Japan's Ito-Yokado Plans Supermarkets in China

TOKYO - Japan's Ito-Yokado Co Ltd. today announced plans to expand its presence in the booming Chinese retail market by setting up a joint-venture supermarket business, Reuters reports.

Ito-Yokado Co Ltd., Asia's biggest retailer, will go into business with Beijing Wangfujing Department Store. The company is seeking Chinese government approval for the venture and plans to open the first supermarket next spring, according to Reuters. Three supermarkets are planned for the first year of business.

Ito-Yokado is making this move as Japanese retail sales continue to decline. Last year sales fell 1.8 percent, the seventh straight year of decline, according to Reuters.

Meanwhile retail sales in China rose nine percent to 4.47 trillion yuan ($540 billion) last year.

Ito-Yokado spokesman Yasuo Takaha said the outbreak of SARS last year had increased the appetite of consumers in China for food grown and shipped with better hygiene controls, spurring the company into establishing food-only supermarkets there.

"We'll be concentrating on fresh food, for example, procuring from local farmers produce that has been grown organically," he said. He said foreign competitors offered mainly processed food.

The retail giant already has three huge general merchandise stores in China, which include clothes and typical supermarket fare.

Ito-Yokado and Beijing Wangfujing Department Store will each take a 40 percent stake in the venture. York-Benimaru Co Ltd., an Ito-Yokado group supermarket operator, will take 20 percent.

Wal-Mart Stores Inc., which has opened 35 stores in 17 Chinese cities since 1996, has said China could rival the United States in terms of growth opportunities despite current regulatory difficulties in opening stores.

Carrefour owns 40 supermarkets in 21 Chinese cities, and Tesco Plc is in talks to buy a 50 percent stake in a chain of 25 hypermarkets in China from Taiwan's Ting Hsin International Group, according to Reuters.