Watsons to triple stores in mainland

Hutchison Whampoa's health and beauty chain Watsons plans to triple the number of its stores on the mainland to 3,000 in the next five years as it revs up expansion in a mammoth but competitive consumer market.

Watsons, which opened its 1,000th mainland outlet in Shanghai yesterday, will also make inroads into an additional 150 cities and have a presence in 300 cities by 2016, said Christian Nothhaft, chief executive of Watsons China.

'We've got a lot of logistics and management experience in China,' Nothhaft said. 'We are a big fan of the Chinese economy and we are fairly confident.'

The retail chain controlled by Hong Kong tycoon Li Ka-shing has doubled the number of its stores on the mainland over the past two years, adding 250 outlets each year.

Under the new expansion plan, it will have 400 openings each year to reach its goal.

The fast pace of store openings also reflects the mainland's increasing significance to Watsons. To date, the number of outlets it has there represents one-tenth of its global total - some 10,000 worldwide.

Watsons would not provide details about its further expansion on the mainland, saying the investment would amount to several hundred million yuan, including spending to upgrade existing stores and its logistics network.

Admitting that Watsons' pharmacy business on the mainland accounted for only a small portion of its sales, Nothhaft said the retail chain would look to further expand the service when the 'legal framework changes'. An increasing number of young mainlanders prefer to buy over-the-counter drugs at shops rather than in hospitals, but the pharmacy business is now heavily regulated, with state-owned companies playing a dominant role.

The retail sector has been a bright spot for the mainland economy since the central government cut spending on infrastructure projects, following the stimulus package. Retail sales grew 14.8 per cent to 15.7 trillion yuan (HK$19.15 trillion) last year.

'Obviously, there's more competition than ever before,' Nothhaft said. 'We are ahead of our competitors and we try not to be driven by competitors.'

Watsons targets shoppers aged between 24 and 30 on the mainland.

It would add 50,000 jobs on the mainland next year, taking its workforce there above 220,000, Nothhaft said.