Japan's Ito Yokado and President Chain Store Corp, which is based in Taiwan Province, plan to link up and open 500 Seven-Eleven (7-11) convenience shops in Beijing.

Last month, they got their long-awaited authorization from US-based Seven-Eleven (7-11) Inc (SE), the world top convenience store operator.

Sources from Ito Yokado revealed that the two companies are negotiating with some possible Chinese partners to set up a Beijing 7-11 convenience shop joint venture. At present the Chinese Government does not allow the establishment of solely foreign-funded chain retailers.

Li Zhisheng, an official with the Investment Development and Public Relations Department of Hua Tang Yokado, a Sino-Japanese joint venture of Ito Yokado, told China Daily that his company has conducted four rounds of negotiations with the Beijing-based Capital Union (Shoulian) Group on establishment of a joint venture.

Shoulian is an enterprise group of more than 10 chain retailers.

"Ito Yokado is eyeing Shoulian's selling network resources in the capital city and its government background," said Li.

Ito Yokado is targeting a 65 per cent stake in the joint venture, the maximum for foreign partners in a retailing joint-venture and in line with the Chinese Government's regulations.

So far, agreement has not been reached and all sides are very cautious about discussing detailed clauses.

Zhuang Xiaowei, vice-general manager of Shoulian, told China Daily that Shoulian is optimistic about the agreement and the fortunes of the joint venture.

"Convenience stores have spread in South China, a trend which meets the demands of customers, so Ito Yokado, President Chain Store Corporation and we, are all confident about the huge market potentials in the capital and North China," Zhuang said.

In fact, besides Ito Yokado and President Chain Store Corp, which is affiliated to Taiwan's Uni-President Group, there were two other giant players, involving Dairy in the Hong Kong Special Administrative Region and Thailand-based Charoen Pokphand Group, that strove to open 7-11 convenience shops in the capital but failed to get approval from the Seven-Eleven Inc.

So far, Hong Kong Dairy's 7-11 business has dominated Guangdong Province and the company is planing to develop in other key cities in southern China. Meanwhile, Charoen Pokphand, a successful operator of 7-11 shops in Thailand, is eyeing the market in Shanghai.

Wang Wenxin, spokesperson of the Uni-President Group, acknowledged that they have investigated the Beijing and Shanghai markets and found that the competition is already very fierce in Shanghai.

Beijing, however, can still be regarded as virgin territory when it comes to the business of convenience shops.

Experts and insiders point out that in spite of the authorization from SE, the two companies will still have to wait for some time before opening any shops, because the joint venture must first obtain the approval of the State Economic and Trade Commission.

( China Daily September 17, 2002)