Shanghai, July 17 - Lianhua Supermarket Holdings, China's largest supermarket chain, plans to open 15 hypermarkets a year across the country to keep pace with booming consumption and safeguard its lead over Wal-Mart and Carrefour.
Lianhua, a joint venture partner of Carrefour in Shanghai, started its hypermarket business just seven years ago and now runs 120 of the plus-sized supermarkets, about one-fifth of those in Shanghai, General Manager Liang Wei told Reuters on Thursday.
Lianhua is part of a wave of local firms building hypermarkets -- huge stores carrying goods from basic food staples and household products to bicycles and TVs -- across the world's No.4 economy, slugging it out with the likes of Wal-Mart.
But fierce competition among players both foreign and local has squeezed margins. Lianhua turned losses from its hypermarket division into a meagre segment operating profit of 5.21 million yuan ($765,000) in 2007. "The hypermarket sector is more mature now after restructuring and don't forget we're a latecomer against our foreign competitors," Liang said.
Hypermarkets, which accounted for 54 percent of the company's sales in 2007, will see significant improvement this year, Liang added, without going into details.
Lianhua, controlled by the state-owned Bailian Group, has opened nine hypermarkets so far this year and will set up six more by the year-end, bringing its total to 126.
"Hypermarkets will be the fastest growth sector of our business," said Xu Lingling, Lianhua's Chief Financial Officer.