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ASIA IN BRIEF

Work proceeds on Bangkok’s WTC

Bangkok, Thailand’s World Trade Center is to get a new lease on life with plans by Central Pattana, the real estate arm of Bangkok-based Central Group, to invest $230 million (10 billion baht) turning it into a mixed-use complex. The redeveloped property will contain a shopping center, an office building, a 400-room hotel, a cinema complex and a parking garage. The retail portion would comprise 2.1 million square feet of middle-market and high-end shops catering to both local and foreign visitors. Currently, the World Trade Center’s mall is 1.4 million square feet.

The move follows a major financial settlement between Central Pattana and the financially troubled Wang Petchaboon Group, which developed the complex on its present site. The site is leased from Crown Property Bureau. Wang Petchaboon had managed to complete only the World Trade Center’s shopping center before the 1997 Asian financial crisis stalled the project.

Work on the office building, which is 70 percent completed, was put on hold as a result of Wang Petchaboon’s woes. Central Pattana, which expects to raise the building to 45 floors, says it hopes to complete it this year.

Central Pattana is reportedly negotiating with several potential investors to develop the four-to-five-star hotel project and the 269,000-square-foot cinema complex.

According to retail watchers, the biggest challenge Central Pattana faces as it takes over the project will come from the nearby Siam Paragon, which is positioning itself as the country’s top luxury shopping and entertainment complex. The two developments are only a five-minute walk from each other in Bangkok’s prime commercial district on Rama I Road. Costing B9 billion and built on the site of the old Siam Inter-Continental Hotel next to Siam Center, Siam Paragon has reportedly signed up 100 percent of its retail and entertainment space, even though it isn’t opening for three more years.

Other luxury retail venues have sprung up around the World Trade Center, including the Gaysorn shopping complex, Sogo department store and Peninsula Shopping Plaza.

Wal-Mart acquires Seiyu stake

Wal-Mart Stores has completed a deal to crack the Japanese market by acquiring 37 percent of Seiyu, the well-positioned but struggling supermarket chain. Wal-Mart has the option to increase its stake to 50.1 percent by the end of 2005 and to 66.7 percent by the end of 2007.

Seiyu stores are concentrated in the Tokyo metropolitan area, the nation’s biggest market. The chain operates some 400 stores nationwide, but profitability is lower than at some of its competitors, including Aeon Co. and Ito-Yokado Co. Wal-Mart, the world’s largest retailer, says it plans to improve Seiyu’s earnings by remodeling the chain’s stores and improving management operations. In particular, Seiyu is to begin using Wal-Mart’s Retail Link inventory management system.

In line with Wal-Mart’s everyday low-price strategy, Seiyu will expand its lineup of inexpensive clothes and other products, using Wal-Mart’s purchasing networks.

Seiyu plans to lower prices overall in 2004, with the aim of offering the same price year-round and eliminating discount sales at certain times of the year. It also plans to do away with discounts for special customers, including holders of credit cards issued by a group firm.

Some analysts predict that within three years, Wal-Mart will begin operating its mainstay Supercenter outlets, which sell low-priced food, clothing and general merchandise. They also predict that if Wal-Mart expands its operations and wins over Japanese customers, that could accelerate an industry shakeout by cornering domestic retailers suffering from high cost structures. Aeon and Ito-Yokado are drawing up strategies to counter Wal-Mart, observers say.

FairPrice enters China

Singapore’s NTUC FairPrice supermarket chain is entering the Chinese market by forming a joint venture with DBS Private Equity. The venture, called Nextmall, will provide merchandizing, management and logistics services for a fee to Nextmart, a newly formed, China-incorporated hypermarket operator.

Other partners in the venture are two Chinese companies — the diversified New Hope Group, controlled by billionaire Liu Yong-hao, and real estate developer and mall operator Silver Tie — as well as Taiwan’s Apex Group, which runs the Save & Safe hypermarket chain.

The goal is to set up seven Nextmart hypermarkets in China by the end of this year, with the first store opening this month in Shaoxing, a city of about 4 million in Zhejiang province. The other six will open in Zhejiang, Shanghai and Nanjing. Nextmall’s initial investment for the first two years will be about $26.6 million (S$47 million), of which FairPrice’s 27 percent stake works out to about $7 million.

Though FairPrice does not operate hypermarkets in Singapore, it has bid to lease the hypermarket space at the proposed HarbourFront Mall, which is under construction at the former site of the World Trade Center exhibition halls. When completed in 2006, the mall will be Singapore’s largest, offering more than 1 million square feet of retail, entertainment, and food and beverage outlets.

Carrefour expanding in region

French hypermarket retailer Carrefour is moving into a 70,000-square-foot spot at Singapore’s Plaza Singapura mall, its second location in Singapore. (Its first and currently only store there, at Suntec City, opened in 1997.)

Carrefour, which introduced the hypermarket concept to Singapore, said it is investing more than $5.6 million to fit out the Plaza Singapura store.

Meanwhile, Carrefour is expanding rapidly in China. It recently signed an agreement with the local government of Hangzhou, capital of east China’s Zhejiang province, to open its 28th Chinese store there.

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