Carrefour To Open First Central Asian Stores In Uzbekistan

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Op/Ed by Chris Devonshire-Ellis

Central Asia Allure Starts To Appeal To Investors After Years Of Neglect 

The French retailer Carrefour will open its first stores in Uzbekistan next year, an important marker of just how far the Uzbek economy has come in recent years. The retailer is partnering with Dubai-based Majid Al Futtaim, which owns shopping malls and retail franchises in  the Middle East and intends to  open seven shops under the Carrefour brand  in Tashkent over the next two years.

Hani Weiss, CEO of Majid Al Futtaim – Retail, said that these would be the first Carrefour stores in Central Asia. “A supportive government, growing economy and high demand for a customer centric offering like ours makes Uzbekistan a compelling fit for our expansion into Central Asia.” he said.

It is also an important return to the region for French hypermarkets. In 2017, after a high-profile launch 15 months earlier, Carrefour’s French rival Auchan closed its only store in Kazakhstan.

This was a humiliation for Kazakhstan and the decision by Carrefour to open in Uzbekistan rather than Kazakhstan is perhaps a sign of the shifting market forces now that Uzbekistan has opened up under President Shavkat Mirziyoyev. In its press release, Carrefour said that it would work with 600 local suppliers and manufacturers to stock its hypermarkets and would create 2,500 jobs directly and indirectly.

Mr Weiss, the Majid Al Futtaim – Retail CEO, said that the company considered the Uzbek market to be a launchpad for regional expansion. “We see Uzbekistan as a stepping stone to the rest of the central Asian market.” he said. Majid Al Futtaim already operates 285 Carrefour hypermarkets in 14 countries.

The move by Carrefour comes as the country mulls membership of the Eurasian Economic Union, which also includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia, although the country already enjoys some preferential free trade rights with the organisation. Uzbekistan has a market of some 32 million people, a GDP of about US$50 billion, with growth running at a healthy 5.3% and a per capita income of around US$7,200 (PPP). The country also reduced its VAT rate from 1st October in moves that will boost consumer spending – great news for retailers. The country has also relaxed its visa regime, and now offers Visa Free access to 45 different countries therefore boosting regional tourism. Carrefour have been doing their homework (and reading Silk Road Briefing).

Uzbekistan is landlocked, however has great mineral wealth. As such it has become a focal point in Central Asia as concerns infrastructure developments, which include it being part of the China-Europe Connectivity network. This, coupled with an increasingly liberal political regime, friendly towards Foreign Investment has seen opportunities in the country increase. Carrefours move, which has to be underpinned by significant logistics developments, will prove a bellweather for other foreign investors interested in looking at reaching out into Central Asia. Indian investors, who are likely to see their country move to Central Asia markets with negotiations on-going with the EAEU rather than the previously touted South-East Asian free trade with RCEP, will especially be interested in following developments.

 

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About Us

Silk Road Development Weekly is compiled each week by Chris Devonshire-Ellis, Chairman of Dezan Shira & Associates. The firm has 28 offices throughout Eurasia and assists foreign investors into the region. For strategic advisory and business intelligence issues please contact the firm at silkroad@dezshira.com or visit www.dezshira.com

 

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