Alliance stores to promote domestic brands

Fifty Chinese brands joined forces to open a store on Friday in Beijing that only offers Chinese goods. 

The store, in the Hailong Building on the North Fourth Ring Road, offers a variety of Chinese products, including Huiyuan bottled water, Neiliansheng handmade cloth shoes, Seagull watches and Haier refrigerators. 

The store is the brainchild of the Aigo Entrepreneurs Alliance, which was launched by a group of Chinese entrepreneurs including Feng Jun, founder and chief executive officer of Aigo Technology Co Ltd. 

Speaking at the store's opening ceremony, Feng said that, in recent years, many Chinese people have been "queuing up for hours and spending lots of money on European branded handbags, but not for Chinese products. 

"But we know a lot of Chinese products have good quality and are much cheaper. The alliance hopes more and more Chinese people and foreigners are willing to buy more Chinese goods." 

Feng said the alliance will open 5,000 stores throughout China through franchising by August 2013, and it plans to have as many as 50,000 outlets globally to give Chinese brands an "international platform". 

Guo Zengli, president of China Shopping Center Development Association, said: "Cash flow and sales channels are the two elements the alliance is pursuing after entering the retail industry. But there are a lot of challenges as it is short of retail experience compared with other domestic retail giants." 

Gong Bo, an industry analyst at Beijing United Innovation Capital Ltd, said: "The store model can shorten the supply chain, through which manufacturers can directly send their products to retailers, not via distributors. So the model will decrease supply costs and bring down prices." 

But Gong said many retail giants, such as Suning Appliance Co Ltd, China's largest electrical appliance retailer by sales volume, have tried that business model. 

"If prices at the alliance's store are higher than online shops, its business will be greatly affected by e-commerce," Gong added. 

The products most affected by online business are those that have a high degree of standardization, such as home appliances and household products, said Chen Xiaodong, executive director and chief executive officer of Intime Department Store (Group) Co Ltd. 

According to Boston Consulting Group, China has the world's biggest population of online shoppers at 193 million, compared to 170 million in the United States. 

The trading volume of China's online business reached 750 billion yuan ($120 billion) in 2011, accounting for around 4 percent of the country's total retail value, said the Ministry of Commerce.