China, India, Turkey, Thailand, Malaysia and Hungary Considered Top Markets for Retail and Consumer Investment, According to PricewaterhouseCoopers Study

Transitional Economies Show Varying Degrees of Challenge and Opportunity in Retail and Consumer Sector

New York, New York, UNITED STATES


NEW YORK, Oct. 6, 2004 (PRIMEZONE) -- PricewaterhouseCoopers launched today the third edition of its Retail & Consumer study, "From Beijing to Budapest: New Retail & Consumer Growth Patterns in Transitional Economies," at the Global Retail & Consumer Business School in Dusseldorf. The study assesses growth opportunities in fourteen countries in Asia, Central and Eastern Europe (CEE) and Russia; it has determined six countries with "GO" recommendations in terms of investment: China, India, Turkey, Thailand, Malaysia and Hungary.

"Our study finds that transitional economies across the globe offer varying degrees of challenge and opportunity for the retail and consumer investor, and while the modernization of the retail and consumer sector is for the most part driven by multinationals, all areas are seeing the emergence of regional players," said Alec Jones, Global Industries Leader, PricewaterhouseCoopers.

The study determines that the most immediate opportunities in the retail and consumer sector lie in China and that India offers more long-term potential for investment in the sector. Turkey, Thailand, Malaysia and Hungary are considered investment havens that offer general opportunities for development in the short or longer term.

Niche opportunities exist in South Korea, Poland, Romania, Czech Republic, Singapore and Slovenia despite the fact that they are already saturated as far as the size of the market is concerned. The study also shows that Russia and Indonesia should be viewed with caution and seen as long-term investment options.

Overall, there are three major trends that emerged after assessing the challenges and opportunities within the fourteen countries covered by the report:


 - Price sensitivity is having a significant impact on brand
   management and the development of private label;

 - Expansion from the increasingly saturated major cities into
   small, regional cities;

 - The development of shoppingtainment -- shopping centers with
   malls and the creation of adjacent leisure activities.

"It is expected that as certain retail and consumer investors take a break after a first phase of investing in these economies that local players will begin capitalizing on their increasing knowledge of modern retailing and their understanding of local cultures to make their presence felt more strongly. This, together with the consolidation of local and foreign retailers' investments, will toughen the competitive environment considerably in the future," said Jones.

Additional findings on the opportunities and challenges facing these high growth markets follow:


 Immediate Opportunities in China

 -   China is the biggest consumer market in the world and membership
     in the WTO (World Trade Organization) will improve business
     conditions for companies investing there.

 -   National and regional brands are still extremely strong, and
     multinationals have to be aware of the extent to which they need
     to adapt their products and marketing to the Chinese consumer.

 -   The Chinese government will play a key role in developing an
     environment conducive to long-term and sound economic
     development.

 India's Emerging Economy Offers Longer-Term Opportunities

 -   Consumer goods companies have already established themselves with
     success in India; there is huge potential for future development
     as the country modernizes.

 -   Currently, foreign retail and wholesale investment is restricted
     to cash & carry outlets and, to a lesser extent, e-commerce.

 -   India's outstanding capabilities in IT will ensure an extremely
     rapid and dynamic development in the modern retailing space.

 -   The new government is designing policies to help improve the
     lifestyles of its 300 million people. Partnerships between
     foreign retail and consumer goods companies with local firms will
     undoubtedly contribute to the improvement of lifestyles and
     higher levels of employment and consumption, when this becomes
     possible in the future.

 Investment Havens

 -   Turkey, with its young and growing population, is an obvious
     target for companies in the retail and consumer sector. A huge
     effort is being made to modernize the Turkish economy and
     accession to the EU would make a significant impact on the
     country's economic development.

 -   While regulatory restraints are still an impediment in Thailand,
     there is plenty of potential for development in this country.
     Increasing consumer demand and the existence of a burgeoning
     middle-class make Malaysia an extremely interesting destination
     for investment. Additionally, a young population, low
     unemployment and a growing modern retail sector all contribute to
     this country's extremely attractive investment climate.

 -   While Hungary has a fast maturing retail and consumer market,
     there are still opportunities left for investment there for
     hypermarkets, convenience stores and specialized outlets
     especially outside the capital.

 Niche Opportunities

 -   South Korea, Poland, Romania, Czech Republic, Singapore and
     Slovenia are already saturated as far as the size of the market
     is concerned. Although a certain number of general retail
     development opportunities in these countries still exist, retail
     and consumer companies would be better advised to focus on niche
     investments.

 -   Singapore and Slovenia's prosperous populations make them targets
     for niche opportunities.

 -   Romania, with its current limitations on property and land
     acquisitions and the limited availability of skilled staff and
     management, also make it a better destination for small, targeted
     retail opportunities.

 Opportunities for the Long Term

 -   Russia is a potentially huge mass consumer market for the
     investor and has one of the highest current world growth rates.
     However, the country is set for an extremely fragile economic,
     political and social framework.

 -   For Indonesia, the decisions made by its government will have a
     profound influence on the country's development in the long term.
     The changing political and regulatory environment is an
     impediment to efficient and rapid development for foreign
     companies.

For more information on the third edition of the PricewaterhouseCoopers Global Retail & Consumer study, "From Beijing to Budapest: New Retail & Consumer Growth Patterns in Transitional Economies," please go to: www.pwc.com/growth.

For a copy of the executive summary please contact: kalexander@porternovelli.com.

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services for public and private clients. More than 120,000 people in 139 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders.

"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

(c) 2004 PricewaterhouseCoopers. All rights reserved.

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Methodology

The third edition of PricewaterhouseCoopers' Retail & Consumer Thought Leadership Study, "From Beijing to Budapest: New Retail & Consumer Growth Patterns in Transitional Economies," covers a market of nearly half of the world's population, living in the economies with the highest growth potential: China, India, Indonesia, South Korea, Malaysia, Singapore, Thailand, Czech Republic, Hungary, Poland, Romania, Russia, Slovenia and Turkey.

The survey was conducted in the fourteen selected countries between April and July 2004, using a generic template. The template was structured around three main investigation topics:


 - Economic overview and regulatory environment;
 - Demographics and consumer behavior;
 - Retail & consumer goods sector: performance, challenges,
   opportunities and emerging trends

The retail and consumer sector as analyzed in the study comprises the following information:


 - Distribution activities (wholesalers, distributors, retailers);
 - Suppliers of consumer packaged goods (CPG);
 - Multinational, regional and local players from both activities;
 - Food and non-food, i.e.
 - For retailers: convenience stores, department stores, supermarkets,
   hypermarkets, supercenters, specialty retailers, and online
   retailers
 - For CPG companies: food, beverage, tobacco, consumer products,
   household and personal products and luxury good.


        

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