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Thu, May 30, 2002 - Page 18 News List

`We're not just a business, we love it here'

CEO of California Fitness Eric Levine was in town recently for a visit and sat down with `Taipei Times' staff reporter Dan Nystedt to discuss selling fitness in Asia, the company's plans for Taiwan and its support of the Chinese Taipei Olympic team

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California Fitness CEO Eric Levine says that the company's support of Taiwan's Olympic team pays off with consumers because it sends a message that says `` We're here. We've been checked out by the government. They could have gone anywhere, but they chose us.''

PHOTO: ERIC CHEUNG, TAIPEI TIMES

Taipei Times: Has it been difficult to sell fitness in Asia?

Eric Levine: When I first came out here, people told me -- we started in Hong Kong -- they said Chinese people won't want to work out, the women are skinny and they won't sweat. I said, okay, that's fine, thank you for that. But when we did the body fat testing on the women, they were as high as the United States, because they don't have any lean muscle mass.

TT: No. Really?

Levine: Really. They're not big, but being big doesn't mean you're in shape just like being skinny doesn't mean you're in shape. Being big doesn't mean you're not in shape. Appearance is a good indicator, but it's not everything. So when we did the body fat testing on thin women, they were in the danger zone.

TT: How has the economic downturn impacted California Fitness?

Levine: [The downturn] did impact us, but we were very far ahead. We had a great first couple of years and then it did slow down -- but it didn't slow down to a level that caused us any concern.

We're actually still -- financially -- our rent is about 50 percent of our overhead. In times of financial gloom, the first thing that goes down is the rent. Landlords now come to us and say `hey, I've got 50, 60, 70,000 square feet and I don't want to have a 3,000 square foot restaurant, a 1,000 square foot shoe shop, I want some someone who's going to give me a ten year lease, you're a triple AAA tenant with 440 centers around the world and I want to give you a fair price. So in these times, it's a wonderful time for us to expand -- we did it during the financial crisis in `98.

TT: Didn't the fitness centers at Hsimenting and the Taipei Train Station open just before the current economic downturn set in?

Levine: Just before. Hsimenting opened just before, about 6 months before and the [train] station opened up kind of just at the beginning of it, so that one is our weakest one. This one [Chunghsiao E Road] is extremely solid. We have over 20,000 members here in this one. This is one of the most successful fitness centers in the world.

TT: Are you looking at closing down the Taipei Train Station center?

Levine: No, no, no, no. One thing about our business, you never have a second chance at a reputation. We have 440 clubs in 11 countries and we've never closed down a club, ever. We've moved within a 3km radius sometimes to a bigger, better location, but we've never shut down. It gives the wrong message. We're trying to expand globally and be the brand name of fitness.

Besides that, the fact that we usually sign 10 year leases and new clubs typically cost us US$5 million in improvements, what are you going to do with that? A year later, you're not going to be able to write that off.

TT: What are your expansion plans?

Levine: We have three locations we're negotiating right now in Taiwan. We'll have at least two of them in the next year, one in Taipei and one in Taichung. [But] I've walked into leases that I've been negotiating on for a year and a half and in the last minute we've pulled out.

The reason we were late opening up in Taiwan is because we had a building right across the street [from the Chunghsiao location]. A year we worked on that -- the negotiating, spent all the money -- and then I asked the landlord about the floor loading and they gave us their architecture drawings showing that it was enough. But we don't go on that, we go on our own. After an extensive survey we found that not only was it not strong enough for us, but it was a completely illegal structure and it couldn't hold even a household. So, things take time, and we had to be safe.

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