CHINA FRANCHISE NEWS
Vol. 4 , No. 6 - June 10, 2003
TOPICS THIS ISSUE:
- Supermarket Chain Prepares For Listing
- IKEA Opens New Store In Shanghai
- Kodak Aims To Increase Market Share Of Digital Printing Market
- US Convenience Store Chain Set Up In Guangzhou Subway Stations
- Carrefour No. 1 In Number of Stores In China
Supermarket Chain Prepares For Listing
Shanghai-based Lianhua Supermarket Holdings is expected to set its initial public offer subscription price at 14.8-20.1 times 2002 earnings per share, according to a report by BNP Paribas Peregrine.
Lianhua, the country's largest supermarket chain, is set to launch its initial public offering (IPO) in Hong Kong. It plans to issue 150 million H-shares, raising HK$470-HK$640 million (US$60.3-US$82 million) with the offer price at HK$4.70-HK$6.40 per share.
BNP forecasts Lianhua's turnover to grow more than 30 per cent annually over the next three years and reach more than 14.6 billion yuan (US$1.76 billion) by 2005, bolstered by the country's booming retail market and the company's aggressive expansion.
Lianhua now runs 11 hypermarkets, 828 supermarkets and 1,045 convenience stores in 16 provinces and cities.
BNP estimated that Lianhua's store network would increase to 71 hypermarkets, 1,559 supermarkets and 3,200 convenience stores in the next five years. BNP said the expansion would come from opening of new outlets and acquisition of existing chains.
Lianhua also plans to invest with Distribucion Internacional de Alimentacion, a Spain-based subsidiary of Carrefour, to set up a joint venture in which Lianhua will take a 45 per cent stake. The joint venture plans to set up 300 discount stores in Shanghai.
Lianhua, established in 1991, is 37.5 per cent held by Shanghai Friendship, a Shanghai-listed firm, and 23.3 per cent by Shanghai Industrial Comm Network, and 7.4 per cent by Japan's Mitsubishi Corp.
Source: China Daily
IKEA Opens New Store In Shanghai
Swedish furniture retailer IKEA opened its largest store in Asia - in Shanghai.
The company predicts a 10-fold growth in sales over the next five years by bringing its chic, minimalist furniture to the Chinese masses.
IKEA, known for simple, yet practical, household accessories, is pinning its hopes on China's expanding urban middle class, and is eyeing a network of a dozen stores in key Chinese cities.
IKEA's aim is "to grow 10-fold by 2008 and have 12 stores opened by 2010."
Source: BizChina
Kodak Aims To Increase Market Share Of Digital Printing Market
Kodak plans to cooperate with the Bank of China to launch the second round of a lending operation to assist the formation of a nationwide network to print photos taken by digital cameras.
Under the scheme, anyone who wishes to join the Kodak color digital photo printing chain store system will be provided with loans of up to one million yuan (US$120,400), said Chen Yaorong, general manager of the Consumer Imaging Department under Kodak (China) Ltd.
Kodak has set up 8,300 color photo printing stores in more than 700 Chinese cities. Of the total, 1,400 engage in digital film printing, serving as the largest retail print service network in China since it set about building a digital photo chain in 1994.
A number of Chinese investors have complained about the cost of the digital photo printing equipment. The scheme offers a financing channel for those who are in need of adequate funds to purchase digital printers.
The development of the digital photo industry in China is growing faster than expected, he added. Statistics showed that the number of Kodak chain stores for digital photo development increased by 10 times to 1,400 by the end of last year. And the sales value of digital printers quadrupled.
The Bank of China issued 60 million yuan (US$7.2 million) in loans to Kodak chain store owners in the first round of the lending operation. In a number of large cities such as Beijing, Shanghai, Guangzhou and Chengdu, transactions of digital prints went up by one quarter.
According to a recent market survey, the number of digital camera users in China has increased at an annual rate of up to 50 percent. The sales of digital cameras across the country last year exceeded 600,000, up 70 percent.
Source: BizChina
US Convenience Store Chain Set Up In Guangzhou Subway Stations
7-Eleven, the world's largest convenience store chain, has appeared in the subway stations of Guangzhou, south China's Guangdong Province, since the city's No. 2 subway line opened last December.
The US-based 7-Eleven will open shops at all the 16 stations of the line. The store mainly sells daily-use items such as newspapers batteries, drinks, milk and hamburgers, but will modify its goods and services according to customers' needs and the number of passengers by the subway.
The Guangdong Sai Yi Convenience Stores Ltd., a subsidiary of 7-Eleven, has permission to open 350 7-Eleven shops in south China.
Source: People's Daily
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Carrefour No. 1 In Number of Stores In China
French retail giant Carrefour, although second to US firm Wal-Mart in global sales, has gained the upper hand in China's retail market in terms of number of stores. Carrefour announced that the company has signed an agreement with the local government of Hangzhou, capital of east China's Zhejiang province, to open its 28th Chinese store there.
At the same time, Carrefour set up a global sourcing base in Ningbo, a coastal city in Zhejiang Province, for purchasing goods to be sent overseas. It is the 11th of its kind established by the retail giant in China.
Number one in the European retail market and number two in the world, Carrefour has about 9,200 stores in 31 countries. The year 2002 alone saw its global sales exceed 80 billion Euros.
The French retail giant entered China's vast retail market in 1995. Since then, it has opened a total of 28 stores in 16 major cities. Its sales network covers nearly all of China's economically-developed areas.
Carrefour's major competitor, Wal-Mart, arrived in China in 1996 and has set up 21 branches in six provinces, mostly in southern China.
The world's biggest retail giant has yet to enter China's most economically dynamic cities such as Beijing, Shanghai, Tianjin Guangzhou, as well as the Yangtze River Delta.
The world's third largest retailer, Germany based Metro, has opened only 15 stores in China, and is dwarfed by Carrefour in its share of China's retail market.
Experts believe that Carrefour's success can be attributed to the fact that it has already established a stable consumer group.
A survey made available by Carrefour shows that the company's consumer group in China comprises mainly medium and low-income urban residents.
This conclusion was based on survey results indicating that about 28 percent of its customers arrive on foot, 15 percent on bicycle and 20 percent by bus.
Carrefour's big market share can also be attributed to its flexible marketing strategy and its clear understanding of China's economic policies.
Carrefour's flexibility was reflected in its decision to shift its global sourcing base from Southeast Asia and India to China.
In 2001, Carrefour spent 3.5 billion US dollars on purchasing in Asia, of which 61 percent was purchased in China.
Source: People's Daily
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