President Chain Plans 300 7-Elevens in Shanghai Within 5 Years

Taiwan's President Chain Store Corp., an affiliate of the Uni-President group and operator of the island's largest chain of convenience stores, recently beat out Thailand's Charoen Pokphand Group to win the 7-Eleven franchise for Shanghai.

7-Eleven will be President's 10th brand business in China. The company already has four 7-Eleven stores in Shanghai, and intends to boost the number to 300 within five years. The company contrasts this hoped-for performance with that of Japan's Family Mart convenience-store chain, which has been in Shanghai for five years and now has only 152 stores there.

Lin Tsang-sheng, president of the Uni-President Group and chairman of President Chain Store, reports that the group started developing the food and beverage market in China in 2000 by opening the first Starbucks coffee shop in Shanghai. From that time on the group has continued to establish footholds in China for its other chain operations, which include drugstores, supermarkets, bakeries, and ice products, among others.

Hsu Chung-jen, general manager of President Chain Store, says that his company expects its 7-Eleven operation in Shanghai to turn profitable relatively quickly. "Our 7-Eleven stores in Taiwan didn't turn a profit until the seventh year," he notes. "But we are confident in the operation of this convenience chain in China, and hope to see profits in the fourth year."

The 7-Eleven chain was introduced into China back in 1992. Today its franchise in North China is held by Seven-Eleven Japan (SEJ), in the south by Hong Kong's Dairy Farm International Holdings Ltd., and in the east by Taiwan's President Chain. The country currently has a total of 591 7-Eleven stores: 75 in Beijing, 512 in Guangzhou, and the four recently unveiled in Shanghai by President Chain Store.

Huang Chien-li, who was formerly general manager of President Transnet Corp., another Uni-President company that operates the Takkubin home-delivery service in Taiwan, was dispatched to China early this year to take charge of President Chain Store's business there. President Transnet's good performance, with revenues up 14% and profits up a whopping 55% last year, is believed to be the reason for Huang's promotion to the China position.

President Chain Store's other nine chains in China, in addition to 7-Eleven, are Unimart, Shandong President Yinzuo Supermarket, Starbucks, Mister Donut, Cold Stone, Semeur Depain (bakeries), Afternoon Tea, Presiclerc Supermarket, and Cosmed (drugstores).

All of these chains have been doing very well in China--particularly Starbucks, whose profits last year doubled those of Starbucks in Taiwan despite having only 167 outlets to Taiwan's 224.

Huang has been in his China office for only four months, but he has already signed a contract with the organizers of Expo 2010 Shanghai to rent an area of about 200 pings (1 ping = 3.6 square meters) inside the Expo complex for a Starbucks coffee shop there during the exhibition period. Huang says that he will continue to strive for the right of other President Chain Store brands to operate at the Expo, including 7-Eleven, Cold Stone, and Mister Donut.

To cater to the tastes and eating habits of Shanghai's people, the four newly opened 7-Elevens there plan to have chefs on duty to cook food for their customers. The stores will also offer brewed coffee, hot soybean milk, and hot meals. Some of the snacks and most of the tea drinks provided in the stores are directly imported from Taiwan to guarantee quality. And, to lower operating costs, 7-Eleven will share a warehousing system and logistic services with Starbucks.

After 30 years of development in Taiwan, 7-Eleven is the largest convenience store chain on the island with a total of around 4,500 stores generating revenues totaling NT$100 billion (US$3.03 billion) and profits of around NT$3.4 billion (US$103.03 million) last year. The company hopes that the 300 7-Eleven stores it hopes to have in China within five years will take in revenues of NT$100 billion per year.

Chains operated by President Chain Store in China and Taiwan
Brand	Location	No. of Stores
Unimart	Sichuan Province (China)	4
Shandong President Yinzuo Supermarket	Shandong Province (China)	112
Starbucks	Taiwan	224
	Shanghai, Hangzhou, Nanjing (China)	167
Mister Donut	Taiwan	45
	Shanghai	5
Cold Stone	Taiwan	13
	Shanghai, Beijing, Guangzhou, Tianjin, Suzhou, Shenzhen (China)	34
Semeur Depain	Taiwan	20
	Wuhan (China)	21
Afternoon Tea	Taiwan	3
	Shanghai (China)	2
Presiclerc Supermarket	Beijing, Qingdao (China)	7
Cosmed	Taiwan	300
	Shenzhen, Guangzhou, Zhuhai (China)	11

Source: President Chain