Deflation Dilemma: How Deep Discounts Are Reshaping China's Retail Landscape

Amid China's deflation challenges, manager Leo Liu of Beijing's Wankelai highlights the thin-profit model with flash sales to combat inventory pressure. As industrial capacity rises and consumer price index dips, price wars create deflationary pressures threatening traditional retail models and economic growth.

In Beijing, the sprawling Wankelai store, managed by Leo Liu, stands as a testament to China's deflationary economy challenges. Utilizing flash sales to slough off inventory, the store aims to attract consumers with sharp discounts, like selling a cotton jacket at a mere fraction of its initial price.

Analysts warn that the flourishing discount retail trend stirs deflationary pressures, similar to Japan's 1990s deflationary struggles. The broader preference for value-for-money purchases intensifies competition, pressuring traditional retail models as the consumer price index continues to fall.

As industrial capacities and export surges persist, price wars—from budget breakfasts to cheaper electric vehicles—shape China's economic terrain. Both household demand and unemployment concerns fuel this complex scenario, raising alarms over sustainable economic growth.

(With inputs from agencies.)