CHINESE consumers' growing spending power is a good reason to invest in China's retail industry, says the chairman of Yaohan International Holdings, Kazuo Wada. Mr Wada said the growth of disposable income was timely for the group's launch of its Nextage Shanghai department store in the city's Pudong district in December. 'China has undergone vast economic development in the past four years when we decided to go ahead with the project,' he said. 'People's spending power has become stronger. The opening [of Nextage Shanghai] at the end of the year is a suitable timing and in line with Pudong's growth progress.' China has forecast the value of retail sales this year will be at 1.95 trillion yuan (about HK$1.79 trillion), a rise of 22.6 per cent over last year's estimates. The Nextage Shanghai project saw Yaohan becoming the first foreign company to be granted a government licence to operate a retail business as well as import-export business on the mainland. Nextage Shanghai, tipped to be one of Asia's largest department stores, is a joint venture between Yaohan and Shanghai Number One Department Store. The joint venture has a paid-up capital of US$50 million. Yaohan International Holdings has a 36 per cent stake, while Yaohan Japan Corp owns a 19 per cent interest and Shanghai Number One Department Store controls a 45 per cent share. The group yesterday signed a loan agreement for $48 million with a consortium of 13 international banks to finance Nextage Shanghai. The banks included the Industrial Bank of Japan, the People's Construction Bank of China, the Hongkong and Shanghai Banking Corp and Banque Nationale de Paris. The loan is in addition to the $40 million raised for the store by the joint venture in December last year. 'The two loans confirm that international financial institutions are taking a big interest in the Nextage Shanghai project,' said Mr Wada. By the year 2000, Yaohan would have been involved in projects worth $600 million, comprising total investments of $300 million, he said. 'Our forecast is that, we will be investing in department stores and supermarkets in six major cities from Shanghai to Nanjing,' he said. The group will open its Shanghai International Merchandise Mart - a distribution and exhibition centre in June - and another store at the Shanghai railway station in September. Mr Wada said they would increase the existing four supermarkets in Shanghai to 20 by the end of the year.