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Sandy Li

Hutchison Whampoa is expanding its AS Watson stores into the Philippines by forming a joint venture with SM Group, the country's largest retailer.

The joint venture, to be called Watsons Personal Care Store (Philippines), will acquire all of SM's 61 health, beauty and family drugstores.

The SM Group, founded by George Sy, will take 40 per cent of the venture, with Hutchison taking the remaining 60 per cent.

The new company will rebrand the stores with the slogan 'Watsons, Your Personal Store' and open 15 outlets in its first year.

A Watson spokesman refused to disclose the financial terms of the deal or capital expenditure for the new stores.

Philippine law requires foreign investors to inject at least US$850,000 into each retail outlet.

This means the joint venture would need to pay at least US$12.75 million for the new stores in the first year. Watson would have to invest about US$7.65 million.

Watson said this was the first major foreign investment by an international retail chain store in the country since the Government revamped its foreign investment policies in March 2000 to enable overseas investment in the retail industry.

Most of the 61 outlets are inside shopping centres owned by SM in Metro Manila. The rest are spread around the country.

The Watson spokeswoman said the company targeted customers aged between 15 and 30 with high disposable incomes.

Ian Wade, Watson group managing director, said the company's Canton Dispensary had operated in Manila from 1883 to 1912 at the original Chinatown on Escolta Road.

The group was returning to the country after an absence of 90 years, he said.

SM Group president Teresita Sy-Coson said: 'We were looking for a reputable global retail partner to further expand and enhance our market reach.'

A Watson spokesman said the firm was also considering expanding its ParknShop supermarket chain to the Philippines and negotiations with domestic partners were under way.

Watson, with more than 1,200 retail stores and a history of more than 150 years in the region, was the perfect choice, he said.



Watson moves on Philippine market