San José State University

applet-magic.com
Thayer Watkins
Silicon Valley,
Tornado Alley
& the Gateway
to the Rockies
USA

The Commercial Penetration
of Retail Markets in the Azores
by China-Financed Businesses

On a recent (August 2018) tour of the Azore Islands of Portugal Betty and I first became conscious of major investment by businesses from China when we came upon a large hotel in western Sao Miguel which has been recently purchased by a Chinese business for 200 million euros. It had been built years before and had failed commercially. It has been vacant for years.

Renovaction has not started yet but is due to begin next year.

It overlooks the Twin Lakes region and it is easy to visualize Sao Miguel as a stopping off place for tourists from China on their way to destinations in Europe. They would naturally visit theTwin Lakes where one lake is greenish and the other bluish due to different algae.

In Punta Delgado there are quite a number of shops labeled Loja Chinesa (Chinese Store) with different owners. They are notable for having seemingly irreristibly low prices. Betty, an inveterate shopper, found attractive women's dresses in these stores selling for about seven euros which woud sell for about thirty dollars in the U.S. and about fifteen in non-Chinesa stores in Punta Degado. Normally one would expect the locals to patronize only the shops owned by locals but the strategy of the Lojas Chinesas is to set prices so low that they are irresistible. But so far the strategy is not working. Betty observed that the customers in the Lojas Chinesas are largely tourists. Local people told us that the Government of China pays the rent for these Chinese shops for the first five years of their operation. This ls to enable them to charge irresistibly low prices and overcome any local resistence against shopping in alien stores.

Conclusions

(To be continued.)


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