Foreign retailers have so far failed to take over China's chain store industry, despite worries that these giants would impact local businesses after China's accession to the World Trade Organization (WTO), according to statistics from the Ministry of Commerce.

The ministry yesterday gave a list of the top 30 chain store operators of 2003, which for the first time includes foreign-funded companies.

Six overseas-funded chain store operators entered the list including Carrefour (China), China Resources Vanguard Co Ltd, Suguo Supermarket Co Ltd, Wal-Mart (China), Jinjiang Metro and Haoyouduo Supermarket Co Ltd.

Total sales income of the six companies reached 49.5 billion yuan (US$5.98 billion) last year, representing 18.3 percent of the combined sales income of the top 30 companies.

The number of franchise stores from these operators totaled 1,748 by the end of 2003, accounting for 16.9 percent of those in the top 30.

Total sales income of the top 30 in 2003 was 270.4 billion yuan (US$32.67 billion), up 29.2 percent. The total number of stores was 10,321, up 35.1 percent year-on-year.

The newly-organized Shanghai Bailian Group, which merged into Shanghai Lianhua Group and Lianhua Group, the two biggest chain store operators in 2002, topped the rankings with sales income measured at 48.5 billion yuan (US$5.86 billion) and 4,357 outlets.

The Dalian-based Dashang (Group) Co Ltd, Beijing Gome and Beijing Hualian Group placed second through fourth respectively on the list.

"The statistics indicated that local chain store operators are still dominating the industry despite challenges from foreign counterparts," said Huang Hai, an assistant minister.

The statistics defied predictions that the local retailing business would shrink because of the aggressive entrance of foreign companies.

Huang also did not expect foreign investment to enter the industry in a large-scale manner, because China is set to further open the retailing market by the end of this year as part of its WTO commitments.

China promised to lift restrictions on capital composition and locations within three years of its WTO accession.

"The aggressive entrance by foreign investment is impossible as room in the east is limited because of fierce competition," Huang said.

He added that these companies are unwilling to go to middle and western regions, and signs in the already-opened cities in the regions have proven that.

Men Xiaowei, deputy director of the ministry's department of commercial reform and development, said that many of the operators saw a high growth rate in their expansion phases despite the impact of SARS earlier last year.

Eight companies witnessed growth rates of more than 40 percent in terms of sales income last year, according to Men.

The rate for Shanghai Yongle Household Electronic Appliances Co Ltd reached 80 percent, while Beijing Wumart hit 67.8 percent and Beijing Gome Electronics Co Ltd 63.3 percent.

Two companies, Qingdao Liqun Group Shareholding Co Ltd in east China's Shandong Province and Nantong Wenfeng Dashijie Chain Shareholding Co Ltd in east China's Jiangsu Province doubled their number of outlets last year and then expanded those stores by 50 percent.

Men said many Chinese chain companies are becoming industry powers, part of approaching China's target to foster its own giants.

Nine of the 30 companies had sales of more than 10 billion yuan (US$1.2 billion).

Except for six local companies replaced by overseas-funded companies this year, the majority of the 30 top chain companies in 2002 were still on the list in 2003.

Household electric appliance dealers became a major group on the list, with a total of five being ranked.

(China Daily February 12, 2004)