CHINA FRANCHISE NEWS
Vol. 2 , No.15 - August 21, 2001
TOPICS THIS ISSUE:
- China Relaxes Control Over Foreigners' Trading Rights
- KFC China Outlets Run Short of Mashed Potatoes
- China Issues Amended Rules on Implementing JV Law
- State Capital to Leave Service Business in Beijing
- Carrefour to Set up Buying Base In China
- "Welcome to Our Restaurant, But Don't Order Too Much"
China Relaxes Control Over Foreigners' Trading Rights
The Chinese government decided last week to relax its control over foreign-invested companies' import and export rights. According to this decision, the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) will allow foreign-invested manufacturing companies to export any non-monopolized products not under quota or license management, regardless of who makes the products.
Although MOFTEC also ruled that these companies must export at least US$10 million each year and must not have broken any laws or rules on taxation, foreign exchange and foreign trade in the past two years, experts said the measure is a big step towards a relaxing of government control over trading rights.
Foreign-invested companies accounted for half of China's total exports in the first six months of this year. Their export volume increased 16.9 per cent in that period to US$62.3 billion, while the overall increase for China was 8.8 per cent.
MOFTEC said the measure was taken to prepare China for its impending entry into the World Trade Organization (WTO). China has promised to let all companies conduct foreign trade business within three years of WTO accession, which is widely expected to occur by the end of the year.
(Source: China Daily 07/24/01)
KFC China Outlets Run Short of Mashed Potatoes
Since the end of last month, Kentucky Fried Chicken (KFC) outlets in major Chinese cities, including Shanghai, Beijing, Guangzhou and Nanjing, have stopped serving their popular mashed potato dish due to an insufficient potato supply.
The shortage resulted from logistics problems at the U.S. headquarters of Tricon Global Restaurants Inc., which owns the fast-food chain. Potatoes used at KFC outlets in China are normally imported from the United States. KFC outlets in smaller cities also will face a "potato crisis" as soon as their supply runs out, according to Tricon Global's Chinese branch, which said at least 5 million tons of mashed potatoes are consumed each year at KFC outlets nationwide.
Last month, KFC tried to find a national supplier from three potato suppliers in Shanghai and Inner Mongolia, but found the potatoes were not up to standards. With domestic farmers' potatoes also failing to meet KFC's quality requirements, they have missed a lucrative deal of supplying 300 million yuan (US $36 million) worth of the tubers annually to KFC outlets across China.
Fang Zhiquan, a spokesman for the Shanghai Vegetable Office, blamed inadequate sunlight at domestic potato plantations for the inferior quality of Chinese potatoes. Fang noted that the problem could be solved by technological support.
Meanwhile, Tricon Global is seeking to purchase additional potatoes from Australia and the United Kingdom.
(Source: Eastday.com 07/31/01)
China Issues Amended Rules on Implementing JV Law
China's State Council, the highest governing body, issued rules on the implementation of the newly amended Law on Sino-Foreign Equity Joint Ventures on August 1. According to the No. 311 State Council Decree signed by Premier Zhu Rongji, the revised rules take effect as of the date of issuance.
Altogether 45 amendments were made to the rules, in line with a decision made by the top legislature on March 15 on revising the joint venture law to better serve China's reform process, accelerate market drive and improve the investment environment for foreign investors.
The amendments removed provisions that require joint ventures to file their production and operation plans with relevant authorities and procure materials from within China whenever possible. It has also added provisions concerning labor protection and insurance, and arbitration of disputes involving joint ventures.
The rules were first issued on September 20, 1983 and underwent revision in 1986 and 1987.
(Source: People's Daily 08/01/01)
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State Capital to Leave Service Business in Beijing
According to officials with the Beijing Municipal Commerce Commission, state capital will be withdrawn from Beijing's small service businesses, such as those running bathrooms, barbershops, repair shops, restaurants, inns, laundries and photo studios, so that funds can be directed to the establishment of 18 large commercial enterprise groups in five years.
For certain businesses with large amounts of assets, the withdrawal of state capital will be conducted step by step. For large and mid-sized retail and wholesale businesses with promising prospects, the government's stake should not exceed 50 percent.
Observers say the move will help make better use of state funds in major industries and improve the performance of the whole service trade. It is of special significance on the eve of China's entry into the World Trade Organization, an event which means China will have to open its service industry so that investors, Chinese or foreign, can compete on equal footing.
(Source: XinhuaNews 07/30/01)
Carrefour to Create Buying Base In China
French retailer Carrefour plans to set up a buying and distribution base next month in Shenzhen, in south China's Guangdong Province. The center will be the company's first purchase office in China.
Carrefour has 23 supermarkets in 14 cities across China and the new Shenzhen center will distribute Chinese commodities through the company's global retail network. The French retailer says the Chinese base will be developed into one of the company's major distribution centers in the world, feeding its chain stores in 29 countries and regions. It will also give Chinese producers access to worldwide orders, requirements and quotations as well as provide information about the international market.
Carrefour hopes the center will boost its buying power in China. It expects to procure 1.5 billion US dollars worth this year and double the figure within two years.
Carrefour is the world's second largest supermarket chain after Wal-Mart. Over the past year, most of the company's purchasing in China has been based in Shenzhen, China's first special economic zone.
(Source: CCTV News 07/28/01)
"Welcome to Our Restaurant, But Don't Order Too Much"
A famous Beijing restaurant is now launching a nationwide campaign among its 69 branches, aimed at convincing customers to order only a sufficient amount of dishes. Such slogans as "Welcome to our restaurant, but don't order too much" can be seen in the Quanjude outlets. Quanjude is a very famous restaurant that serves roasted duck with a history of over 100 years.
According to the latest official figures, as many as 1,600 tons of leftover food are thrown away everyday in Beijing and Shanghai. Some sociologist believe that in China, at least 4 billion U.S. dollars and another several million tons of grains are wasted by ordering excessive dishes in restaurants.
However, for Quanjude and its followers, the target of establishing a tradition of anti-waste still has a long way to go. Restaurant customers in China, especially those who want to impress guests or desire to spend large amounts of money in high-class restaurants, generally have the notion that prestige or respect depends upon how much money they spend on dishes.
"We will have to fight a tough war against the bad habit of wasting money and food," said Yan Yu, deputy secretary-general of the China Cuisine Association.
(Source: People's Daily 08/01/01)
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