CHINA FRANCHISE NEWS
Vol. 3 , No. 10 - August 02, 2002
TOPICS THIS ISSUE:
- 7-Eleven Unveils Its License Plan in China
- New Standards Issued on Shenzhen Pharmaceutical Retail Chain Industry
- Investment Forum Held in Beijing by Ten Franchise Enterprises
- New Franchise Business Mode Appears in Shanghai
7-Eleven Unveils Its License Plan in China
According to press reports, the world's largest convenience-store chain, 7-Eleven Inc., has unveiled its plan to license to three companies that already operate 7-Eleven stores in Asia to open stores in China.
It was reported that these three companies, who have been awarded licenses to operate in China, are Taiwan's President Chain Store Corp., Thailand's Charoen Pokphand Group Co. and Hong Kong's Dairy Farm International Holdings Ltd. However, it is still not clear when the announcement would be made, or how the market would be divided among the three companies.
The report said that, the US listed 7-Eleven, based in Dallas, prefers to work with current franchisees that have a proven record than with local Chinese partners. President Chain runs 2700 7-Elevens stores in Taiwan while Charoen Pokphand operates 1700 7-Elevens Convenience stores in Thailand. According to the report, Dairy Farm has run 90 stores in Shenzhen in Southern China, besides operating in Hong Kong.
According to data from the National Bureau of Statistics, China's retail sales in May grew at their fastest pace this year, gaining 9.3 percent to 320 billion yuan ($39 million) from a year earlier.
(Source: Bloomberg - North Asia News)
New Standards Issued on Shenzhen Pharmaceutical Retail Chain Industry
To strengthen the city's management of the pharmaceutical industry, and to regulate the commercial activities of drug retail companies, the Drug Administration of Shenzhen Municipality recently issued the Surveillance and Management Interim Regulations on Shenzhen Pharmaceutical Retail Companies, which will take effective on August 1, 2002. This Regulation encourages the development of drug chain retail activities via mergers, acquisitions, co-operation and partnerships, promotes the drug retail companies to adopt advanced operational modes and modern management methods, and supports new openings of retail stores in suburbs and remote areas. All companies with more than 10 drug retail stores, which also satisfy the chain store opening conditions, can apply to become drug retail chain companies from the provincial pharmaceutical surveillance and management agency.
This Regulation requires that to open a drug retail store in Shenzhen, the company must have one licensed pharmacist or a professional with middle level pharmaceutical title, and one on duty pharmacist at the store, or a pharmaceutical professional with at least a pharmacist license. To open drug retail stores in Baoan, or Longgang districts, the company must have one licensed pharmacist or a professional with at least a pharmacist title (including pharmacist title on Traditional Chinese Medicine), and one on duty pharmacist at the store, or a pharmaceutical professional with at least a pharmacist license. To open drug retail stores over 400 square meters, the company must have two licensed pharmacists or professionals with at least pharmacist titles (including pharmacist title on Traditional Chinese Medicine), and two on duty pharmacists at the store, or pharmaceutical professionals with at least pharmacist licenses.
According to this Regulation, to open the drug retail stores in Shenzhen, the stores must be no less than 120 square meters. In Baoan, or Longgang districts, the stores must be no less than 80 square meters. In suburbs and remote areas of Baoan, or Longgang districts, the stores must be no less than 40 square meters. In dense residential areas, where stores may have difficulty reaching 120 square meters, they must be at least 80 square meters. The stores in malls or in commercial compounds must be at least 40 square meters.
It is also required that the drug retail companies must have drug warehouses in their stores, and the standards are as follows: for stores with areas more than 120 square meters, the warehouses must be at least 30 square meters; for stores with areas between 40 and 120 square meters, the warehouses must be at least 20 square meters; for stores whose drugs come from retail chain distribution centers or from drug storage and supply companies, it is permitted to open without a warehouse.
(Source: Shenzhen Trade Journal)
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Investment Forum Held in Beijing by Ten Franchise Enterprises
With China's entry into WTO, more and more foreign retailers will launch into the Chinese market, as the Chinese government will gradually open its domestic retail industry sector. As a result, the domestic retail business will face stuff competition from both foreign and domestic companies. It is estimated that there will be great changes in the pattern of domestic retailing. Therefore, within the 3-year phase-in period, it is a must for domestic enterprises to make proper re-adjustments, so as to promote future development and take advantage of the new market.
Compared to foreign multinational giant retailers, domestic franchise enterprises are fairly small and lack competitiveness, and thus need quick business expansion through merger, acquisition, co-operation, partnership and reorganization. In addition, more and more domestic retailers are expecting cooperation with large-size enterprises through various ways.
China Chain Stores and Franchise Association (CCFA) has cooperated with Beijing AiBiKe Micron-Electronics Technology Co., Ltd. to host the Ten Franchise Enterprises Investment Forum. The Forum was held in April this year.
According to CCFA, the purpose is to set up a platform for domestic large-, medium-, and small-size retailers, who are eager to find partners and thus promote face-to-face talk and negotiations between them and large franchise enterprises. It was reported that the Forum has adopted a new pattern of negotiation between 10 large-size franchise enterprises and other interested parties, rather than a simple exhibition of various types of enterprises.
(Source: Market News)
New Franchise Business Mode Appears in Shanghai
The President of Lianhua Supermarket announced recently that by the end of next year, 300 fresh food supermarkets would be launched in Shanghai. It was reported that this new style supermarket has already appeared in Huangpu District of Shanghai.
The reasons for introducing this new style fresh food supermarket can be summarized as follows: in fresh food markets or farmer's markets, you may find various fresh foods, vegetables and other goods at very cheap prices. However, as those are normally open-air markets, customers may find the shopping environment not comfortable. In contrast, supermarkets are well-decorated and air-conditioned, but for fresh food and vegetables, supermarkets have less variety and higher prices. Therefore, the new style supermarket, situated between supermarket and fresh food market, has now appeared in Shanghai.
According to Lianhua Supermarket, their future business expansion will focus on developing the fresh-food supermarkets, which combines the function of farmer's markets and supermarket. The fresh-food supermarket provides customers with full ranges of fresh food and vegetables, including some that are not normally provided in supermarkets.
The vice-manager of Lianhua Supermarket, Fan Jinpin, said that the value of this new style supermarket should not be underestimated; Lianhua will gain competitiveness by lower prices through franchising.
(Source: Morning Post)
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The China Franchise News is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
