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Hualian may be 'forced to quit capital?'
Last Updated(Beijing Time):2006-11-29 10:24
Shanghai Hualian Supermarket Co Ltd, one of China's largest domestic chains, has closed most of its loss-making outlets in Beijing in a bid to stop the bleeding from a profit downturn that began in 2005.

A woman riding a tricycle passes an already-closed Shanghai Hualian Supermarket in Beijing yesterday.

A woman riding a tricycle passes an already-closed Shanghai Hualian Supermarket in Beijing yesterday.(Source: Chiandaily.com)

The Shanghai-based company has so far closed down more than 20 outlets in Beijing, leaving only eight in operation.

A company official at its business operation department told China Daily that more closures are in the pipeline.

The possibility of pulling out of Beijing altogether cannot be ruled out, she said on condition of anonymity.

Shanghai Hualian Supermarket Co Ltd, a subsidiary of Shanghai Bailian Group, owns and operates a network of 2,000 outlets around the country. The company's fortunes took a turn for the worse in 2005 when it suffered a 40 million yuan (5million U.S. dollars) loss. Its Beijing operation alone lost 17 million yuan (2.13 million dollars).

The secretary to the general manager of Hualian Supermarket Co Ltd, surnamed Yang, claimed the company is going to make adjustments to Hualian outlets in Beijing. He declined to reveal the details or make any comments on the firm's reasoning.

Reducing outlets is in line with an industry trend. Many supermarket chains are trying to cope with intensified competition, especially from large foreign stores. This has forced several local chain operators to merge in order to achieve economies of scale.

"Hualian's pulling out of Beijing is a natural result of an increasingly competitive market," said Wang Liang, an analyst with the Shanghai Current Economics Research Institute. "With the opening of China's retail sector after its entry into the World Trade Organization, local players have had to change their strategies of development, including rearrangement of operation networks."

Competition comes from deeper penetration of foreign retailers such as Wal-Mart and Carrefour.

It is also due to a market squeeze by superstores on one side, and small convenience stores on the other.

Source:chinadaily.com.cn 
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