CHINA FRANCHISE NEWS
Vol. 2 , No.19 - November 8, 2001
TOPICS THIS ISSUE:
- Le Saunda to Franchise its Nat's Brand in Mainland of China
- B&Q to Open More Chain Stores in China
- First Taiwan-funded Mall Opens in Beijing
- China Issues Rules on Retail Sales of Gold Product
- Domestic Businesses Join Hands before the Opening of Wal-Mart's first Beijing Store
- China Federal Software Prepared for GEM Listing
Le Saunda to Franchise its Nat's Brand in Mainland of China
Le Saunda Holdings Ltd is starting new product lines in Mainland China in an effort to expand beyond its stagnant Hong Kong market and position itself for China's WTO accession. Le Saunda is studying whether to franchise its "Nat's" brand in China.
Le Saunda reported a net loss of 5.67 million HK dollars for the first half of this year compared to a net profit of 479,000 HK dollars in the previous corresponding period.
Le Saunda's Hong Kong operations had been suffering an operating loss since the previous fiscal year. The company expects its Hong Kong market will remain "difficult and full of challenges" given the uncertainties surrounding the economic outlook and waning consumer confidence.
Le Saunda's mainland China business recorded an operating profit of 7.675 million HK dollars for the half, down from 12.233 million a year earlier, reflecting increased inventory pressure and consequent price cuts of its footwear products. "On the whole, management is confident that our shoes and property development business in Mainland China will retain their previous strong performance in the second half of the year," it said.
(Source: AFX News Limited, 30/10/2001)
B&Q to Open More Chain Stores in China
B&Q Plc will open 58 chain stores to sell construction materials in more than 30 Chinese cities by 2005. The announcement was made during a trade fair at the 2001 West Lake Expo in Hangzhou. B&Q has so far set up stores in Shanghai, Tianjin, Nanjing, and Hangzhou.
B&Q is a subsidiary of the world-famous Kingfisher Plc of Britain. It owns nearly 600 chain stores in 14 countries. B&Q and Kingfisher Plc purchase from China construction materials, hardware and tools, electric appliances and general merchandise worth 1 billion U.S. dollars annually and sell them through their chain stores worldwide.
(Source: Xinhua News Agency, 31/10/2001)
First Taiwan-funded Mall Opens in Beijing
On October 25, 2001 the Pacific Department Store opened in eastern Beijing. It is the first Taiwanese retail store in China. Taiwan Pacific Group is the largest shareholder. The six-story Pacific Department Store is located in the western part of the Changhong Overpass in the Chaoyang District. At present the store is on a trial run, and will be officially open to the public on November 1st 2001.
The second Pacific Department Store is expected to open by the end of this year in Xidan, near the center of the city. And a third store will set its location in the western part of Beijing. "When all of the three stores are in operation", the chairman of the Chinese investor said, "the sales figure will reach 2.7 billion yuan."
(Source: Beijing Youth Daily, 25/10/2001)
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China Issues Rules on Retail Sales of Gold Product
The People's Bank of China announced on October 30 that enterprises and individuals who intend to engage in retail sales of gold products are required to register.
The Circular on Regulating the Retail Market for Gold Products provide that entities selling gold products should obtain approval from the central bank's local branches, get a business license from the local Administration for Industry and Commerce (local AIC), and handle tax registration procedures with the local taxation administration. The central bank's local branches should decide whether the entity is qualified for gold retailing within 40 working days of the application date. Auction houses also have to get an approval if they want to auction gold products. Foreign invested enterprises engaged in gold product retailing should, according to this Circular and the Trial Measure for Foreign Invested Commercial Enterprises, get approval from the central bank's local branch and the local MOFTEC, and register with local AICs.
The circular was jointly issued by the People's Bank of China, the State Economic and Trade Commission, the State Administration for Industry and Commerce, and the State Administration of Taxation.
The circular allows the opening of chain stores and outlets of enterprises engaged in retail sales of gold products. But these enterprises must purchase from officially designated suppliers.
The central bank announced in April this year the abolition of China's long-term government monopoly of gold and the commencement of a gold market.
(Source: www.pbc.gov.cn, 31/10/2001)
Domestic Businesses Join Hands before the Opening of Wal-Mart's first Beijing Store
A branch of the U.S.-based Wal-Mart, the world's largest chain store retailer, is to open in Beijing on November 7. The store, located in the capital's western Shijingshan District, will be a joint-venture between Wal-Mart and a domestic company.
In 1996, the corporation opened its first Asian member store and shopping plaza in Shenzhen, one of the country's first special economic zones in Guangdong Province. Wal-Mart thus became one of the first overseas retailers permitted to establish joint ventures in this country.
Coincidentally, on November 6, 2001, 13 Beijing retailers signed an agreement to merge into the Capital Chain Store Commercial Group. It is rumored that the alliance of these commercial giants directly resulted from the guidance of Beijing Commercial Committee. Unlike Shanghai, domestic commercial businesses in Beijing haven't merged to create any large-scale companies with competitive strength. The new alliance is supposed to achieve economies of scale.
(Source: http:// www.sina.com.cn, 07/11/2001)
China Federal Software Prepared for GEM Listing
Federal Software Co Ltd, China's largest software chain operator, will launch a listing on the Hong Kong Growth Enterprise Market as early as next month, company vice-president Lin Yue said, according to the Shanghai Daily.
Federal plans to use IPO proceeds to turn itself from a software retailer into a nationwide software service provider, and to promote sales to corporate and government clients. Federal has appointed Core Pacific-Yamaichi as the offer's main underwriter, but has not decided how much it will raise, Lin said.
Established in January of 1994, the company is the first domestic enterprise dealing in genuine software products and related services. Presently it operates more than 300 software chain stores in China, but has experienced a decline in its earnings from these stores as profit margins on software have narrowed. In 1995-1996, the profit margin on software was about 50 percent, but the margin has since shrunk to below 30 percent. The main factors accounting for the profit decline are higher rents for software stores in large cities, more local competitors and popularization of online software sales service.
(Source: AFX-Asia, 24/10/2001)
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