President Chain still in talks over China 7-Eleven

President Chain Store Corp (統一超商), operator of the world's third-largest 7-Eleven franchise, said it's still in talks to take a stake in a venture to operate 7-Eleven stores in Beijing, though it won't be part of the group that opens the first outlet this month.

Seven-Eleven Japan Co will open one store on April 15 and another four outlets by the end of May, it said in a statement on the Tokyo Stock Exchange. The Japanese company will take a 65 percent stake in the venture, and two Chinese partners will hold the remaining 35 percent.

Taipei-based President Chain, which last year said it would take a 14 percent stake in the venture under a preliminary agreement, has been wrangling with Seven-Eleven Japan for a bigger share. It applied in June, 2001 to open stores in Shanghai and Beijing, and may be hurt by not joining the venture.

"It's certainly a disappointment," said Simon Lu, a money manager at Hua Nan Investment Trust Corp (永昌投信) which oversees the equivalent of US$2.7 billion of mutual funds in Taipei. Lu doesn't hold President Chain shares. "Convenience stores and supermarkets belong to different markets. China is about who gets in first. The company's long-term development may be affected."

Seven-Eleven Japan said in a statement in January on its Web site that it set up a Beijing venture that would open and run the 7-Eleven Inc franchise in Beijing, Tianjin and Hebei province. Beijing ShouLian Commercial Group (北京首聯) would take a 25 percent stake and China National Sugar & Alcohol Group (中國糖業飲料集團) 10 percent. The statement didn't mention President Chain.

"It doesn't matter even if we aren't a founding shareholder," President Chain Chief Financial Officer Fred Chen (陳福唐) said in a telephone interview. "We're still in talks to increase the stake, the higher the better. A 14 percent share makes us feel we have a lot of know-how but no room for play."

Chen said President Chain is pressing ahead with supermarket and drugstore ventures in China. In February, the company said it would set up a drugstore venture in Shenzhen in southern China.