CHINA FRANCHISE NEWS
Vol. 2 , No.21 - December 13, 2001
TOPICS THIS ISSUE:
- China's Service Industry Attractive to Foreign Investment
- Wal-Mart to Enter Beijing with Five Branches
- Chinese Cities Open to Foreign Commercial Companies
- McDonald's Lose its Title to "McChina"
- CCFA Announces This Year's Top Ten Events in China Chainstore Industry
- KFC Sales in Mainland China Top Two Billion Yuan
China's Service Industry Attractive to Foreign Investment
China will gradually open up its service industry within several years after its entry of the WTO. The service industry in China now contributes about one third of the national GDP, which ompares with an average world rate of 60 percent.
Following the first foreign investment wave in China, multinational companies, aware of the bottleneck created by deficiencies in the service sector, promoted investment in wholesale, retail, foreign trade and other marketing systems, in banking, insurance and other financial systems, and in law, accounting, management, PR and other specialized consulting service systems.
The opening of the commercial retailing market has been gradual. In July 1992 the State Council issued the Reply on Utilization of Foreign Investment in the Commercial Retailing Sector, permitting one or two foreign-funded retailing enterprises each in Beijing, Shanghai, Tianjiin, Guangzhou, Dalian and Qingdao and the five special economic zones. However, such ventures must be Sino-foreign equity or contractual joint ventures in which the equity of the Chinese party exceeds 51 percent. Such ventures may not engage in wholesale business, and the proportion of imported commodities may not exceed 30 percent. By the end of 1999, the State Council had approved 28 Sino-foreign joint venture retailing enterprises, and local governments had approved 277 such ventures, involving a total foreign capital of about 2 billion US dollars.
(Source: Asia Pulse, 11/18/2001)
Wal-Mart to Enter Beijing with Five Branches
Wal-Mart, the world's largest chain store retailer, will set up five Beijing branches with a total investment of 25 million US dollars including 6.5 million of foreign capital. The five branches will include three shopping plazas and two members-only stores called Sam's Club. The first Sam's club in Beijing is expected to open by early 2003.
In 1996, Wal-Mart started its business in China by opening its first Sam's Club member store and shopping plaza in Shenzhen, a special economic zone in Guangdong Province near Hong Kong. Now15 Wal-Mart branches operate in China, involving a total investment of 1.3 billion yuan (about 156 million U.S. dollars).
Last year, Wal-Mart purchased more than 10 billion U.S. dollars worth of China-made products, about 20% directly bought in China, for sale in its outlets around the world.
(Source: Xin Hua news, 11/20/2001)
Chinese Cities Open to Foreign Commercial Companies
China has decided to open all cities to foreign commercial firms as one of the first steps taken after its entry of the WTO.
Foreign retail giants are allowed to establish its business presence in the capital cities of provinces and autonomous regions, economic zones and municipalities. A foreign retailer with an average retail volume of over US$ 2 billion for three successive years can apply to the central government to set up joint ventures in China. The government encourages foreign investment in state-owned commercial enterprises by providing preferential policies.
The presence of foreign retailers has brought advanced management experience and modern marketing skills to China's retailing market. "Shopping facilities and environment, the quality of services and commodities and the marketing patterns of domestic commercial enterprises have also been greatly improved," an Official with the State Economic and Trade Commission said.
Foreign investment in commercial enterprises accounts for only 1% of China's total foreign capital inflow and the total turnover of the foreign-invested commercial firms accounts for just 4% of China's total retail sales volume. So there is still much room for foreign investment in the commercial sector to grow.
(Source: China daily, 11/28/2001)
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McDonald's Lose its Title to "McChina"
McDonald's Corp, the world's largest restaurant company, tried in vain to stop a British-based restaurateur from using the name McChina in Britain.
A judge at London's High Court said the US fast food giant was trying to monopolize the "Mc" or "Mac" prefix. Judge David Neuberger overruled an earlier decision to prevent restaurateur Frank Yu Kwan Yuen, a Chinese immigrant, from registering McChina as a British trademark.
Yuen, who moved to England from China in 1967, with the ambition to create "a new generation of Chinese food" with fast food restaurants across Britain, had opened his first McChina restaurant in Wimbledon, south-west London in 1991. He adopted the Mc prefix to signify "son of", as in Scottish names.
However, his trademark application met an opposition from McDonald's, which, as the owner of a series of established trademarks including McDonald's, MacDonald's, Mc and Mac, claimed that the registration of McChina would cause confusion among consumers.
Rejecting McDonald's evidence, the judge said there was an "absence of any evidence of confusion". After the hearing, Yuen was quoted by the Times newspaper as saying he was "as happy as a drunken prawn".
Yuen opened the first McChina restaurant in Wimbledon, south-west London in 1991, under the names McChina Stir Fried and McChina Wok Away.
(Source: AAP Newspeed, Nov. 28, 2001)
CCFA Announces This Year's Top Ten Events in China Chainstore Industry
The 3rd Annual Meeting of the China Chainstore Industry held in Shanghai has announced the top ten events in 2001 for the industry. The 10 events are as follows:
- Mr. Li Lanqing, vice premier of the State Council, provides guidelines to the chainstore industry and points out that the reform in circulation of commodities is vital to the development of chainstore industry.
- Regulation on the Administration on the Commercial Franchise Operation was put on the legislative agenda.
- "Beijing Xidan Hualian Supermarket" is established as a sign of cooperation among the three local retail giants, namely, Shanghai Hualian, Beijing Xidan and Chaoshifa.
- China's largest retailer, Shanghai Lianhua, became the first local retail enterprise to own1000 stores.
- The release of the list of the top 100 Chinese chainstore enterprises for the year 2000.
- China Chainstore & Franchise Association (CCFA) won the sponsorship of the 2003 Asia Franchise Exhibition.
- The State Economic and Trade Commission (SETC) approved more JV retailers during the experiment with foreign investment in commerce industry.
- Huarun (China Merchants) was approved to acquire Shenzhen Wanjia Store with an investment of RMB 475 million.
- "Efficient Customer Response" (ECR) established its China Committee.
- "Malan Noodles", a famous fastfood chain store originating in northwest China, opened three chain stores in Paris, marking the first presence of Chinese fast food in Europe.
(Source: CCFA, 14/11/2001)
KFC Sales in Mainland China Top Two Billion Yuan
Kentucky Fried Chicken (KFC) had sales of at least two billion yuan (about 250 million U.S. dollars) in mainland China in 2000, according to the State Statistical Bureau.
Tricon Global Restaurants Inc., a U.S.-based fast food giant, said that it has opened more than five hundred KFC chain stores in China. Nearly all KFC stores in China are profitable, according to J. Samuel Su, president of Tricon in China.
The success of foreign fast food owes to the high standards in food preparation and in-depth market research.
KFC, after careful investigation and research, divided Beijing into 75 commercial districts, opening at least one store in each to ensure that the eye-catching red-and-white KFC storefront is ubiquitous in Beijing's commercial areas.
(Source, Xinhua News, 11/29/2001)
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