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Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

China Lures Foreign Retailers With Rule Changes

  • Summary: Last year China's retail sector was finally liberalized per its promise to do so when joining the WTO in 2001. Foreign retailers no longer have to form JVs or partner locally, resulting in a surge in applications and approvals -- some completely new to China such as prominent U.S. players like privately held Toys "R" Us and publicly traded Best Buy and Home Depot. Interestingly China has some of the world's largest shopping malls but only about 10% are profitable. New entrants seem to be eying only the major cities and as the CEO of Best Buy International said, "We're only going to open when it's right. This is not a race."
  • Comment on related stocks/ETFs: Estee Lauder (EL) and Tiffany (TIF) are among a handful of other companies in addition to Best Buy (BBY) and Home Depot (HD) that are listed in the article as having received approval for retail operations licenses over the past year. Wal-Mart (WMT) is regarded as an established player in China's retail sector. There is some concern about the government intervening and hampering chain-store expansions. However, there have been no real developments to-date except for some draft rules under consideration. With a national savings rate estimated between 40-50% and sustained robust economic growth there's no questioning why foreign retailers are knocking on China's door. The key will be to take it slow as Best Buy intends to do and to focus on major economic centers lining the coast.
Source: Big Name U.S. Retailers Eye China's Opening