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The debt crisis of PriceSmart, a leading membership supermarket group in China, seems likely to be eased soon, as Britain's B&Q and Taiwan-based President have agreed to take over five PriceSmart outlets or inject funds into N-mart shops, the affiliated hypermarket brand of PriceSmart.
PriceSmart declined to comment on the deals and said that they were still in negotiations with the possible partners.
But the officials from B&Q, the world's third largest home improvement business, and President, the top chain retailer in Taiwan, say that they have reached agreements with PriceSmart.
Hu Lifeng, an official with the public relations department of B&Q China, said that the home improvement DIY giant would acquire five PriceSmart stores in North China, West China and Northeast China for 105 million yuan (US$12.65 million).
"The locations of those outlets are in accordance with our developing strategy, which is likely to be a great contribution to B&Q's expansion around China," said Hu.
Although Hu refused to name the cities where the five PriceSmart stores are established, sources close to both B&Q and PriceSmart said that two of the stores were in Sichuan and the rest in Tianjin, Shandong Province and Harbin in Heilongjiang Province respectively.
B&Q has clinched a deal with the outlet in Harbin, and it says it will ink separate agreements with the other four one by one.
The five PriceSmart stores are to be changed into B&Q home improvement supermarkets next year to make the total number of B&Q chain stores in China 26.
"We are targeting having 80 supermarkets in over 30 Chinese key cities by the end of 2008, 10 of which will be in the capital city," said Hu.
The company is also targeting 15 billion yuan (US$1.81 billion) in combined sales volume by 2008, Wei Zhe, the president of B&Q China, announced on October 18, 2003 at the opening ceremony of B&Q's first store in Beijing.
B&Q's fast expansion strategy is based on a promising home improvement market in China, which was driven by wealthier Chinese and their ever-increasing demands to upgrade living conditions, says Fan Yanru, deputy secretary-general of the retail enterprise's committee of China Commerce Association for General Merchandise.
"The acquisition of five PriceSmart stores will help B&Q take a shortcut, while the funds may support PriceSmart to solve its debt problem," said Fan.
President has chosen to take a part stake in PriceSmart's N-mart business for 600 billion yuan (US$72.29 billion).
"We are eying N-mart's business network, especially in the western area, and our chain operation skills may guarantee successful co-operation," said Lily Lin, a manager in President's supermarket sector.
Entered China in 1997, PriceSmart has developed 15 membership stores and 28 N-mart hypermarkets in China.
(China Daily December 1, 2004)
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