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HK’S CRE TO SLOW EXPANSION PLANS IN CHINA
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| CRE
puts the brake on its aggressive expansion in China |
Hong
Kong-based China Resources Enterprise (CRE) has announced plans
to lay off up to 3,000 staff at its supermarkets and hypermarkets
in Hong Kong and China this year as it integrates businesses acquired
last year.
Executive director Francis Kwong told South China Morning Post that
the retrenchment plan was expected to reduce overhead by HK$50 million
(US$6.5 million), for the red-chip conglomerate, whose businesses
include supermarkets, beverages, textiles, property and oil distribution.
In a bid to make its mainland operations profitable as soon as possible,
the company is considering slowing expansion in China this year.
“Opening new stores at a fast pace will hit the bottom line,”
Mr Kwong was quoted as saying.
The company would review its expansion pace in the middle of the
year. It would probably open fewer than the 70 new stores planned
for this year.
According to Mr Kwong, the proposed lay-offs, accounting for about
15% of its 18,000-strong supermarket workforce, was aimed at streamlining
its businesses.
Overlapping had occurred in areas such as finance departments, following
the acquisition of Guangdong’s largest hypermarket operator
China Vanguard.
In mid last year, CRE acquired a 65% stake in China Vanguard, now
known as China Resources Vanguard and followed that in September
by buying almost 40% of Jiangsu province’s largest supermarket
chain operator, Suguo Supermarket.
Mr Kwong said the layoffs would come mainly from low and medium
management in China but some Hong Kong staff would also be affected.
The company hoped to improve the quality of its management through
the streamlining, he said.
CRE has 376 self-operated supermarkets—77 in Hong Kong and
the remainder in China. It also has 17 mainland hypermarkets. CRE’s
revenue targets of RMB12 billion (about HK$ 11.25 billion) for this
year and RMB50 billion by 2007 remained in place, Mr Kwong said.
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