Lianhua Supermarket Holdings, China's biggest supermarket operator, is considering pulling out of its discount foodstuff chain partnership with French hypermarket giant Carrefour after the joint venture lost more money than the mainland retailer had invested.
Shanghai-based Lianhua, which operates more than 3,700 supermarket, hypermarket and convenience stores, might sell its 45 per cent stake in the 120-shop Shanghai Dia Lianhua to Carrefour which holds a 55 per cent stake, Lianhua executive director Liang Wei said yesterday.
Formed in 2003 with a registered capital of 90 million yuan, the venture accumulated losses exceeding the amount Lianhua had invested, said Mr Liang, who declined to specify the figure. He said a stake sale was one of the options Lianhua was considering and a final decision would be reached before the end of the year.
However, Mr Liang said the mainland retailer would retain its 45 per cent stake in a separate hypermarket joint venture with Carrefour that has nine outlets in Shanghai.
Lianhua yesterday said that despite booming mainland consumer spending - retail sales rose 13.7 per cent last month to 601.2 billion yuan from a year earlier - its first-half net profit increased 5.6 per cent to 138.4 million yuan on 8.35 billion yuan sales amid intensifying competition from foreign players such as expansion-minded Wal-Mart and domestic rivals including the acquisitive Wumart.
Mr Liang said the company was under 'pressure' to meet its target of opening 500 stores across all segments this year after inaugurating only 99 in the first half. He expected capital expenditure in the second half to match the 400 million yuan in the first.