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Published on December 21, 2007

CEO Tos Chirathivat said the company would open its first Central Department Store in the city of Hangzhou in China's Zhejiang province, to be located in Mix C shopping centre.

With total space of 240,000 square metres, the Mix C shopping complex will be developed through a joint venture between Hong Kong-based China Resources and Sun Hung Kai Properties in China. The shopping complex will open in September 2009.

CRC will allocate an initial investment of Bt500 million to occupy a 23,000-square-metre area in the Mix C complex and will be the largest tenant there.

"Opening a store in China is an important milestone for both Central Department Store and Central Retail. Our flagship department store, Central, has been in existence for more than six decades in Thailand. We have both very strong brands and retail platforms, ranging from department stores, large retail malls, speciality stores and many others. With our brands, solid retail expertise, successful business formats and relationships with suppliers, we believe this expansion will allow us to capture tremendous opportunities in mainland China while transferring our skills abroad," said Tos.

CRC expects total sales this year to reach Bt74 billion, up 7-8 per cent from last year.

Tos said CRC had secured a long-term rental contact of about 20 years for the store in Mix C but that rental payments would be made annually.

"We expect the first Central Department Store in China to break even within the next four or five years," said Tos, adding that the store was expected to achieve sales of more than Bt3 billion annually.

Hangzhou is the capital of Zhejiang province. The city itself has a total population of 6.7 million, together with about 48 million people living in the province. About 30 million tourists visit Zhejiang each year. The province has four department stores with one medium-size shopping centre, and all are owned and managed by local operators.

He said CRC planned to open at least two or three department stores in China annually over the next three years and four to six stores after that. A minimum budget of between Bt4.5 billion and Bt5 billion will be allocated to CRC's Chinese operations in the first three years of investment.

"We expect to open about 40 department stores in China in the next 10 years," said Tos, adding that the company had conducted feasibility studies and spoken with 20-30 project developers in major locations like Shanghai, Hangzhou, Suzhou and Nanjing in the first zone; Guangzhou and Shenzhen in the second zone; and Beijing, Tianjin, Shenyang and Dalian in the third zone.

"Our goal is to use the proven successful retail platforms we've built in Thailand to gain a strong foothold in China. The first step is to start with Central Department Store and a few other brands we have, such as B2S, SuperSports and PowerBuy. CRC will also apply its previous success in merchandising and branding concepts. We'll be selling in-house brands like Defry01, B+Basic and other only@central merchandise. In addition, we'll be using the strong relationships with the more than 4,000 suppliers in Thailand with whom we've built solid trust and recognition over several decades. Going to China will create opportunities for our retail partners and suppliers to distribute their products, helping boost their competitive edge and increase efficiency while indirectly helping the Thai economy," said Tos.

Kwanchai Rungfapaisarn

 The Nation