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CHINA FRANCHISE NEWS
Vol. 4 , No. 8 - November 5, 2003
TOPICS THIS ISSUE:
- Gome aiming at 30% share in Hong Kong
- Retailers create own brands
- European Fast Food Giant Opens 1st Chain Store in China
- Wal-Mart's Sam's Club Opens In Beijing
- KFC Opens 100th Outlet in Chinese Capital
Gome aiming at 30% share in Hong Kong
Gome Home Appliances, China's largest chain-store operator of household-electrical goods, will set up its first store in Hong Kong next month.
It has the ambitious goal of acquiring 30 per cent market share in the city by setting up further stores.
The move, announced yesterday, will mark the springboard for the company's overseas expansion plans.
The Beijing-based company will also use Hong Kong as a fund-raising platform while it plans to float on the stock exchange possibly next year.
Gome, with 150 outlets around the country, is investing HK$50 million (US$6.4 million) to open a five-store 25,000-square-foot store in Mongkok, one of the territory's most bustling shopping districts which is home to a cluster of local household electrical stores.
Known for its rapid expansion aided by the low-price strategy on the mainland, Gome, founded in 1987, will continue its tactics and offer more diversified products in its Hong Kong store. It will sell domestic brands like Haier and Midea in a bid to compete with local chains such as Fortress and Broadway, said Wong.
Gome aims to establish three to five chain stores in the next two to three years.
Despite the impact of SARS, the company generated 8.5 billion yuan (US$1.0 billion) in sales during the first half of 2003 and it is expected to pull in 20 billion yuan (US$2.4 billion) at the year-end.
Gome also plans to boost its outlets from the current 150 to 180 nationwide this year. It also vows to increase its share on the mainland market from seven per cent to 20 per cent in three to five years.
Source: China Daily
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Retailers create own brands
China's chain store companies are developing a growing number of goods under their own brand names as a way to survive increasingly stiffening competition in the retail sector.
Discount stores are apparently the bellwether in developing self-labeled products, as they must offer more competitive prices than other chain supermarkets.
"We depend on self-labeled goods to create the company's image and retain regular customers," said Wang Ruohai, an official with Dia Tian Tian (Shanghai) Management Consulting Service Co.
Dia is a discount store brand owned by Carrefour SA, the world's second-largest retailer.
Currently, about 30 percent of the 1,000 goods Dia sells are under the Dia brand. Their prices are about 20 percent lower on average than the same goods with other brands.
The company said it hopes to increase the proportion of self-labeled goods to more than 50 percent in the future.
Costs are comparatively lower for private labeled products as retailers buy goods directly from select suppliers in large quantities with simple packaging.
Lianhua Supermarket Co, the country's biggest grocery chain, has developed four brands of its own - Lianhua, Chunyi, Sheng-xian and Hengsheng since 1996.
In addition to Lianhua, most of the city's major chain stores have created about two to three of their own brands, although they are not necessarily famous.
According to the Shanghai Chain-Store Research Institute, less than 5 percent of goods sold by domestic retailers are private-label products, while the rate is about 10 percent in overseas-invested retailers.
Source: Shanghai Daily
European Fast Food Giant Opens 1st Chain Store in China
European fast food giant Quick opened a chain restaurant in the capital of north China's Hebei Province on Saturday, marking its first venture into the Chinese market.
Besides the standard fast food of hamburgers, French fries and cola, Quick offers three types of bread, eight hamburgers with various fixings, five fried items and salad, as well as different-flavored beverages and ice cream designed for Chinese consumers.
It was after two years of market research and analysis and a successful pilot project in Qingdao City of east China's Shandong Province that Quick finally decided to enter the country.
The Belgium based fast food group has chosen to cooperate with China's native investors, a different entrance from that of the American-styled fast food industry characterized by McDonald's and KFC.
With a Quick franchise with its brand and technology support, domestic investors can become involved in the operation and management of its chain stores in line with a unified style and business concept.
Quick will gradually approach Beijing and other major cities with the Shijiazhuang store serving to accustom consumers to its flavors, which is one of its strategies to avoid face-to-face confrontation with McDonald's and KFC at the first stage, Xu added.
Quick also plans to set up more chain stores along China's expressways as well as in medium- and small-sized cities in three to five years.
Founded in 1970, Quick currently has over 700 chain restaurants spread across Europe.
Source: People's Daily
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Wal-Mart's Sam's Club Opens In Beijing
The members-only warehouse Sam's Club, part of the United States retail chain Wal-Mart, opened with a grand ceremony in Beijing.
The city's first Sam's Club is in Shijingshan District by the West Fifth Ring Road. It has a business area of 18,000 square metres.
The store offers 4,000 kinds of commodities, and it costs 150 yuan (US$18) to join.
Many insiders have adopted a wait-and-see attitude to the new shop and have questioned whether the world-retailing giant can prove that the membership system will do well in Beijing.
Membership supermarkets such as Price Smart and Makro have not fared very well in Beijing so far.
Price Smart, the world's leading operator of membership stores, has already decided to change two of its six membership stores in Beijing into chain supermarkets.
Sam's Club operates by selling high volumes of merchandise for very low profit margins.
Wal-Mart has opened four Sam's Club stores in Shenzhen in South China's Guangdong Province, Fuzhou in East China's Fujian Province, Kunming in Southwest China's Yuannan Province and Changchun in Northeast China's Jilin Province.
KFC Opens 100th Outlet in Chinese Capital
US-based fast food giant KFC inaugurated its 100th outlet in the Chinese capital at the Zhushikou Avenue in downtown Beijing.
KFC first entered the Chinese market in Beijing on Nov. 12, 1987 when it opened an outlet at Qianmen. Since then, it has invested 1.3 billion yuan (about 157 million US dollars) in China and has opened over 850 outlets in almost all areas of China except Tibet.
More than 50,000 people are employed at KFC outlets across the country and 550 Chinese firms have become KFC's chief suppliers. KFC is now the largest and fastest growing fast food chain business in China, said a spokesperson for Yum! Restaurants China.
KFC is a unit of Yum! Brands Inc, which also runs the Pizza Hutand A&W chains that operate several stores in Beijing.
KFC also donated 100,000 yuan (about 12,040 US dollars) to the Beijing No. 2 School for the Deaf on Wednesday. It has spent over 60 million yuan (about 7.23 million US dollars) on juvenile education and social welfare cause over the past more than one decade.
Source: People's Daily
Lehman Lee & Xu
China Lawyers, Notaries, Patent, Copyright and Trademark Agents
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