Shin Kong Mitsukoshi Department Store Co (新光三越百貨), the leading department store chain in Taiwan, has cut its stake in a Beijing joint venture from 50 percent to 20 percent, ending years of management disputes with its Chinese partner, the local company confirmed yesterday.
The deal, which came after Chinese authorities in September last year settled a call for arbitration filed by Shin Kong Mitsukoshi, gives Beijing Hualian Group (北京華聯集團) control of the joint venture, Shin Kong Place (新光天地), the Taiwanese firm said by telephone.
Previously, both partners had equal stakes in the Beijing outlet that opened in April 2007. However, it was not long before the partners fell out and in August 2007 Beijing Hualian raided the store with 200 security guards and fired most of the Taiwanese executives for allegedly taking bribes.
Shin Kong Mitsukoshi declined to supply details about the terms of the transaction or when it took place.
“With 20 percent of the shares in the company we can still take part in policymaking discussions regarding the store,” the department store chain’s communications official said.
During the dispute five years ago, Shin Kong general manager of Beijing operations Steven Wu (吳昕達) was detained by Chinese security officials as he was about to board a plane back to Taiwan and the movements of other Taiwanese staff were also restricted.
Kenneth Lo (駱錦明), chairman of the Industrial Bank of Taiwan (IBT, 台灣工銀) and the Chinese National Association of Industry and Commerce, said Shin Kong Mitsukoshi’s dispute highlighted the risks of doing business in China, as did a recent case involving Pacific Sogo Department Stores (太平洋崇光百貨).
Sogo, which owns eight branches in China, told a news conference in Taipei on Tuesday that its Chinese landlords had unreasonably increased the rent and engaged in other breaches of contract at two stores.
Lo voiced regret at the Chinese landlord’s disregard for the regulations stipulated in the contracts and urged the government to speed up the inking of an investment protection pact with China to provide a legal framework to deal with future disputes.