Hong Kong retailers are busy charting expansion courses for the Chinese mainland market, taking advantage of the Closer Economic Partnership Arrangement which exempts tariffs of a variety of Hong Kong goods and opens the mainland market.

Hong Kong New World Department Store said it plans to open two stores every year in mainland cities in the coming five years.

"The signing of CEPA offered a better investment environment for Hong Kong retailers in terms of a more open market," said Philip Cheung, managing director with Hong Kong New World Department Store. "The company will open more stores in the mainland market taking advantage of CEPA."

Cheung said Hong Kong New World will open stores in Chengdu and Nanjing this year and is considering tapping China's important western cities such as Kunming in Yunnan Province and Hohhot in Inner Mongolia.

Development strategies may vary from direct investment to renting space.

The company has opened 14 stores in 10 cities on the mainland since last year. In Shanghai, it opened its third store on Sichuan Road N. last year.

"About 20 to 30 percent of the goods in the stores are from Hong Kong," said Xu Yiying with Hong Kong New World's Shanghai management center. "The percentage is going to rise following CEPA."

The stores will invite more Hong Kong up-market fashion brands to Shanghai such as Cerruti 1881, said Xu.

"Prices of some Hong Kong fashion brands are expected to go down."

Meanwhile, another up-market Hong Kong retailer Maison Mode, with investment from Hong Kong property developer Wharf (Holdings) Ltd, also geared up its business expansion plan.

"Maison Mode plans to expand to more cities around China," said an official surnamed Wu with the store's promotion department. "We are seeking the sites in a couple of cities."

The company plans to tap the markets in Dalian, Xi'an, Chongqing, Hangzhou and Beijing by opening stores or cooperating with local companies.

Maison Mode has a 10-year-old store in Shanghai's chic Huaihai Road M. Its second store on the mainland opened last October in Chengdu.

The third project of Times Square, another retail brand owned by Wharf Holdings, is currently under construction in Chongqing, of Sichuan Province.

Together with Beijing Capital Times Square and Shanghai Times Square, this project will bring the total Times Square footage in China to 4.1 million square feet (381,403 square meters).

Wharf Holdings is also planning to build Shanghai Weelock Square, a 1.5 million-square-feet retail project at Shanghai's Jing'an Temple area. The project is expected to be finished in 2007.

Hong Kong's trade development council is planning a promotion campaign of made-in-Hong Kong products during March 20 through April 4 in Shanghai along the chic Huaihai Road M.

(Eastday.com March 4, 2004)