CHINESE CONVENIENCE STORE SALES TO RISE.

Faced with tepid sales growth in their mature home markets, the worlds largest convenience store chains are increasingly pinning their hopes for expansion in the Chinese market. Chinese consumers have a long-standing tradition of shopping in neighborhood stores, and increasing purchasing power in the major metropolitan areas makes the Western convenience store concept increasingly viable there.

Dallas, Texas based 7-Eleven, Inc., announced early this year that it had won approval from the Chinese government to open stores in Beijing and the surrounding provinces. The first store should open during the second quarter of 2004, and the companys ultimate goal is to operate 500 stores in the Beijing metropolitan area.

Overall Chinese retail sales grew at a pace of about 10 percent per annum in recent years, but convenience store sales are likely to grow at a faster pace in 2004 and 2005. However, convenience store chains are not likely to show a profit this year because operating costs will not begin to slide until the number of stores operated by a chain increases. As discretionary income in Chinas metropolitan areas increases, sales of beer, cigarettes, snack foods, and soft drinks should see double-digit growth this year.