China'S Three Or Four Line Retail Business Is In An Awkward Position, &Nbsp, And Is Caught In A "Vicious Circle".

It seems that the pace of expansion of retail enterprises has not stopped for a moment, but there are more and more stumbling blocks.

According to Guo Geping, President of China Chain Store Association, revealed at the thirteenth China chain meeting held recently.

Embarrassingly, China's three or four line retail enterprises have hardly been able to share this "welfare".

Borrowing problem

There are more than 20 stores in China's three tier cities, and the general manager of a state owned retail business with annual sales of over 1 billion has recently been somewhat unhappy.

Although the loan of 60 million Yuan approved at the beginning of this year is not yet fully accounted for, it has increased by 3 million in October of this year.

Although the company used this loan to open 10 stores in the region at a stretch, the new store is still in its incubation period. This high loan interest rate is no wonder that the managers of enterprises are sighing with great pressure.

However, the entanglement of the management of the enterprise is more "more affectation" for more three or four line retail enterprises.

The interest rate of the state-owned enterprises is too high, but for most private retail businesses, borrowing is no longer a headache.

With the rising cost of property leasing, investment in commercial real estate seems to be the most effective way for retailers to avoid risks and reduce costs.

The Chinese chain store association and DDT office have conducted a survey on the development trend of retail enterprises. The results show that more than half of the retail enterprises enter the commercial real estate mode.

But in the industry experts, retailers invest in commercial real estate is not a long way to go, blindly invest in the purchase of land will affect the speed of expansion of enterprises.

According to a senior level of the China Real Estate Association, the CBRC recently conducted "window guidance" to some banks with large commercial property loans in oral form, which led some banks to suspend commercial property loans.

The survey shows that although the major banks have not suspended commercial property loans, the number of loans has been reduced to 5 years from the longest 10 years, and the loan interest rate has increased by 50%.

Insiders confirmed that in 2011, Jiangxi's largest retail retailer, Hong Kong, sold the retail sector to a large extent in order to meet its capital requirements for expansion of real estate projects.

In 2010, Shandong's Zibo Dongtai and Hebei long long warehouse abandoned retail business, to a large extent, because of real estate.

According to the financial circles, the credit scale of small and medium-sized enterprises has also tightened sharply over the previous year under the background of the sharp tightening of credit scale.

Although commercial banks have divided the scale of this year to protect the credit demand of SMEs, the proportion of loans to SMEs has increased continuously. However, because of the limited volume and the large number of financing needs arising from the rising production costs, upgrading or upgrading of small and medium-sized enterprises, the financing needs of SMEs can not be fully met.

Industry experts pointed out that, from the industry perspective, the tightening of bank credit scale has the biggest impact on wholesale and retail trade, although the support for manufacturing industry has also declined. But considering the risk of bank credit reduction, commercial banks are inclined to invest in manufacturing enterprises with certain assets, stable production and operation, and rooted in the local manufacturing industry.

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Big crocodile approaching

Unfortunately, the market will not have compassion for these three or four line retail companies in financial difficulties.

The pattern of China's retail market seems to be being rewritten with the strong sinking of a second tier retail business.

At the thirteenth China chain industry conference, Guo Geping said that the urban retail market competition in Beijing, Shanghai, Shenzhen, Guangzhou and other first tier cities was extremely fierce. The market was basically in a state of saturation, and the profits that retailers could gain were declining. Retailers' competition had begun to spread to three or four cities.

Studies have shown that China's three or four tier cities are becoming the main battleground for the collective settlement of retail channels.

At present, the three or four line market is just like the second tier cities 5 years ago, and the central and western cities 2~3 years ago.

Industry experts also expressed the same view. Because of the low urbanization and the lagging commercial development, the price of commercial land in the three or four tier cities was slower than before; the government hopes to introduce retail enterprises to solve employment, bring taxes and enhance the image of the city.

Cost advantages and policy support reduce the risk of channel sinking for a second tier retail enterprise.

Some securities agencies reckon that the three or four lane city's new stores can reach 6000 yuan, that is, they are expected to be guaranteed capital. At present, there are three or four new retail outlets in many retail businesses. The incubation period is only one year.

These enterprises can reach 20 million net profit and 5% net interest rate in many stores on the three or four line, and this high return is still expected to remain within two or three years and supply is still insufficient.

It is reported that the top ten retail enterprises in China's chain companies in 2010 have taken the pace of entering the three or four line city, while the listed retail companies such as BBK, Nanjing middle merchant, Hubei Wu Shang, Hefei department store, chengshang group and Guangzhou hundred shares have also begun to fall in the three or four line city.

Xiang Xin, director of the Department of circulation development of the Ministry of Commerce, pointed out at the meeting of the chain industry that "increasing the support for large circulation enterprises, especially large chain enterprises, and breaking through the bottleneck of regional development", seems to have taken a reassurance for the second tier retail enterprises in the war.

It is an indisputable fact that the new outlets of local retail leading enterprises and foreign retail giants are sinking into the three or four tier cities, which is an important trend in the future development of retail industry.

And these aggressive second-line retail enterprises have strong resources in addition to their powerful brand influence, as well as abundant capital that many three or four line retailers are "jealous".

The value of capital for retail enterprises is beyond doubt. Financing has become an important reason for many retail enterprises to rush to the capital market.

Daniel Chan, President of intime general store, has spoken frankly: there are a lot of advantages in listing, but I think the core of this pile is financing.

Gao Xin, a newly listed chief executive of the retail market, also admitted that the listing first gave the company a capital to help businesses grow better.

But at present, the three or four line retail enterprises seem to be trapped in such a strange circle: they want to go out of the region, but lack of money can not form a scale.

At present, China's capital market does not seem to be enthusiastic about retail businesses.

It is understood that a large number of retail enterprises in China, which have been sprint for several years, are facing a dilemma of selling or not selling.

Although mergers and acquisitions in the retail industry are not rare, some industry experts point out that sellers are no longer scarce resources in the current retail market. Even though sellers are not bad, the buyers of Hainan Airlines and Huarun now have enough patience.

For some retail businesses, selling is not even a problem.

For the embarrassment of China's three or four line retail enterprises, such a retail environment seems to be hard to emerge as private enterprises such as BBK and Yonghui from small to large, from region to whole country.

The industry is sob: if there is no better mode, China's three or four line retail enterprises' rising corridor may be blocked.