CHINA FRANCHISE NEWS Vol. 2 , No.16 - July 26, 2001 TOPICS THIS ISSUE: Foreign Investment in China Tourism Industry Restricted China's Consumer Goods Market Brisk 2001 China Hotel Chain Seminar Opened in Shanghai First Wholesale JV Set Up Chain Stores Develop Rapidly in Chinese Catering Industry Foreign Investment in China Tourism Industry Restricted Foreign agencies aspiring for a piece of the giant market pie in China's booming tourism industry still face high bars despite a recent report of a Hong Kong travel agency's plan to acquire a mainland peer. Xu Jufeng, a senior expert on tourism market in China, rejected the reported acquisition plan as nonsense. A strict regulation passed in 1998 by the State Tourism Administration (STA) sets tough conditions for foreign investment. The Chinese partner must be a travel agency with overseas tourism business, and the foreign investor should have annual revenues of more than US$50 million for at least three years. The entity should register assets of no less than RMB5 million, with investment from the Chinese side no lower than 51%. But analysts said foreign involvement may help build the domestic tourism industry into a real business. Travel agencies in China right now are more administrative organs than business entities. Meanwhile, the industry is running short of funds and hungry for advanced management and operation techniques. (Source: SFISC News 07/23/01) China's Consumer Goods Market Brisk China's consumer goods market maintained stable growth in the first half of the year, Ye Zhen, spokesman of the National Bureau of Statistics, announced on July 17. Retail sales nationwide totaled 1,791.5 billion yuan (US $215.84 billion) in the first six months, up 10.3 percent on a year-on-year basis. Of the total, the retail sales in urban areas rose 11.6 percent on an annual basis to 1,120.9 billion yuan (US $135.05 billion), while that in rural areas grew by 8.1 percent to 670.6 billion yuan (US $80.8 billion) during the period. (Source: Xinhuanet 07/17/01) 2001 China Hotel Chain Seminar Opened in Shanghai The 2001 China Hotel Chain Development Strategy International Seminar opened on July 16 in Shanghai with hundreds of managers, specialists and scholars from world famous hotels and hotel management schools in attendance. The four-day seminar was jointly hosted by the China Tourist Hotels Association, Shanghai Tourism Industry Association Hotel Chapter, Florida International University, and International Hotel and Restaurant Association. Beijing's winning the 2008 Olympic Games has stimulated China's hotel development strategy. (Source: CCTV News 07/17/01) First Wholesale JV Set Up The nation's first joint venture in the previously State-owned wholesale business will soon be revving up in Shanghai. The final approvals are still pending from the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), but the US$10 million venture, Shanghai Beihong Trade Co. Ltd., is expected to start operation within two months, with a 49 percent stake owned by the Japanese-based Marubeni Corporation, and 51 percent owned by Shanghai First Department Store (Group) Co., Ltd., China's second retailing giant. The joint venture will serve as a role model for foreign investors to enter the domestic commercial market after China's accession to WTO later this year. Since 1992, China has allowed foreign investors to enter the country's retailing sector. Nearly 300 foreign-invested retailing enterprises, including Wal-Mart, Carrefour, and Metro, now operate in the country, having invested US$2 billion. But not until 1999 did the State approve a pilot plan to allow foreign investment in wholesale businesses. Under the planned economy, wholesale establishments were among the few channels for retailing companies to purchase their supply. Change was necessary because traditional wholesale businesses were losing money to foreign retailers. In addition to limited rights to import and export goods, the joint venture will buy commodities manufactured by domestic companies and sell them wholesale to various retailers nationwide. (Source: China Daily 07/13/01) Chain Stores Develop Rapidly in Chinese Catering Industry Over 40 companies out of the top 100 in the catering industry have their chain outlets generating 59 percent of the turnover. Private and state-owned chain outlets have injected new vitality into China's catering industry. For Chinese food, the Malan Noodle Corporation ranked first with 361 outlets. "The number of chain outlets is still quite few compared with western food. We hope to increase the profit as well as improve the managing skills within chains," according to an official with China General Chamber of Commerce. (Source: People's Daily 07/16/01)     Lehman Lee & Xu China Lawyers, Notaries, Patent, Copyright and Trademark Agents Suite 188, Beijing International Club 21 Jianguomenwai Dajie, Beijing 100020 China Tel.: (86)(10) 8532-1919 Fax: (86)(10) 8532-1999 mail@chinalaw.cc http://www.chinalaw.cc/   To unsubscribe from this newsletter send an email to unsubscribe_franchise@chinalaw.cc Please include the email address to which the newsletter is being sent (not a forwarded address) in the body of the email.	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