CHINA FRANCHISE NEWS
Vol. 2 , No.17 - September 24, 2001
TOPICS THIS ISSUE:
- Legal Registration Required for Foreign-funded Wholesalers and Retailers
- China to Encourage Foreign Investment in SMEs
- Lucky Remains Fortunate in Chinese Film Industry
- Wal-Mart to Enter Beijing Market by Year's End
- Brand Cooperation for Sportswear Industry
- China's First Appraisal Rule on Intangible Assets Now in Effect
Legal Registration Required for Foreign-funded Wholesalers and Retailers
Over 300 foreign-funded wholesalers and retailers in China must apply for licenses from the State, a senior official from the Department of Foreign Economic Co-ordination under the State Economic and Trade Commission (SETC) said on September 11th at the Fifth China International Fair for Investment and Trade.
At the moment, most foreign-invested commercial companies in China are approved by local authorities, but lack State approval. SETC's data show that only 40 of the 365 foreign-funded wholesalers and retailers operating in China since 1992 have obtained licenses from the State level.
The SETC ordered the businesses to register by the end of this year. However, it did not reveal what punishment the companies may expect if they do not register.
The measure is widely believed to be a move by China to prepare for intense competition after its entry into WTO.
(Sources: www.Chinabiz.org, 11/09/2001)
China to Encourage Foreign Investment in SMEs
China is working out regulations to allow foreign investors to buy small and medium-sized enterprises in China, a senior official from the State Economic and Trade Commission (SETC) told an ongoing forum in Xiamen.
The Chinese government will take measures to support foreign enterprises to participate in China's reform of these small and medium-sized businesses. For example, it promises to establish a sound credit system, expand credit lines to the small and medium-sized enterprises, and allow them to go public on domestic and overseas stock markets.
(Sources: Xinhua News Agency, 10/09/2001)
Lucky Remains Fortunate in Chinese Film Industry
Lucky Film, the only remaining independent film maker in China, suffered a 10.7 percent drop in profits in the first half of this year. With US giant Eastman Kodak and Japan's Fuji Photo now active in the mainland market, Lucky posted lower earnings of RMB 102.19 million (US$12.35 million).
Competition among the three large companies is intense. Film this year is now 20 percent cheaper than last year in the large metropolitan centers of China.
Although Lucky only has 20 percent of the market, it plays an important role in the domestic film industry. Its persistence has obliged the global veterans Kodak and Fuji to lower their prices in the Chinese market.
While Kodak's sale price for a 36-shot roll of film in Europe is US$ 5 and US$ 3 in the United States, in China the price drops to RMB 16 (US$ 2).
Lucky currently has 2,700 film developing stores, while the market leader Kodak has 6,000.
Several foreign businesses have expressed hopes to form strategic partnerships with Lucky. Kodak and Fuji, and well as Japan-based Konica and Belgium's Agfa have all been investigating joint venture possibilities with Lucky, but Lucky's desire to maintain control has been an obstacle.
(Source: China Daily, 28/08/2001)
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Wal-Mart to Enter Beijing Market by Year's End
Wal-Mart Stores Inc. is currently selecting a site in Beijing and will establish itself in the city by the end of the year.
According to an official from the Beijing Municipal Commercial Commission, a feasibility study submitted by Wal-Mart has been reviewed and approved. After the report is approved by the State Economic and Trade Commission and another regulatory body, Wal-Mart will achieve legal status in Beijing.
According to the official, the review-and-approval process for the establishment of a store in Beijing by a foreign business is typically a lengthy process. However, due to the strength of Wal-Mart's global business, the U.S.-based retailer will likely obtain this approval in only three to four months, the article noted.
(Source: www.chinaonline.com, 04/09/2001)
Brand Cooperation Strategy for Sportswear Industry
Now that China has won the bid to host the 2008 Olympic Games, sportswear enterprises are discussing brand cooperation strategy. On September 8, nearly 30 sportswear manufacturers, including Nike, Adidas, Li Ning, gathered in Shanghai.
About 65% of the sportswear in the global market is made in China. At the seminar sponsored by Dupont, sports wear manufacturers agreed that cooperation among brand owners of raw material, plus material and ready-to-wear will enhance the competitive edge of the whole industry. As a result, a preliminary agreement was reached by the attending enterprises that they will take part in the "Partnership Project" sponsored by Dupont. Dupont, as fabric supplier, will help the lining and ready-made clothes manufacturers to gain consumer preference information, while the enterprises increase the technical level of their products by introducing newly-developed fabrics like Coolmax. Plus material and clothes containing Coolmax should bear a standard mark to identify the fabric.
(Source: www.people.com.cn, 09/09/2001)
China's First Appraisal Rule on Intangible Assets Now in Effect
China's first "Assets Appraisal Rule---Intangible Assets" went into effect on September 1, 2001. The China CPA Association helped develop the Rule.
Published by the Finance Ministry on July 23, 2001 as the first regulation for China's appraisal industry, the Rule provides the basic requirements for the evaluation of intangible assets. The Rule forbids groundless assumptions. The appraiser should consider the macroeconomic prospects, the industrial status and the subject enterprise's status and prospects. Also, the Rule puts more obligations on the assets appraiser by providing a list of the essential information that should be disclosed in the appraisal report.
(Economy Daily, 06/09/2001)
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