SINGAPORE -- Joint ventures between Asian-based food retailers and large operators from Europe are likely to dominate the Asian retail scene in the next five years.
That was the forecast heard by attendees at the 41st Annual CIES Executive Congress here last week.
A handful of major chains are expected to proliferate in each of several Asian markets, mostly foreign retailers who were first to move into Asia, according to James Dallmeyer, the editor of Asian Supermarket magazine, which is based here.
Retailers to watch include Carrefour, from France; Royal Ahold and Makro, both from the Netherlands; Delhaize, from Belgium; Tesco, from the United Kingdom; and Hong Kong-based Dairy Farm.
"Globalization is becoming a reality in Asia," Dallmeyer said. "Big international retail companies are pouring into Asian markets in search of new investment opportunities and joint ventures, and they have been greatly aided by the Asian currency crisis and prevailing economic conditions."
Going through Asia country-by-country, Dallmeyer made the following observations:
China's "potential for foreign players knows no bounds," he said. "The key here is finding the right local partner." However, despite several foreign entries, it would be difficult to find a foreign player who is managing to turn a profit at the moment, he said. In Japan "no foreign food retailers have yet been brave enough to take on Japanese [retail] masters. And with so many easier Asian markets to access, why aim for the difficult Japanese market?" Dallmeyer asked.
The Philippines is still closed to foreign retailers. "But it may be deregulated by 2000, and this will lead to a stampede of foreign players," he said, noting that the three largest operators there have all been wooed by potential overseas suitors.
In Thailand two locally based companies that began opening hypermarkets in the 1980s are both turning to foreign investors -- Charoen Pokphand, which sold its 13 Lotus hypermarkets to Tesco in May; and Central, which received a loan earlier this month from its existing partner, Royal Ahold, for its 21 Big C Discount superstores but which is still seeking a joint-venture partner, possibly Wal-Mart, Dallmeyer said.
Taiwan is dominated by Carrefour's 18 stores. "However, Taiwan could be a happy hunting ground for other international players," Dallmeyer said, because it has not been affected by Asia's economic downturn, "and players who might otherwise be looking for foreign assistance have not yet been forced to do so."
In Malaysia locally based Metrojaya and Parkson are each seeking a foreign partner to run their respective food operations and Ahold remains a growing presence.
Indonesia saw the destruction of many supermarkets during the riots that occurred there in mid-May. "It is difficult to know how the country's retailers can raise the capital needed to rebuild, given the Indonesian economy's present parlous state," Dallmeyer said. "One answer could be to fast-track retail deregulation as a condition for bailing out the economy, [which] could offer foreign retailers the chance of entering the market as full partners for the first time."
Korea's barriers restricting direct foreign participation in retail were dismantled in 1996. That was followed by the entry of Makro and Carrefour and, more recently, by Costco, with Wal-Mart and Tesco apparently poised to enter, Dallmeyer said.
In Hong Kong two locally based chains -- Dairy Farm and Watson's -- are so dominant "that you would have to be either brave or foolish to venture into this market, although Carrefour has already taken that step."
According to Dallmeyer, Dairy Farm, which operates 1,900 stores across Asia and Australasia, "has aggressive plans for more expansion under the leadership of Ron Floto." Floto is the former president of Kash n' Karry Food Stores, Tampa, Fla., and more recently headed Kmart's supercenter division.
In Singapore Dairy Farm and locally based labor cooperative NTUC Fairprice seemed to have a lock until Ahold acquired 11 stores there last year and Carrefour entered the market, Dallmeyer said. "The jury is still out on whether the newcomers can survive but, in all truth, there probably isn't any more room for more players."