CHINA FRANCHISE NEWS
Vol. 2 , No.18 - October 4, 2001
TOPICS THIS ISSUE:
- Wal-Mart Take Aggressive Move in Northeast China
- The First Batch of KFC Franchisees Experience Success
- Gosun Become the Exclusive Licensed Nokia Retail Chain of Telecommunications Stores in China
- Jinan Becomes the New Battlefield for Retailing Giants
- China Stores Show Impressive Growth
- State-owned Conglomerates Part of Anti-piracy Plan
Wal-Mart Take Aggressive Move in Northeast China
On September 12, 2001, a 10,000 square meter project, "Wal-Mart Supermarket Project" set off in downtown Harbin, which announces the entry of Wal-Mart into Harbin, the capital of the northeast China's Heilongjiang Province.
Wal-Mart is taking aggressive moves in Northeast China. In January and April of 2000, Wal-Mart opened two chain stores in Dalian, a seashore city in northeast China. On September 20, a member store funded by US-based Wal-Mart opened a three-floor shopping mall in Shenyang, thus bringing the total number of Wal-Mart's chain stores in China to 15. It is also reported that a joint retail store "Wanda-Wal-Mart" will start business soon in Changchun.
With a sales volume of US$ 16.53 billion this August, Wal-Mart is the largest chain store retailer in the world. Presently, Wal-Mart or its member stores have opened 15 branches across the country, with a total investment of RMB 1.2 billion (about 145 million U.S. dollars). There are a total of 4,000 Wal-Mart member stores in the world, including 500 Sam's Clubs.
(Sources: www.ccfa.org.cn, 24/09/2001)
The First Batch of KFC Franchisees Experience Success
Since becoming the first foreign fast food chain allowed to enter China in 1989, Dallas-based Tricon Global Restaurants Inc., KFC's parent company, has built 490 stores in 120 cities, nearly all company-owned, and is still expanding. Just to meet its goals for the 100-plus stores on the drawing board, Tricon will have to finish a store every three days. McDonald's, which recently announced plans to begin bona fide franchising in China in 2002, lags behind by at least 100 stores.
In 1993, Tricon finally allowed a Taiwan entrepreneur to establish the first KFC franchise in Xian. Two years ago, the company decided it was time to get serious about franchising. It set the bar high: In addition to having at least US $1 million to invest in the license, franchise operators had to have restaurant experience and a clear understanding of the risks of doing business in China. Tricon required its franchisees, who pay a licensing fee of 6 percent of gross sales, to purchase an operating restaurant and run it at least a year before expanding.
Mr. Shawn Gu is one of the first batch of KFC's franchisees in China. He is running a KFC chain store in Li Yang, a small city near Nanjing. His store is so different from the local restaurants serving Chinese food that has turned out to be a great success. He has made his KFC synonymous with the good life: birthdays, good grades and graduation. He targeted the parents and grandparents who spend lavishly on their "little emperors", the offspring of China's one-child policy. The restaurant offers children colorful plastic superheroes and free English and exercise classes.
Mr. Gu has chosen the location for his second KFC store in a nearby town. He hopes to have 15 stores in the countryside surrounding Nanjing within 10 years.
(Source: Chicago Tribune, 16/09/2001)
Gosun Become the Exclusive Licensed Nokia Retail Chain of Telecommunications Stores in China
Gosun Communications Limited, Inc. was nominated by Nokia as the only licensed retail chain of telecommunications stores in China. The license will significantly add to Gosun's competitive edge in telecommunications sector in China. Gosun anticipates a 35% increase in sales revenue for its third quarter as a result of the cooperation with Nokia.
Though a corporation established according to the state law of Texas, Gosun has its principal business in China. With 450 employees, Gosun is the largest seller and distributor of telecommunications equipment in Guangzhou, where it has 20 directly owned chain stores. Gosun expects to develop its business in other large cities in China by increasing the number of its chain stores to 104.
(Source: Business Editors, 24/09/2001)
VISITING US IN BEIJING?
Beijing City guide for Palm OS 3.5
1000 Chinese Character TAXI Cards
1000 Super descriptions ONLY US $18.95
NEVER EVER LOST
What the professionals have said:
I tried the redBANG application,
It is the most thorough guide I've seen!
