Wednesday, July 17, 2013

Why Chinese commerces close every three months!

In China, commerces close very fast.
I opened 3 restaurants in China with more or less success. I believe that most commerces change owner every three months!


How can we explain this fast turn-over?:

  • Chinese tenants don't have any business plan, no long term plan. The tenant doesn't calculate his costs, his income, the rent, the turn over he should achieve.
  • Chinese tenants don't take into account the amount of the initial investment. They will often spend more for a questionable initial investment that might not necessarily bring value for consummers. For instance and marble and golden toilet in a restaurant...
  • Many Chinese commerce don't look at the existing offer. It happens that two shops will open next to each other with a similar offer.
  • Chinese consumers come once but they don't come back. This can be misleading for a outside observer. Chinese customers are curious: they want to try once...
  • Many commerces are juste a façade to recycle dirty money... For instance you can see some restaurant with unbearable costs and low price offer. They can not bear these costs and  at the same time grow... Sometimes they are place for prostitution, drugs...
  • The tenant wants to cede his rent. Many tenants don't open a commerce to make money. They expect to make money when they cede their rent! For instance the tenant will pay 100 000rmb to rent and then cede his rent for 500 000!
  • The owner was cheated while buying a modern and far too expensive place. He wants to get back his money and will rent at irrealistic price. Some owner would rather even leave a empty place than lower their rent.



The last shop on the right is where we opened our restaurant.
Before there was a shop for construction material, we kept the restaurant opened 1 year, then we let the rent to a Chinese restaurant. After 1 month, the Chinese restaurant cede the rent to another Chinese restaurant.

Our neigbour from the left was a shop for cigarettes and drinks, then a restaurant.
The next neighbour was a travelling agency, then a restaurant then a school for children.
...


Some businesses match well. For instance a cigarette shop, a alcoohol shop, a restaurant...
Or some fashion clothes shop, a sushis restaurant, a school for wealthy children...

Different shops give you an idea of one area customers: young people, students, wealthy wives, companies...

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