TOKYO - Japanese
convenience store operators and other retailers are set
to expand franchise chains in China after this Saturday,
when the government there deregulates the establishment
of such operations by foreign companies, The Nihon
Keizai Shimbun learned on Monday.
The Chinese
government is poised to open up franchise operations to
overseas retailers, in line with its World Trade
Organization entry roughly three years ago, as well as
lift other investment restrictions currently placed on
these companies.
Foreign companies will likely
be allowed to set up wholly owned franchise headquarters
in China, giving them more operational freedom than the
current system, which requires a joint venture with a
local company.
Family Mart Co plans to file for
permission as early as this Saturday to begin franchise
operations in China.
If approved by Chinese
authorities, the convenience store chain operator will
convert a directly run store in Shanghai into its first
franchise store on December 27. It will then transform
most of its 38 directly operated convenience stores in
China into franchises.
Family Mart will
primarily solicit individual Chinese business owners to
set up franchises. Franchisees will be required to pay
60,000 yuan (US$7,249) for a five-year contract with
Family Mart. The chain operator plans to branch out to
Beijing, Guangzhou, Dalian and Tianjin around fiscal
2005, and aims to have 1 ,000 stores in operation by the
end of fiscal 2008 in the five major cities, including
Shanghai.
Lawson Inc also plans to transform at
least 90% of its 200 existing Chinese branches into
franchises. The more than 100 new outlets it aims to
open every year will be franchises in principle. The
company will make a foray into Jiangsu and Zhejiang
provinces next fiscal year, and will eventually increase
its network of stores in Shanghai and neighboring cities
to 2,000 by fiscal 2010.
Seven-Eleven Japan Co,
the largest convenience store chain operator in Japan,
is also gearing up to turn its Beijing stores into
franchises.
When franchisees launch operations
with their own money, the burden shouldered by the head
office of a franchised company can be limited to less
than 10% the amount for a directly run outfit.
(Asia Pulse/Nikkei)
Dec 8, 2004
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