Ava Mason
Handango Business Development
Jinan Becomes the New Battlefield for Retailing Giants
On September 25, 2001, China's biggest retailer, Shanghai Lianhua, announced its cooperation with "Sanlian", China's biggest household electric appliance store headquatered in Jinan. The two retailing giants are going to open the biggest mall in Jinan City, Shandong Province, and Sanlian will be responsible for the operation of the electric appliance section of the mall.
As the capital of Shandong province, Jinan has become the battlefield for both foreign and domestic retailers. A downtown area covering 50,000 square meters has been chosen by Wal-Mart for its joint chain store with Dalian Wanda Group. With an investment of RMB 500 million, the project will begin construction in 2001 and will be put into operation in 2002. It will become the distribution center for Wal-Mart for its chain stores in Shandong province.
Carrefour, the world's second-largest chain store retailer, has also set its eye on Jinan. The Vice-President of Carrefour China announced that Carrefour would open its first store in Jinan by the latter half year of 2002. Thus far, Carrefour operates 27 stores in China.
(Source: www.ccfa.org.cn, 28/09/2001)
China Stores Show Impressive Growth
Shanghai Lianhua Supermarket has reported sales for the first half of this year that have exceeded those of all of China's retail chain stores. The State Economic and Trade Commission (SETC) has reported that the company's sales volume for the first six months of this year amounted to RMB 7.6 billion (US$ 918.3 million). In addition, the SETC announced that the country's other retail chains with high sales include: Shanghai Nonggongshang, with sales of RMB 3.895 billion (US$ 470.6 million), Shanghai Hualian with sales totaling RMB 3.606 billion (US$ 435.7 million), Shandong Sanlian with sales amounting to RMB 3.599 billion (US$ 434.8 million) and Beijing Hualian with sales amounting to RMB 3.208 billion (US$ 387.6 million), according to China Daily. Retail chains in China have experienced rapid development since the early 1990s. Sales at the top 20 retail chain stores totaled RMB 3,741.2 billion (US$ 452 billion) in the first half of this year. This figure reflects an increase of 48.8% since the same period last year. The chain store that has experienced the fastest growth is Beijing Guomei Electronics. The company's sales amounted to RMB 2.33 billion (US$ 281.5 million) in the first six months of this year. This figure reflects an increase of 187.5% since the same period last year.
(Source: IPR Strategic Business Information Database, 16/09/2001)
State-owned Conglomerates Part of Anti-piracy Plan
China's audio and video industry is experiencing fundamental changes, with six large companies making the first steps.
"Six big State-owned companies in this sector, such as China Record Corporation, China Audio & Video Corporation, Shanghai Audio-Visual Press and Guangzhou Pacific Audio and Video Company, will be chosen to be the core of the six conglomerates that will incorporate publishing, issuing, wholesale and retail," said Zhang Xinjian, deputy director of the Marketing Department under the Ministry of Culture.
Zhang said it is now imperative for domestic companies to increase their competitiveness by banding together.
As China gets ready to enter into the World Trade Organization, foreign capital will soon be permitted to retail audio and video products as soon as the first year and wholesale within three years.
Because foreign dealers will be able to directly introduce foreign products, the audio and video sector will certainly suffer a negative impact.
While industry analysts say this is good for the market, Tuo Zuhai, head of the ministry's audio and video office, said the emerging six companies will have to spend more capital and energy on publishing.
A store manager in Shanghai said that he feels there is a lack of suitable products in his store due to rampant piracy, which creates a lack of interest and profit for publishers to create new product.
Although official statistics put the value of the national audio and video market as high as RMB 30 billion (US$ 3.62 billion), legitimate products only compromise RMB 5 billion (US$ 603.8 million) of that amount.
The government of China has a two-step plan to cut down on piracy. The first is to close over 200 markets selling pirated audio and video products. The second step is a nationwide campaign promoting audio and visual chain stores.
(Source: China Daily, 17/09/2001)
Lehman Lee & Xu
China Lawyers, Notaries, Patent, Copyright and Trademark Agents
|
Beijing Office
|
Shanghai Office
|
|
188, Beijing International Club |
Suite 1902, Central Plaza |
To unsubscribe from this newsletter send an email to unsubscribe_franchise@chinalaw.cc Please include the email address to which the newsletter is being sent (not a forwarded address) in the body of the email.
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.
