New World Department Store China Limited ("NWDS" or the "Company"; Hong Kong stock code: 825), one of the largest owners and operators of department stores in the PRC, is pleased to announce its acquisition of a property in Zhengzhou City, Henan Province, at a consideration of approximately RMB 307,317,000. The Company intends to develop the property into a self-owned department store targeting mid-high class customers. The new store is expected to commence operation in 2010.
Zhengzhou City, the capital of Henan Province, is the political, business and cultural centre of the Province. The city is also one of the important hubs in the Central China region for transportation and communications. With a population of over 7.3 million, Zhengzhou City recorded a GDP of around RMB 242 billion* in 2007, representing a 15.6%* y-o-y growth. During the same period, the city's disposable income per capita grew by 15.8%* to RMB 13,692 compared with that of 2006. For the three months ended 31 March 2008, its total retail sales of consumption goods jumped by 24.7%* over the same period a year ago to RMB 29 billion*.
The proposed first Zhengzhou store is located at Zijingshan Commercial Circle with close proximity to the City's core commercial circle, Erqi Commercial Circle. It is well positioned to benefit from the increasingly sophisticated retail sector of the city. The gross floor area of the new store reaches approximately 34,530 sq m.
Commenting on the proposed transaction, Mr Adrian Cheng, Executive Director of NWDS, said, "We have adopted two strategies for opening new stores - "multiple stores within a single city' and "entering markets through radiation effect". Leveraging our strong presence in Wuhan, Hubei Province, we have successfully expanded our geographical reach to Changsha, Hunan Province which is proximity to Hubei Province, making good use of the radiation effect from Wuhan."
"The proposed new store in Zhengzhou City, Henan Province which is also right next to Hubei Province, is another application of the strategy. The expansion can further consolidate our foothold in the Central China region."
Mr Philip Cheung, Executive Director and Managing Director of NWDS, added, "Together with our existing stores in Wuhan, Changsha and Xiamen, the proposed Zhengzhou new store will bring our store portfolio in the Central China region to 9 stores. This provides more synergistic advantages to our operations in the region, such as stronger local market knowledge, negotiation power and brand recognition. We are optimistic about market potential of the three key provinces, namely Henan, Hunan and Hubei, in the Central China region. Being the key city in the region, Wuhan's strong economic growth radiates towards adjacent provinces. Capitalizing on the radiation strategy, we will continue to look for suitable expansion opportunities so as to enhance our market share in the region."
*Source: The People's Government of Zhengzhou : (www.zhengzhou.gov.cn)