President Chain focuses on supermarkets in China

President Chain Store Corp (統一超商) will invest in supermarkets in eastern China, after a four-year project for the first 7-Eleven stores in Beijing has yet to materialize.

Taiwan's No. 1 convenience-store operator, which runs more than 3,000 stores nationwide, is negotiating with an unidentified Chinese to invest 100 million yuan (US$12 million) in supermarkets in Shandong Province, chief financial officer Fred Chen (陳福唐) said in a phone interview in Taipei.

President Chain, facing little room for growth in its home market and no speedy outcome with Seven-Eleven Japan Co on the Beijing venture, will face offshore rivals such as Carrefour SA and Wal-Mart Stores Inc in China.

China is the Taiwanese company's first major investment

expanding beyond snacks, beer, cigarettes and takeaway food.

"The mainland already has its supermarkets, so being the new company, President Chain still has to start from scratch," said Christine Wu (吳婉芳), an analyst with the Yuanta Core Pacific Securities Co (元大京華證券).

"The company, facing a matured market in Taiwan, has to venture out and try new things," she said.

Retail sales in China last month grew at their fastest pace in six months, as the end of the SARS epidemic drew consumers out of their homes.

The Shandong venture will aim to set up seven supermarkets, with at least one expected to open by end of this year, Chen said.

President will send senior managers to China for the first time to take control of the supermarket operation.

"Stepping aside from convenience stores, we can start other forms of retail businesses on the mainland," Chen said. ``We are gradually building our operations and know-how.''

President Chain also will invest 30 million yuan in a logistics and distribution unit in China, according to a statement to the Taiwan Stock Exchange Corp. It already has a wholesaling venture in China.

President has reached a preliminary agreement to take a 14 percent stake in the Beijing 7-Eleven venture, though details such as the identity of the Chinese partner and the timetable for opening stores have yet to be announced.

"They have been waiting for the 7-Eleven venture in China for so many years," said Wu, who has a "neutral" recommendation on the stock.

"It seems that even if they get it finally, they will still play a complementary position," she said.