The mainland's second-largest supermarket chain is moving into the hypermarket business in an effort to fend off foreign rivals.
Hualian Supermarket, which operates 1,000 supermarkets nationwide, will invest 600 million yuan (about HK$565.42 million) in 20 new hypermarkets over the next two years, board secretary Dong Xiaochun said yesterday.
'We hope the expansion will strengthen our competitive edge and fend off the growing threat from domestic and foreign enterprises,' Mr Dong said.
Hualian currently operates 11 hypermarkets which, with an average area of 8,000 square metres, are about 10 times the size of its supermarkets.
The move will bring Hualian into direct competition with foreign companies such as France's Carrefour and Wal-Mart of the United States, which already operate - respectively - 27 and 20 hypermarkets in China.
With China's 65 per cent foreign ownership ceiling in the retail sector set to be eliminated next year under the terms of its World Trade Organisation accession, domestic players are bracing for a wave of wholly foreign-owned competition.
But Mr Dong said Hualian was not running scared, and had advantages over its foreign rivals including lower sourcing costs and a more flexible investment strategy.
