November 22, 2005

Updating the Update: Saks, China, Media

Here are some follow-ups to recent subjects we've covered in TPM Update.

Saks

The deduction problem refuses to go away - according to an article in the New York Post (11/16/05), "Saks said it received an 'additional subpoena' on Oct. 11 from the Securities and Exchange Commission related to a probe into markdown payments and other financial controls from 1999 through 2003."

http://www.nypost.com/business/57523.htm

China

China's Ministry of Commerce is considering enacting laws to regulate some promotional allowance practices, according to Shanghai Daily (11/03/05):

The Ministry of Commerce is collecting suggestions for two new regulations that will place strict and clear requirements on market promotions and terms of payment among both suppliers and retailers.

Retailers will be banned from several poor practices including charging suppliers sponsorship fees for opening new stores. They will also be banned from forcing suppliers to take part in promotional activities by threatening to halt purchases.

Good luck, Ministry of Commerce.

In an article in the Minneapolis Star-Tribune (11/15/05), we gain insight into the strategy of General Mills in China. They are (wisely in my opinion) looking to the long-term. The most interesting part of the article, though, was to me a graph detailing the number of people in China that General Mills sees as being able to consider purchasing three of their products:

http://www.startribune.com/stories/117/5729194.html

There's also a fascinating article in Retail Traffic, giving lots of statistics on the development of Chinese retail. For example a listing of the top retailers (only one of the top ten - Carrefours - is a foreigner. Wal-Mart is nineteenth), as well as the news that a mall is being developed in Dongguan that will be twice as big as Mall of America. However, as the article notes, street vendors "remain the dominant retailers."

I noted in my previous article on China that Wal-Mart is having problems there because they can't compete on price, which is the only thing they know how to do. Retail Traffic echoes this: "While its primary attraction here is its low prices, in China, that's not enough. 'They can't match the prices of street markets, so they have to compete on the basis of quality, product mix and convenience,' says Kalish."

http://retailtrafficmag.com/mag/retail_road_china/

Media

The last TPM Update discussed the decline of newspapers. It was followed almost immediately by further news of circulation declines and by news that the biggest stockholder in the Knight-Ridder chain had told management to put the company up for sale (coupled with the threat that, if they didn't, there would be a takeover of the board). The company promptly engaged Goldman Sachs to look for potential buyers.

http://www.editorandpublisher.com/eandp/search/article_display.jsp?vnu_content_id=1001480067

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