhou

Jiuding 九鼎 （Zigong） Ji Mart 吉玛特 （Qujing ） Heli 合力超市 ( Zunyi, Liupanshui, Anshun, Bijie )

810 超市（Guangyuan） Lucheng 鹿城大厦 (Chuxiong ) Xingkelong 兴客隆 ( Xingyi)

Huitong 汇通 （Luzhou） Mingzhu 明珠 （Chuxiong) Jiahui 佳惠（Liupanshui )

Lvyuan 绿缘超市 （Yibin） Wandefu 万德福 ( Dali) Honghua 红华便利 (Guiyang)

Jiajia 佳佳超市（Xichang） Jinfang 金方超市 ( Baoshan )

Dada 达达（Xichang） China Post 邮政超市 ( Mangshi )

Youmate 优玛特（Nanchong, Suining） Meijiahua 美佳华麒麟商业广场

(Qujing)

Zhuoer 卓尔超市（Neijiang） Tiantianle 天天乐购物广场

(Kunming)

Sanba 三八超市（Leshan）

Shanghai Huanle 上海欢乐购超

市 (Kunming)

Huangjia 黄家超市（Leshan） Baoshan Baida 保山百大超市 (Baoshan)

Yangguang 阳光超市（Dazhou） Womate 沃玛特 (Qujing)

Youkelong 优客龙 ( Deyang ) Tianshun 天顺超市

(Xishuangbanna)

Quangou 全购超市（Ziyang）

Kunming Frozen Goods Trading

Market 昆明冻品贸易市场

Chengxin 诚信 (Yaan)

Flying Dragon Supermarket 飞龙超市

(Longchang)

Mo’er Sai er 摩尔 塞尔 (Meishan)

Jiangbei Agricultural Products Wholesale

Market 江北农产品批发市场 (Yibin)

Family Mart 全家 Japan/Taiwan Convenience Store 0 0 39 0 0 39

Distributor Sales Volume (million RMB)

% of Imports Distributes

Chongqing

Taixinmao 100 80% Retail packaged foods

Jingguoyuan 70 60% Fresh fruit

Chaoqi 70 60% Fresh fruit

Hongjiu 40 50% Fresh fruit

Dezhang 20 90% Retail packaged foods

Feihai 10 80% Retail packaged foods, alcoholic beverages

Guizhou

Baolixing 100 60% Infant formula

Katie 30 100% Retail packaged foods and beer

Yujie 25 70% Retail packaged foods and frozen products

Sichuan

Sweetrip 70 100% Retail packaged foods

Cheer Trading 40 90% Retail packaged foods

Pinli 40 60% Retail packaged foods

Niujing 10 70% Frozen products

Wanshunxin 8 60% Retail packaged foods

Youben 6 60% Retail packaged foods

Jiamei 8 90% Dried fruits

Sabrina 3 100% Retail packaged foods

Yunnan

Zhen Cai Hao 80 80% Retail packaged foods

Difei 40 80% Retail packaged foods

Yinhuang 20 60% Retail packaged foods

Shanjun 40 40% Retail packaged foods, fresh fruits

Danhui 200 10% Retail packaged foods, beverage

0 10,000 20,000 30,000

Wuxi County

Youyang County

Chengkou County

Fengjie County

Yunyang County

Pengshui County

Wushan County

Fengdu County

Kaixian County

Qianjiang District

Shizhu County

Xiushan County

Qijiang District

Tongnan County

Liangping County

Dianjiang County

Wulong County

Zhongxian County

Nanchuan District

Dazu District

Hechuan District

Rongcheng County

Wanzhou District

Jiangjin District

Changshou District

Yongchuan District

Fuling District

Tongliang County

Bishan District

Dadukou District

Ba'nan District

Nan'an District

Beibei District

Yubei District

Jiulongpo District

Jiangbei District

Shapingba District

Yuzhong District

RMB

Co

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Chongqing Counties and Districts by 2012 Per Capita Disposable Income

Per Capita DisposableIncome

0 10,000 20,000 30,000

Tongren

Anshun

Liupanshui

Kaili

Duyun

Xingyi

Bijie

Zunyi

Guiyang

RMB

Cit

ies

Guizhou Cities by 2012 Per Capita Disposable Income

Per Capita DisposableIncome

0

100

200

300

400

500

600

700

800

0k200k400k600k800k

1,000k1,200k1,400k1,600k1,800k2,000k

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Po

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Cities

Guizhou Cities by 2012 Non-Agricultural Population & Total Retail Sales of Consumer Goods

Non-Agricultural Population

Total Retail Sales ofConsumer Goods

0k

1,000k

2,000k

3,000k

4,000k

5,000k

6,000k

7,000k

8,000k

9,000k

10,000k

11,000k

12,000k

13,000k

14,000k

15,000kP

op

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tho

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Cities in Sichuan Province

2012 City Populations in Sichuan by Rural/Urban Divide

Rural Pop

Urban Pop

0 10,000 20,000 30,000

Dazhou

Guangyuan

Suining

Zigong

Meishan

Guangan

Leshan

Luzhou

Mianyang

Deyang

Chengdu

RMB

Cit

ies

Sichuan Cities by 2012 Per Capita Disposable Income

Per Capita DisposableIncome

0k

1,000k

2,000k

3,000k

4,000k

5,000k

6,000k

7,000kP

op

ula

tio

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tho

usa

nd

s)

Cities in Yunnan Province

2012 Yunnan City Populations by Rural/Urban Divide

Rural Pop

Urban Pop

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Po

pu

lati

on

(Th

ou

san

ds)

RM

B

Cities

Yunnan Cities by 2012 Urban Population & Per Capita Urban Retail Sales

Urban Population

Per Capita Urban Retail Sales

Major Distribution Channels to Southwest China for U.S. Products

Source: Google