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Overview

Retailing has been named a strategic industry in China’s long term national plan. As mentioned in report 1, the opening of China has caused more foreign retail chains to enter the China market. As more foreign companies enter the China market, the Chinese government has come up with changes to regulations in the retail and fashion industries in recent years. In this report we would talk about the updated regulations and a little on the operating environment for clothing companies in China

Regulations

a) The most important changes to the Retail regulations introduced by the Chinese government (MOFCOM) is the clause on franchising. b) With effect from 1st February 2005, foreign retail chains who want to offer franchises directly to prospective franchisees in China must first established 2 company owned unit in China for more than a year. The reason given by the government for the introduction of this regulation is to protect Chinese companies from buying franchises whose models are not suitable for the Chinese market. c) Franchising in China is complicated process. Foreign firms who want to enter the countries though franchising has to fill in another set of franchise forms and undergo another business registration form. This application would usually take about....

Impact:

 The impact of this franchise regulation is that foreign owned retail chains including Foreign Fashion Chains would find the process of entering the country by franchising more tedious. This is especially for mid sized retail chains who are established in their home countries and are not international brands. Thus for small to mid sized foreign fashion firms wanting to enter China through franchising, we would suggest other marketing strategies like Distribution, setting up their own flagship store and

 One Alternative would be to enter by Joint Venture agreement or partnership with a China local firm. This could be done either through partnership with local firms or buying into local manufacturing companies.

 Another market entry strategy ....

Article by China based consultants in O&L Consultancy Services Pte Ltd. To read more on regulations please email us at oandltraining@pacific.net.sg

Article contributed by O&L Consultancy Services Pte Ltd. For more details please visit our website at http://www.oandltraining.com or email oandltraining@pacific.net.sg

Source: www.articlecity.com