CHINA FRANCHISE NEWS
Vol. 2 , No.16 - September 4, 2001
TOPICS THIS ISSUE:
- China's First Franchising Administration Law to be Published
- Walt Disney Considers Establishing Disney Theme Parks in Mainland China
- Pizza Hut Celebrates Opening of 50th Restaurant in China
- Wal-Mart Sued by Chinese Patent Holder
- Foreign and Domestic Retailers Set Sights on Beijing Market
- China to Unify Quality Authentication Systems
China's First Franchising Administration Law to be Published
China's first franchising administration law is being drafted. This law is based on the current Measures of Administration of Commercial Franchise Operations (Trial Implementation), promulgated by the Ministry of Internal Trade on November 17, 1997. It deals with the rights and obligations of franchisor and franchisee, the basic elements of franchising contracts, mutual disclosures, advertising, and penalties for illegal acts. The disclosure, advertising, and sanction provisions are new.
By the end of the year 2000, there were 410 franchisors in China with more than 11,000 outlets, in more than 30 industries. The new law is expected to provide a healthy regulatory environment for the franchising industry.
(Source: Beijing Youth Daily, 08/15/01)
LEHMAN, LEE & XU submitted formal recommendations to the authorities on how to draft this law.
Walt Disney Considers Establishing Disney Theme Parks in Mainland China
Walt Disney may establish two Disney theme parks in mainland China before Beijing hosts the Olympic Games in 2008. Michael D. Eisner, the Disney CEO, expressed diplomatically that Disney was discussing new theme parks with many countries including China, but no decision has been made yet. However, he added, China is a country with a large population. He believes that one day Disney will set up parks in mainland China. Eisner arrived in Hong Kong after a visit to the Mainland, where he met with Chinese Premier Zhu Rongji on August 28, 2001.
Disney has chosen Hong Kong as a creative base to develop new products and ideas for China and the Asia Pacific region. Hong Kong Disneyland is expected to open to the public in 2005. It will include 5,000 hotel rooms and a 28,000-square-meter retail, dining and entertainment complex.
On August 26, 2001, Disney announced that its Chinese language website www.disney.com.cn went into operation.
(Sources: www.sina.com.cn, 08/30/01)
Pizza Hut Celebrates Opening of 50th Restaurant in China
Pizza Hut announced on August 20 that it has opened a total of 50 restaurants in China and plans to open another 50 outlets in the coming two years.
Pizza Hut entered China by opening its first chain store in Beijing in 1990. It currently employs more than 3,000 staff in the mainland and has 12,000 restaurants worldwide.
Pizza Hut is a member of the world food giant, Tricon Global Restaurants Inc.. Tricon also owns the KFC and Taco Bell restaurant chains. KFC is by far the most popular of the Tricon chains on the mainland, with 480 outlets nationwide.
The opening of Pizza Hut's 50th store shows Tricon's confidence in the China market. Tricon reported sales growth in China in its second quarter earnings report for 2001. While the company saw reduced sales growth in most non-U.S. markets due to the strong U.S. dollar, China was one of a few bright spots.
(Sources: SFISC, 08/22/2001)
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Wal-Mart Sued by Chinese Patent Holder
Supermarket giant Wal-Mart Stores Inc. was sued by Andi Company, a Chinese business located in Hefei City, Anhui province. This suit was brought in the Tianjin Supreme People's Court after Tianjin Customs seized 7 containers of allegedly infringing goods manufactured for Wal-Mart.
Andi manufactures body rehabilitation apparatus for overseas markets. Its general manager, also a technical expert, owns two patents for Andi's dumbbell products.
It came to Andi's attention last year that dumbbells identical to its patented product were sold in Wal-Mart's chain stores. On May 18, 2000, Tianjin Customs seized 7 containers with 2,800 sets of these infringing dumbbells. Customs was told that these dumbbells were manufactured in China and were about to be exported to the United States. The main technical features of these products were identical to those of Andi's dumbbell. The words "Made by Wal-Mart" and Wal-Mart's logo were printed on the packages. Investigation showed that about 200,000 sets of such dumbbells had been exported from Tianjin Port since April, 2000.
(Sources: International Business Daily, 08/29/2001)
Foreign and Domestic Retailers Set Sights on Beijing Market
Both domestic giants and foreign retailers have their sights set on Beijing, hoping to expand their market share in China's capital.
Shanghai Lianhua Supermarket Group, the largest retailer in China, kicked off business in Beijing in March by cooperating with Beijing Chaoshifa Company and Xidan Department Store.
It aims to open 100 outlets in Beijing this year and 1,000 in three years. Currently, Lianhua owns 950 outlets around the country and recorded a sales income of 11.44 billion yuan (US$1.38 billion) last year.
Wal-Mart Stores Inc., the world's largest retailer, has already completed the feasibility study for business inauguration in Beijing and applied to the Beijing Commercial Committee and other government bodies for approval to open outlets.
Earlier reports said Carrefour, Wal-Mart's global rival, which has already has two outlets in Beijing, also planned to develop new stores in the city.
(Sources: China Daily, 08/20/01)
China to Unify Quality Authentication Systems
China National Regulatory Commission for Certification and Accreditation was established yesterday. It will be the only competent authority for quality certification and accreditation.
Before this new organ was set up, there were two quality authentication systems in China. One was established by the former State Administration for Quality and Technology Supervision to apply to domestic products. And the other, mainly designed for foreign products, was run by the former State Administration for Exit-Entry Inspection and Quarantine. Normally, enterprises that had gone through one authentication process were not recognized by the other, which inconvenienced enterprises with products sold both within and out of China.
In April, the two authorities were merged into the State General Administration for Quality Supervision, Inspection and Quarantine.
(Sources:XinhuaNet, 08/30/01)
Lehman Lee & Xu
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