Namchow Group (南僑集團), which started as a soap-making chemical manufacturer in 1952, plans to use its expertise in the food market to tap into the food-and-beverage franchise business across Taiwan and China next year, a Chinese-language Commercial Times report said yesterday.
Namchow chairman Alfred Chen (陳飛龍) said that rising raw material prices, which are driving up costs for food businesses, have made it more difficult for small restaurants to compete with chain stores, the report said.
Chain stores often enjoy advantages in terms of economies of scale.
Under such circumstances, Namchow wants to use its own well-developed logistics support system to set up a full-product franchise, offering a wide choice of products at the request of franchisees, Chen said.
The company plans to establish its franchise headquarters in the coming six months and expand into a cross-strait alliance of restaurants and beverage franchises next year.
Chen said that the yet-to-be-established franchise will sell the company’s main brands, including various types of noodles from Taiwan, while franchising its Paulaner Boutique, Paulaner Bakery and Deli in China. In the future, the company’s franchise will also incorporate other companies and their products such as coffee and sweets shops.
Under the name of the franchise alliance, different kinds of shops will sell different products. The company plans to open 30 shops this year, which will expand to 100 outlets in Taiwan by 2010, while opening up more than 250 outlets in China’s Shanghai area alone, Chen said.
Over the past few years, Namchow has used established flagship shops to build a framework for managing the local food market and has gradually built a complete support system for logistics including personnel, supplies, operational procedure and education, he said.
The company is ready to support full-scale supplies as well as smaller-scale shops when its basic infrastructure is complete, the chairman said.
This logistics system has become a competitive advantage for Namchow in the food business, he said.
Chen explained how, over the years, Namchow has produced an increasingly diverse range of high-quality food products and because of this, it can cater to all kinds of consumption patterns.
Namchow started as a company producing chemicals, but has expanded its activities to the food market, both in Taiwan and in China.
Last year the company had a combined revenue of NT$1.1 billion (US$35.8 million) in both Taiwan and China — a 25 percent growth compared to the previous year.
Namchow entered the Chinese markets more than 10 years ago.
Chen said that if the time is right, the company may consider making its food branch an independent company and start to look toward the European market.