Carrefour expansion report ruled out

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Last updated at: (Beijing Time) Thursday, February 12, 2004

Carrefour expansion report ruled out

No new Carrefour SA franchise has been licensed in China yet, despite a report that three Carrefour stores have been given permission, according to an official from the Ministry of Commerce.

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No new Carrefour SA franchise has been licensed in China yet, despite a report that three Carrefour stores have been given permission, according to an official from the Ministry of Commerce.

"We have accepted its applications, but none have been approved," said Huang Hai, the minister's assistant.

A recent report quoted unnamed sources as stating that Carrefour, which has not expanded over the the past two years because of violations of Chinese regulations, has gotten the nod from the ministry for the new stores. The report also names the locations of the three to be in Beijing, Shanghai and the Xinjiang Uygur Autonomous Region.

Huang denied the report but said that approval will come soon and the number may not be limited to three.

"If the new stores benefit local business and the documents are complete, we will give the green light no matter whether it's for three or four," Huang said.

Huang said the ministry has begun its review of Carrefour applications recently, since the company completed its revamping efforts in China after the Spring Festival.

The approval will take some time as there are several procedures involved and Carrefour also needs to improve its paperwork, Huang said.

He said Carrefour has submitted applications for many new stores since it has not been allowed to open new stores over the past two years. But he failed to elaborate on the number.

Huang said a draft rule governing foreign investment in the commercial sector is still awaiting approval from the State Council.

The new rule has changed rating systems on the requirements of some foreign investors. The original draft proposed to sort foreign investors into three categories of A, B and C.

Under the measures, B-rated foreign investors will not be able to establish new companies or stores in China until one year after their irregularities have been checked.

C-rated investors, however, will lose all rights to invest in commercial companies or stores.

Some foreign investors which have promised not to violate the regulations do not want to be labelled as B or C, Huang said.

Carrefour has reorganized its Chinese operations and started bringing in local partners in 2002, after Chinese officials said it had broken rules by opening stores without their permission.

The French supermarket giant slashed its stakes in three supermarkets in China to abide by government caps on foreign ownership. Foreign retailers are required to operate through joint ventures, in which they can hold a maximum 65 per cent stake.

Carrefour transferred 35 per cent of its ownership in three stores in northeastern China to two domestic trading firms, Chengda and Harbin Dongli Equipment Co.

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