Pei Liang, secretary-general of the China Chain-Store and Franchise Association, said on Wednesday that an increasing number of joint-venture one-stop shopping centres with better service, lower prices and more intensive service networks had emerged on the streets of major Chinese cities.

The Japanese retailer Ito Yokado opened its second store in Beijing on Wednesday. The retailer was part of China's first joint-venture commercial company approved by the State Council in 1997.

With the sudden expansion of a number of large department stores in recent years, Beijing's retail market has witnessed cut-throat competition and the average profit rate has declined to around 3.7 percent.

However, Su Xiaobiao, director of the business-planning department of Beijing Ito Yokado, said on Wednesday: "Competition is good for everybody, and customers will get the benefits from the competition."

The Japanese retail giant aims to provide community shopping services to neighbourhoods and plans to open more stores in Beijing, Su said.

Experts have pointed out that the competition between Ito Yokado, France's Carrefour, and Chinese firms Hualian and Wumei is expected to increase with the entry of more multinational retailers such as the United States-based Wal-Mart.

Wal-Mart -- the world's biggest retail operator -- saw its five-year campaign come to fruition in early November when it received formal approval to set up stores in Beijing.

Wal-Mart signed a land-leasing contract with Beijing Zhongshan Weiye Investment Co Ltd on November 7 to open a club store in West Beijing's Shijingshan District early next year.

The club store requires customers to become members before they can buy products.

Wal-Mart opened its first store in China in 1996 in Shenzhen and has since set up 15 chain stores, 13 supermarkets and three club stores in nine cities, including Dalian, Fuzhou, Guangzhou, Shenyang and Xiamen.

The retailer said it would open another three "superstores" and a further club store in Beijing within the next few years.

Wal-Mart's presence in China has increased dramatically this year. Almost as many stores were opened in 2001 as in the previous five years, according to the store.

To survive the stiff competition, 13 Chinese retail companies have formed a chain-store corporation involving more than 1 billion yuan (US$120 million), according to Yang Xinjing, an official with Beijing municipal government's commercial committee.

This year has witnessed a flurry of mergers in the domestic retail sector, including the merger of Shanghai Hualian with the Beijing Xidan department stores, in a bid to take advantage of economies of scale.

Yang said that domestic retailers should take further advantage of their low wage costs, good community relations and comprehensive service network.

(China Daily December 14, 2001)