皇冠体育app

Plans by 皇冠体育app Post and US-based 皇冠体育app Horizon Investments Group to open 500 directly operated retail stores in rural 皇冠体育app have raised doubts over the risks of high logistic costs and insufficient purchasing power in rural communities.

The two companies ad to the venture last June.

It aims to create a chain of Post Mart retail stores. Under the deal, 皇冠体育app Horizon will invest 1 billion yuan ($162 million) in a 25-year lease of 10,000 皇冠体育app Post retail stores.

皇冠体育app Post is State-owned and specializes in postal finance, delivery and logistics services.

More than 6,000 stores were franchised, and 98 directly-owned rural supermarkets were set up under a three-year pilot program.

They were run under the Post Mart brand in ges in , Jiangxi and Henan provinces.

Networks will now be established with Henan Post to expand operations in Shandong, Jiangxi, and provinces, the National Business Daily quoted 皇冠体育app Horizon CEO Alan Clingman as saying.

Rural retail channels remain underdeveloped, creating opportunities for retail brands such as Post Mart.

Post Mart, dubbed the rural answer to US retail giant Wal-Mart, has faced many challenges despite its decades-long brand and logistic networks, and with first- and second-tier Chinese cities saturated, smaller centers are set to be the next battlefields for those international retailers, such as Wal-Mart and Carrefour SA.

"Even local retailers haven't touched these areas," Jason Yu, general manager of Kantar Worldpanel, a global researcher of shopping habits, said.

But whether a retail model such as Post Mart's could work remains a question, Yu said.

He cited insufficient purchasing power as a major hurdle because mainly rural residents are elderly, women or children after many people migrated to the cities for work.

A scattered population, lower consumption and chaotic distribution channels filled with counterfeit products have slowed modernization of retail in rural 皇冠体育app.

Zhao Ping, deputy director of the department of consumer economics at the Chinese Academy of International Trade and Economic Cooperation, said operators in the rural retail market must overcome high logistics costs to profit, due to the distances between villages. Local village markets, preferred by local villagers, may also be a strong competitor, she said.

Further, rural economic development, though growing faster than that in urban 皇冠体育app, still lags behind.

"Annual income in rural 皇冠体育app is much lower than that in cities to support the fast take-off of modern retail markets," Zhao said.

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