Thai Agribusiness Giant to Expand Retail Chain in China

The Charoen Pokphand Group, Thailand's biggest agribusiness conglomerate, will abandon its investment in Lotus Superstores in Thailand and focus instead on expanding its retail chain in China, the Bangkok Post reported Tuesday.

CP's stake in Lotus fell sharply during the recession to 11 percent from 75 percent, with majority control held by Tesco, a United Kingdom-based retailing giant.

Dhanin Chearavanont, CP's chairman, was quoted as saying that competition in Thailand's retail market was growing each day, with the market increasingly dominated by major global players.

"We have decided to let this business go, focusing resources instead on other business lines, such as expanding our 7-Eleven convenience stores, Chester's Grill and Five Star Chicken chains," he said.

No decision had yet been made on what to do with CP's outstanding stake in Tesco-Lotus, Dhanin said, although further investment by the group was definitely ruled out.

"We know that we can't compete in this area, so we think backing out is the best strategy. But we plan to strongly expand Lotus in China next year."

Narong Chearavanont, president of Lotus Ek Chor Trading (Shanghai), said the firm has 12 Lotus operating licenses in China, eight in Shanghai and the rest destined for locations in Zhejiang and Jiangsu. Four Lotus superstores have opened in the Shanghai area.

Lotus opened its first store in Shanghai in 1997, and currently trails French retailer Carrefour, which operates six stores in the Shanghai area.

But Narong did not see competition in China's retail market becoming as brisk as in Thailand, noting that the Chinese government maintained strict zoning and licensing regulations on stores.

Thanakorn Seriburi, president of the ECI Group, which oversees CP's investments in China, said each Lotus store required a total investment of about 100 million yuan (1.209 million U.S. dollars).

The four Lotus stores already opened average sales of about one million yuan (120,000 dollars) per day, he said.

Meanwhile, CP plans to open its 335-million-dollars Super Brand Mall in Shanghai in August next year. Last week, the mall began accepting applications from retailers for floor space.

CP also was exploring the possibility of opening 7-Eleven stores in China as well.

CP also planned to boost its agribusiness operations in China through new investments next year to strengthen production capacity and staff training.

CP is one of the largest investors in China, with investments valued at some 4.4 billion dollars.

The CP Group, one of the largest agribusiness in the world, has investments in India, Pakistan, Bangladesh, Cambodia, Burma and Russia.



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