Huatang expands business in China
By Pan Jingping (China Daily)
Updated: 2004-03-17 08:33

Japan's Ito-Yokado Co Ltd reportedly announced on Monday in Japan that it is planning to go into business with the Beijing Wangfujing Department Store to explore the retailing market in China, and is now waiting for approval from the central government.

But Huatang Ito-Yokado, a joint venture of Ito-Yokado in Beijing, and Wangfujing said they have never heard about these plans.

However, they both believed that if Ito-Yokado, one of Asia's largest chain retailers, expands its business in China, establishment of a joint venture might be the practical and ideal way to go about it.

Li Zhisheng, a manager at Huatang Ito-Yokado, said that China's booming market is very lucrative to global companies, where retail sales rose 9 per cent to 4.47 trillion yuan (US$540 billion) last year. So far, Huatang Ito-Yokado has three huge general merchandise stores in Beijing, selling clothes and other daily goods along with supermarket fare.

"Two other outlets are under construction and expected to be launched in December and next February respectively," Li said.

Huatang Ito-Yokado initially planned to open eight to 10 chain department stores in Beijing by 2008.

"Ito-Yokado owns diversified chain models, such as department stores, supermarkets and convenient stores," Li said.

According to Ito-Yokado spokesman Yasuo Takaha, the retail conglomerate will engage in a partnership with Wangfujing to establish a food-only supermarket in China.

"We'll be concentrating on fresh food, for example, procuring from local farmers produce that has been grown organically," said Takaha, adding that "foreign competitors offered mainly processed food."

Wangfujing Department Store, a listed company and at one time China's top retailer, is talking with other foreign giants about engaging in future partnerships, according to an unnamed source with the company.

"Actually, we are very cautious, as a group of multinational commercial operators have contacted us over the joint venture issue, eyeing our reputation and network in the domestic market," the source said, although she declined to name the foreign enterprises which had expressed interest.

Wangfujing was ranked by the Ministry of Commerce as one of the top 30 Chinese chain retailers in 2003, with 20 outlets nationwide.

"By 2005, we will have over 30 chain department stores and supermarkets around China," the source said.

According to Fan Yanru, deputy secretary-general with the retail enterprise's committee of the China Commerce Association for General Merchandise, Ito-Yokado has been seeking Chinese partners to boost its presence amid a wave of interest from global companies in China.

"It is struggling with weak consumer demand in Japan, as retail sales fell 1.8 per cent from 2002 to 2003, the seventh straight year of decline," Fan said.

China is looking to fully liberalize its retailing market to foreigners by the end of this year, in line with its commitments to the World Trade Organization.

"Joint ventures are regarded as the ideal strategy for the two sides, as the Chinese side may get robust capital support and advanced global operational skills, while the foreign partner can take advantage of the mature sales network in China," Fan said.

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