Retail giant Yaohan yesterday marked the one-year countdown to Hong Kong's sovereignty transfer by shifting its headquarters from the territory to Shanghai and speeding up its China expansion plans. Chairman Kazuo Wada said Yaohan would bring forward plans to set up 1,000 supermarkets across China - costing about US$450 million - and this would be better co-ordinated out of Shanghai than Hong Kong. He said the transfer of the headquarters was prompted more by China's vast business potential than the high cost of doing business in Hong Kong. 'Originally, we intend to open at least 1,000 stores in 2010. 'But we are now bringing forward the plan by five years to 2005 because China is expanding faster than we had predicted,' Mr Wada said. By then, there would be 1,060 stores in China with a staff of at least 50,000, compared with Hong Kong's 15,000. The man overseeing Yaohan's plans in China - Shoichi Tajima - died earlier this year, and because of the importance of China in the retailer's scheme of things, Mr Wada would now have to spend two weeks every month on the mainland to direct group operations. 'So, for all these reasons, it is better to control our operations from Shanghai than from Hong Kong.' Mr Wada said when he moved the headquarters from Tokyo to Hong Kong in 1990 he did not predict that China's economy would expand so rapidly. Today, China, including Hong Kong, accounts for $1.3 billion, or 30 per cent of the group's $4.5 billion sales. In a decade, the proportion would rise substantially. When the 1,060 stores are operating fully by 2005, China and Hong Kong would account for about 50 per cent of Yaohan's projected sales of $6.5 billion. Hironobu Yasunaga, director (finance and project development) of Yaohan (Shanghai) Holdings, said the supermarket chain should turn in a net profit of $30 million by 2000, when half of the 1,000 stores would be operational. 'By 2005, net profit should be $130 million,' he predicted. Analysts said China was Yaohan's biggest gamble and the key to its flagging fortunes. 'This will [be] make or break for Yaohan. That is why Mr Wada has to oversee it personally,' one retail analyst said. Central to Yaohan's China plan is Nextage, Asia's largest department store in Pudong, a $230 million joint venture between Yaohan group and Shanghai No 1 Department Store. The analyst said if Mr Wada could absorb the losses from running this department store in the early years until Pudong was more attractive as an investment site by around 1998, his 'early bird' strategy and confidence in China would reap handsome returns. 'I firmly believe that after 2000, people would be able to judge as to whether we made the right decision in China.'