【文章內(nèi)容簡(jiǎn)介】 30 types of fruit, twice the number found in a typical market. As anised retailers move to smaller cities and further inland to escape petition and soaring rents, they face huge variations in taste and extreme price sensitivity. This plicates distribution further and raises costs. WalMart39。s buying teams arrive in a city five months before a new store opens to research local habits: ―There are thousands of uniquenesses,‖ says WalMart39。s Mr Hatfield. People in Zhejiang like toilet paper ―as rough as sandpaper‖。 the top seller in Kunming is spicy chicken feet。 and Shandong natives like to buy whole steamed pigs39。 faces to slice up and dip in soy sauce and vinegar. Operating profitably in poorer markets often means switching to smaller stores with a narrower range. Xu Lingling, chief financial officer at Lianhua, says that whereas big foreign players, such as Carrefour, have taken top sites in large cities, Chinese chains may be better suited to midsized towns where productivity is lower. And these may suit a different approach—such as the franchising of McDonald39。s, KFC and Tupperware, which lowers the initial level of capital investment. Avon is going further: having finally received permission to resume direct sales in February, the American cosmetics group has already recruited over 114,000 sales agents. Nor can retailers in small cities expect the same appetite for brands as found in more cosmopolitan Shanghai or Beijing. In general, the Chinese are brandconscious but not loyal. They are more interested in value and trying new things than Westerners are. McKinsey found Sony could charge a premium of up to 40% for televisions in developed markets, but even a 10% markup in China can put consumers off. And many Chinese are impulse buyers, susceptible to lastminute discounts. One response is to shift to own label goods, which WalMart is doing aggressively. Another is to move spending from general advertising to instore promotions. In a typical Gome store, half the floorspace is dedicated to special product displays. These 7 are manned by pushy salespeople, who are cheap to hire in China and are often paid by the manufacturer. Vanguard39。s supermarket in Shenzhen has 350 staff, and 500 other people promoting not just expensive electronics, but also cheap items like toothpaste and shampoo. Stores hoping to increase loyalty are starting to promote giveaways and improve service, but often in vain. At Vanguard, buy hair dye and promoters will apply it free (customers browse its aisles sporting plastered hair and towels). Many ―shoppers‖ happily accept freebies without spending. At the Shenzhen WalMart, the buzzword is ―retailtainment‖. Chairs are placed around a big television so shoppers can watch football matches in airconditioned fort. People with empty baskets lounge on benches and read. Upstairs, staff oversee a babycrawling race. Zhang Hui Lan, 64, visits daily for free food tastings and to chat with staff, ―who are much friendlier than in the markets.‖ Yet getting people to spend more—or anything at all—is only half the task. Retailers must procure goods at the right price. In distribution and logistics, China is far behind developed countries. Strong regional tastes and lack of national scale stymie the development of national brands and efficient supply chains. WalMart39。s 60 stores in China are served by 15,000 suppliers。 its 3,800 American ones need only 61,000. Then there are the many layers of middlemen. Some foreign chains are starting to deal directly with manufacturers. WalMart has introduced its notoriously hardnosed negotiating tactics. At its Shenzhen headquarters, buyers bargain in rows of cubicles strewn with goods. Just like WalMart39。s headquarters in Bentonville, Arkansas, the cubicles have no doors, in order to discourage the passing of bribes. As they gain scale, big chains are also opening modern distribution centres. At the WalMart centre near Shenzhen, a vast effort is under way to link suppliers electronically to the retailer39。s systems—only 30% have been plugged in so far, while the rest still need orders to be faxed to them. Just 20 trucks can fit in the loading bay and they can wait for more than an hour to be unloaded, largely by hand. WalMart will move to a new distribution hub in September. Its old one is outclassed by the cool efficiency of Lianhua39。s distribution centre in northwest 8 Shanghai. There everything is automated and sorted on conveyor belts using barcode scanners and sophisticated lifts. Yuan Zhongmin, who runs the centre, says that with half his former workforce he can shift 60,000 cartons every ten hours, pared with 25,000 previously. The cash tied up in inventory has fallen from 100m yuan to 27m and the rate of mistakes in orders has fallen from 1% to %. Such improvements show how rapidly China39。s own retailers can catch up with the best of the foreign chains. Competition is therefore bound to get even more intense. Some retailers39。 profitability could suffer as they wait for the spending power of the emerging middle class to increase. But there will be handsome rewards for those that can survive this battle of hypermarket proportions. Why Business Models Matter Joan Magretta, Why Business Models Matter(J), Harvard Business Review, May 2021, 80(5). ―Business model‖ was one of the great buzzwords of the Inter boom, routinely invoked, as the writer Michael Lewis put it, ―to glorify all manner of halfbaked plans.‖ A pany didn’t need a strategy, or a special petence, or even any customers–all it needed was a Webbased business model that promised wild profits in some distant, illdefined future. Many people–investors, entrepreneurs, and executives alike–bought the fantasy and got burned. And as the inevitable counterreaction played out, the concept of t