7-Eleven zeros in on Beijing market

US-based 7-Eleven Inc said it has decided to take a relatively conservative approach toward continued expansion in China by primarily targeting the Beijing area.

"We are concentrating our efforts on the Beijing market," Bob Jenkins, a regional vice president for 7-Eleven, said. "We will determine our plan for other areas in China after Beijing operations are up and running."

The chain only authorizes Hong Kong's Dairy Farm International Holdings Inc to operate 7-Eleven outlets in Guangdong Province, which includes Shenzhen and Guangzhou, through a joint-venture agreement.

Dairy Farm International is scheduled to open their 100th store in the area on Aug. 21, Jenkins said.

Chinese-language newspapers in Taiwan reported that 7-Eleven is close to making a decision on other licensees for China market.

The chain will award the licenses to companies that already operate 7-Eleven stores in Asia -- including Taiwan-based President Chain Store (統一超商) and Chai Tai Group, Thailand's Charoen Pokphand Group Co and Hong Kong's Dairy Farm International, the reports said.

But Jenkins said the reports were not completely accurate.

"Although all these companies are excellent 7-Eleven licensees and all are being considered as candidates for expansion in China -- but we have not yet decided to grant licenses to these companies ..." he said.

"We may grant a license to a new joint-venture company consisting of 7-Eleven Japan Co [Japan licensee], President Chain Store [Taiwan licensee] and a Chinese partner that is yet to be determined, to operate in the greater Beijing area" he said.

President Chain Store, which operates more than 2,800 7-Eleven outlets in Taiwan, said during an institutional investors conference last month that it may tap into the China market this year through a joint venture.

Company president Hsu Chung-jen (徐重仁) said President Chain Store is still in the planning stage and needs authorization from the US headquarters.

Any investment plan in China by 7-Eleven or President Chain Store must first be reviewed by Chinese authorities. Moreover, China insists that at least 35 percent of the capital in the venture come from Chinese enterprises.

"This is obviously a complex situation, with government approvals needed in addition to negotiations with potential partners -- but we anticipate a decision before the end of this year," Jenkins said.

Taiwan's second-largest convenience store operator, FamilyMart Co (全家便利), is also targeting the China market. It hopes to open its first FamilyMart outlet early next year in Shanghai, a local Chinese-language newspaper said last week.

FamilyMart spokesman Chien Li-chung (簡麗君) said the company may team up with its Japanese parent company on the venture.

The venture may first set up a holding company in a third country before attempting to establish joint ventures with Chinese enterprises, the report said.