Shinsegae Began To Step Ahead into China

Korean retails began to advance into Chinese market.

Shinsegae announced at 1st of October that it has a plan to open two or three Shinsegae E-Mart in Shanghai in the first half of the next year and outsource Chinese products in China.

At the moment, Shinsegae and Mega Mart of Nongshim have one shop in China individually.

Lee Kuyng-sang, Vice President of Shinsegae announced ”we will have MOU contract with K Chinese retailer in Shanghai in the middle of this month for joint business of discount shop” and added “ we will open two or three shops in Shanghai in the first half the next year and extend to seven shops by 2004.”

The ownership of joint venture will composed of 49% by Shinsegae, 49% by K company and 2% by another Shinsegae Chinese joint venture because foreign capital is limited 49% at maximum. Shinsegae will be responsible for the management.

K Company possesses four department stores, seven shopping mall and logistic warehouse in Shanghai. So the advancement of Shinsegae looks to take off earlier.

Shinsegae also agreed with T Company, a property development company in Tenjin to open E-mart of 12,000 square meters at ground floor of multi purposed building in the downtown of Tenjin and, and reviews the contract conditions now. So one E-Mart shop may be opened in the second half of the next year.

Shinsegae also discusses with a Chinese property development company to establish E-Mart in a large sized apartment zone in outskirt of Beijing.

Shinsegae composed a taskforce that outsource Chinese products directly on the spot.

Shinsegae will advance into Chinese market by itself when more than 50% ownership is allowed in China in 2005, and invest 400 billion won by 2010 to open 40 shops.

Lee Vice President commented “we rush into China for special boom of 2008 Beijing Olympic and open market policy for retailers’ and added “we also launch outsourcing business for purchasing high quality products at reasonable price.

Yong Park parky@donga.com