CHINA FRANCHISE NEWS
Vol. 3 , No. 1 - January 7, 2002
TOPICS THIS ISSUE:
- Beijing's Largest Retail Company
- Shanghai Toothpaste Says Farewell to Unilever
- Japan Itochu Corp. Expands in China's Capital
- Smithfield Foods Sets up Chinese Venture With Artal
- Shenzhen to Turn into Logistics Centre
- Three Asian Retailers Join Forces with Thai Food Giant
Beijing's Largest Retail Company
Chain retailers Chaoshifa and Tiankelong merged on December 18 to form Beijing's largest supermarket company. Beijing Chaoshifa-Tiankelong Co., Ltd., the new company, ranks among China's top 10 chain store operators with 101 stores and an estimated annual sales volume of over USD313 million.
Beijing's retail market now has fierce competition. France's Carrefour has opened four large supermarkets in the city. Last week Japanese retailer Ito Yokado opened its second store. And Wal-Mart from the United States is expected to enter the local market soon.
The total sales volume of the chain stores in Beijing reached 17.4 billion yuan (2.1 billion U.S. dollars) last year, accounting for 12 percent of the retail sector.
Yang Qirui, general manager of the new company, said they will soon open supermarkets in Moscow, Russia, and north China's Hohhot and Zhuozhou cities.
(Source: Xinhua News Agency, December 20, 2001)
Shanghai Toothpaste Says Farewell to Unilever
It's over. Shanghai Toothpaste Co., Ltd. (STF) terminated its seven-year cooperation with Unilever. STF wants to recover its two famous toothpaste brands "Zhong Hua" and "Maxim" from the hands of the foreign giant. STF licensed these brands to Unilever when the two sides formed a joint venture controlled 60% by Unilever. It was agreed that the Chinese party has the right to recover the brands if the sales volume of the JV's products failed to keep growing every financial period. General Manager Hou Shaoxiong said Unilever failed to live up to its commitment.
(Source: Asia Pulse, December 17, 2001)
Japan Itochu Corp. Expands in China's Capital
Hua Tang Yokado Ltd., a venture between Japan's Ito-Yokado Co. and Itochu Corp. and China National Sugar & Wines Group Corp., opened its second department store in mid-December near Beijing's Asian Games Garden, where much of the 2008 Olympics will be staged. Uichiro Niwa, the Itochu president, said the joint venture is preparing to open two more shops in the capital. Eventually, it plans between 10 and 15 stores in the capital before expanding elsewhere.
According to Niwa, Itochu will also open about 3,000 FamilyMart convenience stores initially, then gradually increase the number to 10,000. To support expansion, Itochu plans to build distribution bases in China, including warehouses and transportation systems.
Under WTO agreements, foreign firms will be able to hold a controlling stake of up to 65% in retail stores in 2003.
(Source: Japan Economic Newswire, December 27, 2001)
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Smithfield Foods Sets up Chinese Venture With Artal
Smithfield Foods, Inc., the leading processor and marketer of fresh pork and processed meats in the US, agreed with Artal Holland B.V. to set up a joint venture AFG Company Limited in Guangdong Province. Smithfield Foods, Inc. produces, sells and distributes processed meats to retail and food service customers in China under the Maverick and Haslett brands. Established in 1998, the company has revenues of approximately $8.5 million.
Artal is known in China for its Mankattan and Country Road brands of bread. Starting its bakery business in China in 1995, Artal has achieved the largest market share through direct distribution of bread products to about 6,000 retail, food service and school locations. With Artal's knowledge and experience in the marketing and distribution of branded food products in China, Smithfield Foods, Inc. hopes to increase its processed meats distribution from the current level of about 300 locations.
Smithfield Foods has delivered a 28 percent average annual compounded rate of return to investors since 1975. In the last 15 years, the company's share price has outperformed the S&P 500 Index by more than 350 percent. Artal Holland B.V. is part of the group of Artal, a private European-based company with over $1 billion in capital. Since 1985, Artal has funded more than 60 companies through leveraged buy-outs, expansion financing, and venture capital.
(Source: PR Newswire, December 20, 2001)
Shenzhen to Turn into Logistics Centre
Yu Youjun, mayor of Shenzhen in Guangdong Province, announced at a recent economic conference that logistics would be one of the three main businesses for Shenzhen. Shenzhen will expand transport services at seaports and airports, and develop specialized wholesale and chain-store commerce.
Shenzhen, a booming city near Hong Kong, is one of China's five special economic zones with an export-oriented economy.
According to Yu, within three years Shenzhen will build four or five large wholesale markets for trading farm products, building materials, timepieces, garments, electronic products and furniture. More chain-store outlets will also be set up to make them available in all neighborhoods of the city. The volume of sales from chain-store businesses will constitute 50 percent of the city's total retail sales of consumer commodities, Yu said.
(Source: Canada Newswire, December 20, 2001)
Three Asian Retailers Join Forces with Thai Food Giant
Shanghai Kinghill Co. Ltd., the Charoen Pokphand Group (CP Group) affiliate operating the largest shopping centre in Shanghai, has forged an alliance with three other shopping centre operators in Asia to explore retail opportunities in the region.
The alliance, called Asian Mega-SC (super centre) Network, is composed of the Super Brand Mall of Shanghai; Canal City Hakata of Fukuoka, Japan; Dongdaemun of Migliore, South-Korea; and Breeze Centre of Taipei. Initially, the four strategic partners will focus mainly on China, exchanging experience and information plus joint marketing promotions. The ultimate goal is to form business partnerships or joint ventures in the future. The CP subsidiary is likely to form a joint venture with Canal City in a few years. The $ 1.4-billion Canal City Hakata is the largest privately developed real estate complex in Japan, covering 234,460 square metres.
Covering an area of 240,000 square meters and opening in April, 2002, the Super Brand Mall targets US$ 500 million in sales in the first year of operation. So far, 180 operators have signed contracts for 70 percent of the total rental area. Including a 500-square-meter Thai Food Mart, the Super Brand Mall hopes to become a popular place for consumers in Shanghai to taste exotic Thai dishes.
Mr. Somkit, President of Shanghai Kinghill, said, "We project that at least 50,000 shoppers will visit the mall per day and the number should double on weekends."
(Source: Bangkok Post, December 18, 2001)
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