Lianhua and Hualian to complete merger
- Source: Global Times
- [11:09 June 28 2010]
- Comments
A branch of Lianhua CenturyMart in Shanghai. Both Hualian and Lianhua will retain their brand identities. Photo: IC
By Tang Zhao
The Lianhua and Hualian supermarket chains are due to complete the integration of their businesses next month, following last year's purchase of the latter by the former,
Shanghai Lianhua Supermarket Development Company (SLSDC), a subsidiary of Hong Kong-listed Lianhua Supermarket Holdings (LSH), will become the largest supermarket chain operator in China when the consolidation is completed on July 10.
LSH bought 100 percent of the shares of Hualian Supermarket for 492 million yuan ($72.45 million) in June 2009 from the parent of both chains, Shanghai-headquartered Bailian Group
Ma Xinsheng, chairman of Bailian Group, said that the standard supermarket business of both Lianhua and Hualian will be merged into SLSDC, although both the Lianhua and Hualian brands will remain.
The new retail chain operator will have more than 3,500 supermarket outlets nation-wide, with annual sales turnover of almost 50 billion yuan ($7.36 billion).
Hua Guoping, chief executive officer of LSH, said that the newly-integrated company is planning to spend 600 million yuan ($88.35 million) to open 500 stores, with a focus on the Yangtze River Delta region, according to an Oriental Morning Post report on Friday.
The consolidation of the supermarket business will enable the stores under each brand to share suppliers, while their IT systems and supply chains will also be integrated. According to a Xinhua report on Saturday, the integrated chain's purchases from wholesalers in Shanghai will exceed 10 billion yuan ($1.47 billion) annually, making it the biggest purchaser of Shanghai goods among supermarkets.
Bailian is China's third-largest chain operator by turnover, recording 70.5 billion yuan ($10.38 billion) in 2009, after the Suning and Gome electronical goods chains, according to rankings by the China Chain Store and Retail Association.
Recent years have seen foreign retail chain operators increase their investments in China to open new stores or acquire existing retailers.
In 2009, US retail giant Wal-Mart opened 53 stores in China. It currently owns 180. The same year, South Korea's second-largest department store operator, Lotte, spent $635 million to acquire Jiang-su-based supermarket operator Time Retail Group, which has 65 stores.
French supermarket chain Carrefour is in talks with Baolongcang supermarket chain, with the purpose of acquiring the latter's 14 outlets across Hebei and Shandong provinces.
Hua told China Business News in early June that foreign retail operators are gaining an increasing share of the retail market in China, with some even becoming monopoly players in certain regions. He added that State-owned retailers must be vigilant of the increasing competition they face.
