The franchise sector has grown rapidly in China during the past few years, but some obstacles are still hindering development.

"China had over 2,000 franchising chains by the end of 2004 and is the No 1 country around the world in terms of the number of franchise chains," Guo Geping, director of the China Chain Store & Franchise Association, said yesterday.

Guo's association conducted a comprehensive survey of China's franchise enterprises earlier this year and will release a blue paper based on the survey in the future, analyzing the sector's development.

The survey shows that the 2,000 or so companies had about 120,000 franchised stores and 1.8 million employees by the end of last year, Guo said.

The companies cover nearly 50 business fields ranging from catering to retail business, from education to service sectors.

At present, convenience stores, car maintenance, home decoration, estate agents, training, beauty and fitness, catering, laundry, costume retail, and book distribution are the top 10 businesses favoured by franchise investors, the survey shows.

In 2004, the sector's revenue grew by 41.5 per cent and the number of franchised stores increased by 38 per cent.

"China is becoming the largest market with the fastest growth, attracting more and more domestic and overseas franchisees and franchisers," said Guo.

However, the survey also shows that the market needs to be further regulated.

Problems such as the weak management system and relatively poor marketing concepts are getting in the way of development.

There are even said to be some companies breaking the law, which affects the whole industry.

(China Daily April 12, 2005)