Matahari to launch China retail store in August

Matahari to launch China retail store in August

Dow Jones Jakarta

Indonesia's PT Matahari Putra Prima plans to enter the Chinese market with the launch of a department store in the city of Shenzhen in southern Guangdong province in August, a senior executive said on Friday.

The planned 10,000 square meter outlet will mark the first overseas location for an Indonesian retailer, Matahari's Chief Financial Officer Hendra Sidin told reporters.

"We are open to the possibility of opening stores in other countries if it's feasible," Hendra said, without elaborating.

Matahari will join the growing list of foreign retailers seeking to tap surging consumption levels in China powered by economic growth of 9.5 percent in 2004. China recorded a 12.2 percent on-year rise in retail sales to 466.3 billion yuan in April, a slight deceleration from the 13.9 percent on-year growth in March.

China's retail market is attracting greater foreign retailer interest since the government scrapped restrictions in December that limited foreign retailers to joint ventures in a restricted number of cities nationwide. The new rules, part of the commitments that helped pave the way for China to join the World Trade Organization in December 2001, permit foreign retailers to open wholly-owned stores anywhere in China.

Foreign retailers that have already entered the Chinese market include U.K. supermarket company Tesco and France's Carrefour S.A.

Matahari's new Chinese operation is part of a Rp 400 billion (US$42.35 million) to Rp 500 billion expansion strategy that includes the planned opening of 11 new department stores and 10 hypermarkets in Indonesia in 2005, Hendra said.

He added that the company's sales are likely to rise 25 percent to 30 percent this year from Rp 5.62 trillion in 2004. Matahari had net profit of Rp 125.34 billion in 2004.

Matahari began as a a small children's clothing store in Jakarta's Chinatown in 1958 and now operates 79 department stores and 54 supermarkets, including four hypermarkets, across Indonesia.