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Business

Store wars: The battle for the Chinese market

Competition for customers in Dalian, China, has reached the point where Japanese and Chinese convenience store brands operate side by side.

DALIAN, China -- Consumer trends in China have thrown open the country's convenience store market to a fierce struggle among Japanese and Chinese operators

As of the end of last year, there were around 83,000 convenience stores in China. Despite the country's economic slowdown, convenience store sales are rising sharply as consumers increasingly look to shop without having to move too far from home.

Japan's Lawson plans to operate 922 stores in China by the end of the year, an expected record net increase of 270. The company will set up "eat-in" spaces at stores in southern Shanghai. Lawson plans to operate the new stores near Shanghai, Dalian, and Chongqing, boosting the number of outlets to 3,000 by 2020.

Chairman and CEO Genichi Tamatsuka said smaller regional cities also offer a lot of market potential due to China's burgeoning middle class.

FamilyMart, which operates about 1,600 franchise stores in the country, expects a net increase of 274 stores in fiscal 2016, including 94 stores in Shanghai. It also has stores in Chengdu, Sichuan province and Guangzhou, Guangdong province.

Seven & i Holdings runs the largest number of outlets in China of any Japanese operator, with 2,240 stores in Hong Kong, Guangzhou, Beijing and a number of other cities.

With their domestic market all but completely saturated, Japanese companies are seeking new opportunities overseas.

There are as many as 262 Chinese convenience store brands. The largest independent operator, Dongguan Sugar & Liquor Group, has about 8,300 outlets. It operates "Meiyijia" stores in Hunan province and plans to open 500 to 1,000 stores a year. 

There are approximately 10 companies operating between 1,000 to 2,000 stores across the country, including Chengdu Hongqi Chain, which operates Hongqi Chain brand and Shanghai Lianhua Quik Convenience Stores, the operator of "Quik" stores in Shanghai and other cities. All of these companies primarily operate in the cities where they are based.

Some market watchers estimate that China's convenience store market will be worth 100 billion yuan ($15 billion) this year, the figure in Japan amounted to about 10 trillion yen ($99.2 billion) in 2015.

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