Thai's CP may takeover E-Mart's stores in China

Date : 12 September 2017

Thai's CP may takeover E-Mart's remaining stores in China 

Leading South Korean discounter, E-Mart, is in talks with Thailand's Charoen Pokphand Group to sale its five remaining stores in China.

The background...

In May, E-Mart announced that it was to shut operations in China by end of 2017. E-Mart China has struggled for profitability over the last few years, gradually scaling down its operations since 2011. Despite consolidation, the retailer still reported losses, most recently a net loss of KRW 21.6bn last year. E-Mart had ambitious growth plans for 1000 stores when they first opened in China, but this has failed to materialise, with the peak reaching 27 stores in 2010.  

Recouping losses following exit

E-Mart's declining sales in China have been compounded by increasingly difficult relations between Seoul and Beijing over the deployment of the THAAD US missile-defence system in South Korea. Lotte, E-Mart's fellow-South Korean competitor, has also seen its sales plummet in China, with some outlets still temporarily closed after nearly four months.

The sale of E-Mart's remaining stores in China will help the company reduce losses in the market. August sales did rise 3.5 per cent to 1.2 trillion won from a year ago, but this is an indication of the volatile trading conditions in the current market, particularly impacting large-format stores. Negotiation for a deal is reportedly underway. Charoen Pokphand Group is one of the largest conglomerates in the world and currently operates discount chain CP Lotus in China.

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