Asia as a region is significantly different from the rest of the world in terms of culture, food habits and lifestyles. Geographic proximity goes hand in hand with great diversity in language, tradition, culture, preferences and behaviors. There are certain characteristics of individual Asian cultures that are more or less common across national societies. In an attempt to understand how retail may evolve in India in the years to come, this article looks at retail, in select Asian countries from the point of understanding the key formats that exist, legislations and economic factors which have enabled the development of the formats.
One of the first names that come to the mind when we consider shopping region is Singapore. Singapore is considered to be a shopper’s haven even today. The retail trade in the country comprises of establishments dealing in general merchandise, transport equipment, personal goods, household equipment and other retail, trade, which include the sale of fruits and vegetables, health food etc. Singapore today, has evolved to becoming a mature retail market where rents are stable and the infrastructure attracts many foreign retailers.
The Urban Renewal Authority (URA), a government statutory board, was instrumental in the development of retail and looked into the development of planned shopping centers and mixed use developments, in the central areas in the city. From 1986 to 1991, retail space increased by an average of 286,000 sq ft a year. In 1992, new supply of retail space increased by about 2.5 times to 689,000 sq ft. In 1993 new supply made a quantum leap to hit about two million square feet in just one year. The development of the Mass Rapid Transport System further enabled the development of retail in the country.
While the country does welcome foreign investment it has also enforced laws like the Competition Act 2004 and the GST to regulate trade. NTUC Fair Price Co-operative is the largest retailer in the country and operates supermarkets and 24 hour convenience stores. Cold Storage Singapore, Robinson Group and Takashimaya Singapore are the other key retailers in the country. A well developed retail infrastructure has played a key role in the retail development of the country.
The other nation known for shopping in the region is Hong Kong. Over the years, retail in Hong Kong has evolved from the street side stores and wet markets and a handful of traditional department stores, to a retail destination. In the mid 1960s the creation of the Ocean Terminal, at the tip of the Kowloon Peninsula one of the first shopping center in Honk Kong, changed the scene forever.
Since the 1970, the continuous expansion of the transport infrastructure across the island and the development of new towns by both the public and private sectors, has led to the growth of retail in the country.
Chin’s retail sales surged by 21.6% in May 2008, as compared to a year ago, a rate seven times faster than the retail growth in the United States. Retail sales increased to 870.4 billion yuan or $ 126 billion in May, after rising 22% in April, on strong auto sales and building material purchases.
Restrictions on market access and national treatment for franchising have been removed in line with China’s WTO commitments. The main taxes applicable to foreign invested retail and wholesale companies include the Foreign Enterprise Income Tax (FEIT) and the Value added Tax (VAT). Customs duties are levied by the customs authority on goods imported in to China, based on predefined and published nomenclature, as per the Harmonized Systems. Customs duty is levied based on the Cost, Insurance and Freight (CIF) Transaction Price of the imported goods, at the rate of duty specified in the PRC Customs Tariff and Import vat, which is normally assessed at the rate of 17%, Consumption Tax, which ranges from 8 – 20% is also payable on certain imported consumer products.