Carrefour must sell a stake in China stores
Chinese government cracks down on French retailer’s operations
June 12 2002
Carrefour has been ordered to sell stakes in two of its Chinese hypermarkets to local companies.
The order, made by The Chinese government, may herald a move to bring overseas retailers more firmly under state control.
French owned Carrefour has set up 27 hypermarkets in China, operating under a Chinese law which bans foreign companies from owning more than 65 per cent of supermarkets. Carrefour effectively operates 27 different holding companies to meet the regulations, but the authorities in the Liaoning province have ruled that the existing arrangements at two stores are unacceptable.
Carefour must sell at least 35 per cent of each store, with Shanghai-based Chengda Co said to be interested.
China’s admission to the World Trade Organisation two years ago was heralded as a major opportunity for overseas retailers. Wal-Mart has around 20 superstores in the country, while Kingfisher is rolling out large B&Q DIY stores. While the complex rules on overseas ownership make dealing with the Chinese authorities complex, the long-term potential of trading in one of the world’s largest consumer market is a powerful attraction.
There are more than 730 Carrefour hypermarkets trading worldwide. The company also operates a number of other retail brands.
