CHINA FRANCHISE NEWS
Vol. 2 , No.12 - June 26, 2001
TOPICS THIS ISSUE:
- Kodak Aims to Expand Market in China
- KFC Teams Up with Dot-Com
- China's Overseas Tourism Gains More Profits
- Multinationals face tough competition from local brands
- Nanjing Establishing Eastern China's Largest Logistics Center
- Chinese Investors Enthusiastic in Franchise Fair
Kodak Aims to Expand Market in China
The US-based Kodak Company plans to turn China into its largest market in the world in the coming years, said Daniel Carp, Kodak's chief executive, in Chengdu, capital of Sichuan Province in southwest China.
So far, more than 1 thousand "Kodak Speedy Color" chain stores have been set up in western China, and the number will keep increasing. In its efforts to expand the Chinese market, Kodak has invested 1.2 billion US dollars in setting up five factories in the Chinese cities of Xiamen, Shanghai, Wuxi, and Shantou.
Kodak film now occupies the largest market share in China. A recent survey shows that Kodak has ranked first in film sales in China for the past three years.
(Source: CCTV News 06/13/01)
KFC Teams Up with Dot-Com
ChinaKFC.com, the Chinese web site of the US-based KFC Corp., has been formally launched with technology support from China's leading Internet portal Sohu.com.
Consumers who visit the web site can register to become a member of the "KFC Net Pal Association" and will be sent electronic coupons than can be used in KFC's outlets nationwide. The site also contains product announcements and games for kids to play. This is the first time in China that a food service company has teamed up with a portal dot-com.
After the launch of its Chinese web site, KFC is expected to gradually expand its e-commerce business to provide fast, low-cost, efficient and convenient services to customers.
(Source: ChinaOnline News 06/05/01)
China's Overseas Tourism Gains More Profits
China's international travel agencies are making more profits as there are more Chinese people going abroad and more overseas tourists coming to China, the China National Tourism Administration (CNTA) said on Tuesday.
CNTA statistics show that at the end of 2000, China had 7,725 domestic travel agencies and 1,268 international ones. But the latter generated about 98 percent of the country's total tourism revenue.
A high official with the CNTA attributed the profitability of the international travel agencies to their small scale and good performance, saying that too many domestic travel agencies spoiled the domestic tour business. A recent survey shows domestic tourism had the biggest scale but the lowest profit rate; the profit from hosting overseas tourists ranked second; and the services for those who tour abroad was the most profitable.
This encourages not only Chinese travel agencies but also foreign travel agencies receiving Chinese tourists. Although Chinese organized tours to Switzerland and Austria are not yet offered, the two European countries' tourism ministries have opened travel offices in China.
In a bid to accelerate the development of China's tourism industry and make better use of foreign capital, the CNTA says it will adapt its policies to improve tourism in China's western regions. They will also regulate the creation of jointly-funded travel agencies.
(Source: People's Daily 06/13/01)
Multinationals face tough competition from local brands
As leaders of the world's large firms gathered in Hong Kong at the Fortune Global Forum, business people warned that their international brands face increasingly tough competition from local brands in China.
Miles Young, chairman of Ogilvy & Mather Asia Pacific, said, "Over the last two years, Chinese brands have been getting their act together with dramatic results." They have put money into image building in advance of China's admission into the WTO, he added.
Manufacturers and providers of branded goods and services, from banking to insurance to autos to pharmaceuticals, will face more and more competition from their big-spending local rivals.
A recent study by Ogilvy & Mather Asia Pacific showed that the new generation of the Chinese brands have very strong emotional pulling power on consumers, which owes much to their image as Chinese brands made by Chinese people for Chinese people.
According to BrandZ data, a Hong Kong-based proprietary brand database which measures consumer brand loyalty, seven of the top 10 brands are local, including China Telecom, Mudan Credit Cards, Industrial and Commercial Bank of China, Sohu.com and Legend Computers, which rank well above McDonald's and Coca-Cola.
Young cautioned that it is simply not enough for foreign-owned and foreign-managed brands to "think global, act local". Instead, they must be seen to be local by locals, he said.
(Source: SFISC News 06/15/01)
Nanjing Establishing Eastern China's Largest Logistics Center
Nanjing Wangjiawan Logistics Center, with a total investment of 134 million yuan (US$16.18 million), is under construction. The proposed facility is expected to become the largest logistics center in eastern China.
The logistics center, occupying 86 mu (14.16 acres), is expected to provide marine, land, and air transportation services. According to the Nanjing municipal government's design plan, the area in which the Wangjiawan Logistics Center is located will be developed as an industrial export-processing zone.
(Source: China Daily 06/11/01)
Chinese Investors Enthusiastic in Franchise Fair
Streams of Chinese people who hoped to become rich flocked into the hall of the Beijing International Convention Center, to search for secrets of business success at the third China Franchise Exhibition & Conference held by China Chain Store & Franchise Association (CCFA).
Although it was the third such fair to be staged in the Chinese capital, it was still successful in luring thousands of Chinese intrigued by the idea that the country will soon be admitted into the World Trade Organization, probably at the end of this year. These investors came from every corner of the country.
Last year 11 chain restaurants were ranked in the top 100 Chinese chain enterprises, most of which had accelerated their business development by the way of franchising, including both historically famous shops and the latest successful restaurants.
But building businesses is not easy. Many franchisers wishing to get rich quick complained that profits were less than expected. Available franchise programs for small investors were few. And those with cheap admission scared some investors away for lack of good management, training, and support.
China's impending entry into the World Trade Organization will force a loosening of government control on retailing. The country has committed to opening gradually its retail sector.
(Source: Xinhuanet 06/21/01)
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