BIZCHINA / Overseas Investment
Aeon to triple stores in China
(Bloomberg)
Updated: 2007-06-22 17:09
Aeon Co. in the next five years plans to triple its stores in China, a
country from which Japan's largest supermarket operator predicts it will
eventually generate more revenue than domestically.
"Sales growth in Japan has stalled," the Chiba, Japan-based company's
assistant chief representative for China, James Kazumasa Ishii, said.
Aeon's Asia business, including China, Malaysia and Thailand, accounts
for less than 5 percent of the group's revenue now.
The operator of the Jusco brand of supermarkets is diversifying its
business outside its home nation. China will probably surpass Japan by
2010 as the world's second-largest consumer goods market, Chinese Vice
Premier Wu Yi said last month.
Overseas retailers sped up expansion in China after being allowed to
operate without domestic partners in 2004 as part of a pledge to the
World Trade Organization. Wal-Mart Stores Inc, the world's biggest
retailer, has built a network of 78 stores while Paris-based Carrefour
SA., the world's second largest, set up 95 outlets.
Related readings:
Best Buy to add up to 10 stores in China in 18 months
China's retail sales accelerate on rising incomes
Tesco supermarket gets hold in Beijing
"It will take time for China to contribute significantly to Aeon's total
earnings," said Masafumi Shoda, a Tokyo-based analyst at Nomura Holdings
Inc. "In order to succeed in China, Aeon has to lower its operating
costs, including rents and labor, amid tough competition."
The market is still dominated by local players. Bailian Group, China's
biggest retailer, has 7,180 stores and Gome Electrical Appliances
Holdings Ltd., the nation's biggest electronics retailer, owns 623.
"We cannot compete with Chinese retailers in terms of sales," said
Toshiji Tokiwa, former chairman of Aeon Stores Hong Kong and now Aeon
Co.'s corporate adviser. "However, we will beat them by profitability."
As part of Aeon's five-year plan, the retailer plans to open its first
store in Beijing before next year's Olympic Games in 2008 and another
shopping center in Macao within two years, according to Senior Vice
President Akihito Tanaka. Its first lunchbox store, selling
Japanese-style "bento" meals, will open this year in Hong Kong, where it
operates 21 supermarkets, he said.
(For more biz stories, please visit Industry Updates)
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