From Retail to Real Estate-A New Trend in China and its Upcoming Challenge for Legal Departments
Michael Qu, Legal Counsel, Metro AG
Recent years have seen a rapid expansion of investment in China by foreign retail giants. Contrary to the worldwide economic crisis, the Chinese market has become a hot destination for foreign capital, especially capital from retail giants. Facing fierce competition in the market, traditional supermarkets seem outdated. For some retail investors, looking for diversity or uniqueness will be a way out. Among others, a combination of the whole chain of retail, entertainment, logistics and service by the development of city commercial centers are becoming a new trend for retail giants. Is this only a trial to invest in the Chinese real estate market due to huge appreciation of assets and increasing rental for real estate, or a must-do strategy? The answer could be different.
Engaging more in the real estate market, retail giants seem to be less experienced in this area compared to what they have in the retail market. Since the legislation system on real estate in China is not quite mature, there is still uncertainty or risk for some investors. Prior to discussing some challenges they are facing, let’s first of all have a general picture on Chinese legal system on real estate.
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