Supermarket chain's losses come as competition heats up in crowded sector
In a sign of the intense competition in China's retail sector, one of the biggest supermarket chains yesterday announced that it had closed stores in Beijing to stem rising losses while South Korea's biggest discount store operator opened a large new outlet in Shanghai.
Wang Dongliang, a spokesman for Hualian Supermarket, said that it was reducing its operations in Beijing because of pressure from domestic and foreign rivals, adding: 'This sector is over-competitive.'
Industry sources said that Hualian had cut its Beijing outlets from 40 at the end of last year to the current 18, given up its plan to open 100 stores in the capital and would in future concentrate on its home market of Shanghai and the Yangtze River Delta.
On April 29, the company announced a net first-quarter loss of 1.74 million yuan, down 130 per cent from a year earlier, following a 2005 loss of 41.06 million, of which the Beijing operations accounted for 17.08 million.
Competition in the mainland's retail market has intensified since December 2004 when the government lifted restrictions on foreign players as part of its commitments to the World Trade Organisation, allowing them to invest anywhere and without a local partner.