Overview of Auchan Group's investment and development in China

Overview of Auchan Group's investment and development in China

Auchan's development in Asia began in the mid-1990s. After a series of planning and detailed market research, Auchan focused its development in Asia on China. In April 1997, Shanghai Auchan Supermarket Co., Ltd. was formally established. It is a Sino-foreign joint venture mainly engaged in large-scale comprehensive supermarkets. In 1998, Auchan moved its Asian headquarters to Shanghai. On July 18, 1999, the first super-large comprehensive supermarket in China and the 209th in the world was opened in Zhongyuan Community, Shanghai, thus opening the prelude to the development of Auchan Group in China. In order to facilitate investment in Asia and China, the French Auchan Group established Auchan (China) Hong Kong Co., Ltd. in Hong Kong in 2001.

The Zhongyuan Community in Yangpu District, Shanghai, has been planned and constructed since 1985. It is the largest residential community built in Shanghai in the 1980s, with a land area of ​​345 hectares and a population of more than 200,000. Therefore, it is very necessary to build a comprehensive large supermarket integrating "clothing, food, housing and daily necessities" in this modern community, which is equivalent to the scale of a county-level city. Auchan Zhongyuan Store is located at the intersection of Zhongyuan Road and Nenjiang Road in Yangpu District, covering an area of ​​21,000 square meters, a building area of ​​24,000 square meters, and a shopping mall area of ​​11,000 square meters. The district has a complete range of municipal facilities, and more than ten transportation lines make it very convenient for consumers to enter the supermarket for shopping.

The second phase of the project implemented by Auchan Zhongyuan Store in 2003 converted the original rooftop parking lot into a shopping mall, while adding a food court, restaurants, etc., and the second-floor roof was built as a parking lot. The business area has expanded from the original 7,800 square meters to more than 11,000 square meters, making the shopping environment more convenient and comfortable.

In order to further accelerate Auchan's development in Shanghai and China, Auchan's second large-scale comprehensive supermarket in Shanghai, Auchan Changyang Store, was grandly opened at the end of September 2001. The store is located at the intersection of Changyang Road and Linqing Road in Yangpu District. It is rebuilt from two factory buildings with a total construction area of ​​32,000 square meters, a total area of ​​about 25,000 square meters, a business area of ​​10,000 square meters, and more than 90 motor vehicle parking spaces. The shopping environment and facilities have reached European and American standards. The first floor of Auchan Changyang Store is a spacious and bright commercial corridor with various specialty stores, Chinese and foreign fast food restaurants, and a receiving area, warehouse and parking lot. The second floor is a large supermarket with 60 cash registers. The third floor is the company's headquarters, where domestic and foreign procurement centers are located.

Due to the success of Auchan Zhongyuan Store, people in Shanghai praised Auchan's style and service, which laid the foundation for the opening of Auchan Changyang Store. The area around Changyang Store is densely populated and lacks advanced commercial facilities such as hypermarkets. The opening of Auchan Changyang Store fills this gap and provides convenience for shopping for surrounding residents. Since its opening, Changyang Store's performance has been booming, with daily turnover exceeding one million, an average of more than 35,000 visitors per day, and more than 16,000 daily customer orders.

Currently, Auchan Group has opened seven branches in China, including the two in Shanghai, the Suzhou store opened in 2001, the Wuxi store and the Hangzhou store opened in 2002, the Chengdu store and the Beijing store opened in 2003. In addition, the Minhang and Jiading branches in Shanghai, as well as the branches in Tianjin and Ningbo are being prepared. In the future, Auchan hopes to open more branches in the East China, North China, Southwest China and other regions. In the long run, Auchan hopes to open branches in some satellite cities around Shanghai, so as to better utilize the synergy advantages among branches in relatively concentrated areas (sharing some service centers: finance, logistics, procurement, training, etc.). Auchan hopes to give priority to development in the eastern region of China in the next 2-3 years, while also promoting development in the northern, central and western regions of China.

In order to strengthen its development in China, France's Auchan Group acquired 67% of the shares of Taiwan's second largest retailer, RT-Mart Taiwan, in early 2001. RT-Mart now owns 26 large supermarkets in Taiwan.

In order to enhance its market competitiveness, Auchan Group has set up a special procurement center in China, which is responsible for Auchan's commodity procurement in the entire Shanghai area and other parts of China. The main tasks of the center are: first, analyzing consumer demand; second, completing the composition of supermarket product series; third, signing agreements with suppliers; fourth, supervising the implementation of commercial contracts; and fifth, supermarket internal promotion activities. The procurement center is not only responsible for commodity procurement, but also analyzes consumer demand and commodity supply according to market changes, thereby effectively improving market competitiveness.

In 2002, Shanghai Auchan Distribution Service Co., Ltd. was formally established to provide Auchan with unified purchasing and other conveniences for opening large supermarkets in China. At the same time, it conducts market research, implements the survival of the fittest for commodities, meets market demand, improves the company's economic benefits, and promotes the work improvement of commodity suppliers. The company also conducts management consulting, investment consulting, technical consulting and technical services, market research, information consulting, etc. for large supermarkets. It is estimated that in the next 3-5 years, the annual procurement amount of the distribution company will exceed 5 billion yuan.

To promote product exports, Auchan Group has set up an export representative office in Shanghai. The main responsibility of the export representative office is to undertake the French Auchan Group International Purchasing Center's search for goods in China, directly purchase products from all over the country and export them to Auchan's hundreds of shopping malls in more than a dozen countries around the world. The representative office looks for manufacturers that produce high-quality goods, negotiates the conditions for exporting products, places orders with suppliers, monitors product production quality, and explains Auchan's specifications and quality requirements to suppliers. The company also assists supermarkets in promotional activities and develops long-term cooperative relationships with suppliers.

In 2002, the export value of goods purchased by the export representative office reached 73.66 million US dollars (FOB), an increase of 12% over 2001. In October 2001, the export representative office of the French Auchan Group established a branch in Guangzhou. With the establishment and development of Auchan Supermarket Company in Shanghai, the export volume of goods to China will continue to grow, reaching 300 million to 500 million US dollars in 5 years, so that Shanghai and even China can benefit from the international development of Auchan Group.