Lane Crawford may cancel agreement with Asiaworld

Lane Crawford, a Hong Kong operator of brand-name boutiques, may pull out of a planned investment in Taiwan in view of the nation's sagging economy, a Chinese language newspaper reported yesterday.

The decision to abruptly halt the set up of a retail complex -- located on the intersection of Tunhwa North Road and Nanking East Road -- may breach an agreement it has with Asiaworld Shopping Mall (環亞購物中心), the paper said.

So far both sides have not engaged in any compensation talks. But if Lane Crawford decides to annul the five-year contract, it would have to compensate Asia-world, its landlord, several "tens of millions of New Taiwan dollars" -- including six-months rent, renovation fees and other business surcharges, the paper said, citing Asiaworld's deputy general manager Chen Shih-liang (陳世樑).

The 1,000-ping boutique complex was originally set to start business in September. But Lane Crawford reportedly decided to delay the opening until February and then suspended all other related preparation work following the terrorist attacks on the US.

While Lane Crawford has paid Asiaworld several million NT dollars in monthly rent since September, it has decided to freeze the project, the paper said, citing the impact on consumer demand for luxury brands.

An insider in the retail sector, however, told the Taipei Times that he believes Lane Crawford may annul the contract with Asiaworld because of concerns that the financially-troubled Asiaworld Group (環亞集團) may be unable to pay off outstanding loans of NT$20 billion acquired from 20 to 30 banks and annual interest payments of about NT$1.7 billion.

Lane Crawford currently runs boutiques in four major commercial areas in Hong Kong and a department store in Shanghai.