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CHINA FRANCHISE NEWS
Vol. 4 , No. 8 - November 19, 2003
TOPICS THIS ISSUE:
- Wal-Mart To Open First Sam's Club In SW China Province
- Sincere Step To Tap East China Market
- Gome Switches Into HK Market
- Sanyuan Foods To Raise US$45m From IPO
Wal-Mart To Open First Sam's Club In SW China Province
Wal-Mart Stores Inc., the world's largest retailer, is expected to set up its first Sam's Club in Guiyang city, capital of southwest China's Guizhou province in 2004.
Representatives of Wal-Mart China Co, Ltd, signed a contract with officials of Guiyang to set up the store, which will be located downtown in the underground shopping center of the People's Square.
Kang Bin, a representative of Wal-Mart, said that Guiyang would be the 16th or the 17th city to open a Sam's Club, a warehouse shopping club with a membership system where food accounts for 60 percent of the goods.
Wal-Mart has established 31 stores in China since the first Sam's Club opened in the southern city of Shenzhen on Aug. 12, 1996.
Sam's Club, named after Wal-Mart founder and retail giant Sam Walton, offers exceptional value on name-brand merchandise at member-only prices for both business and personal use.
Since the first Sam's Club was founded in the United States in 1983, it has opened more than 500 chainstores across the world.
Source: Xinhua
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Sincere Step To Tap East China Market
Hong Kong-based Sincere Company Ltd is taking a big step in the mainland by dramatically enlarging its network to compete with convenience-store giants.
With five major convenience-store companies vying with each other, including Alldays, 21 Convenience and Lawson, Shanghai now has about 4,500 outlets.
Sincere is adopting an Australian concept to manage its stores on the mainland; and Shanghai is the first destination.
Sincere will target its business at office workers and communities.
The Hong Kong investor plans to develop about 300 outlets by the end of next year. Sincere reported that each store is expected to cost less than 200,000 yuan (US$24,184).
Sincere entered Shanghai in 1993 with the opening of the city's first overseas-funded department store on Nanjing Road East.
As a multinational company specializing in general goods, Sincere has no more room to develop in Hong Kong, which is monopolized by supermarkets and convenience stores such as 7-Eleven.
Sincere's plan is to develop convenience stores in Shanghai first and then extend them into East China. Within the next five years, it plans to set up 3,000 outlets in the region.
Its survey shows that a 60-square-metre store in downtown areas generates daily sales of about 3,000 yuan (US$363).
Sincere expects to recoup its investment in the city in two to three years, with each outlet contributing daily sales of about 7,000 yuan (US$846), said Jackee Lam, chief executive officer of Shanghai Sincere.
Lam said about 30 per cent of food items sold in the stores would the imported while the rest would be bought domestically. With tariffs reduced, Sincere expects to earn 25-30 per cent of pre-tax profits from its sales, much higher than the current 15 per cent, he said.
Source: HK Edition China Daily
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Gome Switches Into HK Market
The largest chain-store operator of household goods on the Chinese mainland set up its first flagship store in Hong Kong in October.
Gome Home Appliances is investing more than HK$50 million (US$6.4 million) into the venture.
Gome officials report that the newly-opened Gome home-appliance store in Hong Kong will be the springboard for the company's overseas expansion plan.
Along with international brands favored by Hong Kong consumers, the new five-storey Gome store will also sell domestic brands.
The company is planning to list on the Hong Kong stock exchange, possibly next year. It aims to establish three to five chain stores in Hong Kong in the next two to three years, grabbing 20 to 30 per cent of market share.
With the mainland retailer intensifying competition in the Hong Kong market, after-sales customer service will become one new battlefield. That is the forecast of a manager with Fortress - Hong Kong's top electric appliance retailer.
Source: HK Edition China Daily
Sanyuan Foods To Raise US$45m From IPO
Sanyuan Foods, holder of McDonald's franchises in Beijing and booming Guangdong province, has announced it would launch China's first initial public offering linked to an international fast-food name.
Beijing Sanyuan Foods, a unit of Hong Kong-listed Beijing Enterprises, would raise a net 374 million yuan (US$45.19 million) by issuing 150 million shares in Shanghai at 2.60 yuan per share hoping to open new outlets across the country, it said in an IPO prospectus.
Though its core business is dairy products, its 50 per cent-owned Beijing McDonald's franchise and 25 per cent-owned Guangdong franchise has evolved into a key income source.
"McDonald's has become a crucial part of our business," Sanyuan said in an issue prospectus published on the Shanghai stock exchange Web site.
But "first-half net profit fell sharply due to severe acute respiratory syndrome and Beijing McDonald's sales."
For instance, income from the McDonald's operation in Beijing, one of the world's heaviest SARS-hit areas, fell 82.6 per cent on year to 1.66 million yuan (US$200,000) in the first half.
Nonetheless, the scarcity of fast-food plays on the local scene could help Sanyuan generate interest.
"By 2004, Beijing McDonald's plans to set up 130 outlets in places such as Beijing, and Hebei and Shanxi provinces," the company said. "Guangdong McDonald's plans to open 90 stores by the same timeframe."
Source: People's Daily
Lehman Lee & Xu
China Lawyers, Notaries, Patent, Copyright and Trademark Agents
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