While Asia remains one ofthe fastest-growing regions in the world, the deceleration of major economieshas caught businesses by surprise. China and India have registered its slowestgrowth in three years. The slowdown of the Chinese economy is forcing Westernretailers to rethink their once rampant expansion in the country while makingbig shifts in their strategies.
Wal-Mart Stores Inc. isopening only half the square footage originally planned in China this year,while British retail giant Tesco PLC has shut four stores in China. SanFrancisco-based Levi Strauss & Co., whose third-quarter revenue in AsiaPacific dropped by 26%, blamed slowing consumer spending and stiff retailcompetition last month for its decision to phase out its lower-priced Denizenjeans brand in China, India, Pakistan and Singapore.
An economic slowdown inChina was picked as the greatest risk for nearly half of the 321 companiessurveyed by the American Chamber of Commerce at the end of last year, rankingabove things such as labor costs or protectionism.
“China is not the obvious easy money it was afew years ago,” says a local Shanghai firm that consults with foreigncompanies. For retailers grappling with an increasingly crowded and competitiveretail landscape, Asia’s slowing growth is a catalyst to change their strategyor exit the market.