NEW YORK (TheStreet) -- U.S. retail sales data are out today, but let's talk some China. Western retailers continue to be obsessed with trying to sell merchandise and their lifestyles to the Chinese. Hey, can you blame them for going full force in opening stores in the country...

  • 1.3 billion live in Mainland China.
  • 50% of Chinese live in urban areas; this figure will balloon to 70% by 2035.
  • 90 cities in China have a population of 1 million or more people.
  • 10% of the population lives on $1.00 a day compared to 64% 35 years ago.
  • Total population of China is projected to reach 1.45 billion by 2028.

As an example of this obsession, Walmart (WMT) is expected to open 110 new giant locations between 2014 and 2016. Gap (GPS) will add 25 of its namesake brand utilizing a mix of full-price and outlet stores, complimenting five Old Navy openings. However, somewhat quietly, Walmart has closed seven locations in China in 2014 after exiting 11 last year. I think this development from Walmart sends a worrying signal to anyone that wants to listen regarding the most disturbing trend in China retailing now well underway: the mall expansion EXPLOSION.

Although the opening of malls will present near-term sales opportunities for Western retailers such as Nike (NKE), Polo Ralph Lauren (RL), Coach (COH) and others as shelves and racks are stocked, this boom will likely end in a big-time bust by 2020 that harms the financial statements of the aforementioned companies and the financial institutions holding the debt underlying the mall deals. Improper marketing of properties and research in its finest, ugliest form.

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