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Carrefour buys 51% of Baolongcang

0 CommentsPrint E-mail China Daily, October 15, 2010
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Carrefour SA, the world's second-largest retailer by sales after Wal-Mart, will own more than 30 new outlets in China this year after acquiring 51 percent of the Hebei-based hypermarket operator, Baolongcang, in July.

The acquisition echoes the French retail giant's previous strategy of opening 20 to 25 new stores every year in the emerging market.

Eric Legros, president and chief executive officer of Carrefour China, said: "Baolongcang is an excellent local retailer, and we're working on upgrading its existing hypermarkets, which are due to reopen in November."

Baolongcang operates 11 hypermarkets, which recorded net sales of 1.06 billion yuan ($159 million) in 2009.

After initially entering the Chinese market in 1995, this transaction is part of Carrefour's strategy of reinforcing its presence in emerging economies by buying local outlets and utilizing the experience of existing management.

"Carrefour will retain Baolongcang's local store managers, and the president of the new venture will be Yang Longfei, founder of Baolongcang," Legros told China Daily, adding that the company will further support the project by providing state-of-the-art management and operational expertise.

He also said Carrefour will unveil the name of the new stores and further information about the acquisition at the beginning of 2011.

The deal means that Carrefour will have three new outlets in Beijing - one of the most competitive cities for international retailers - by the end of this year.

Asked whether the company will introduce a new concept of "Carrefour Planet" - under which the company has invested $1.96 billion in refurbishing 500 hypermarkets in Western Europe - Legros said: "I'll tell you a secret; many of the ideas underpinning 'Carrefour Planet' were actually exported from China."

These include greater energy-saving measures, extra space for fresh food, and a more rational layout for promotional areas.

"In China, 'Carrefour Planets' already exist in the name of Jialefu," Legros explained. "For such a key market, we will use the latest and most advanced expertise possible to keep our position here."

In 2009, Carrefour posted sales in China of $5.38 billion through its 156 hypermarkets and 360 discount stores, while Wal-Mart gained $7.51 billion with 279 outlets at the same period, according to statistics by Euromonitor International.

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