Tianjin Tongrentang outbid five competitors during a public
auction Monday to purchase the assets of Tianjin Goubuli Catering
(Group) Corp. for 106.0 million yuan (US$12.8 million).
The purchase paves the way for Goubuli's ownership reform and
reflects the efforts of China's famous traditional brands to
improve competitiveness through consolidation.
"Goubuli" is a type of steamed pork-filled bun that has been a
favorite with Chinese consumers for 150 years. Established in 1858
as Dejiuhao, Tianjin Goubuli's current name derives from the
sobriquet of its founder, Gao Guiyou, who was known as Gouzi
("dog"). As his stuffed buns became famous, Gao's real name and
that of the shop were forgotten, replaced by the play on words
using his nickname.
Goubuli became a state-owned enterprise in the 1950s.
Tianjin Tongrentang, which is engaged in traditional Chinese
medicine processing and manufacturing, was established in 1852 and
was reformed into a shareholding company in 2003.
At Monday's auction, the lowest bid was 15.2 million yuan
(US$1.8 million).
Tianjin Tongrentang and five private enterprises -- two
Tianjin-based companies, two Zhejiang firms and a Guangdong company
-- were involved in the bidding.
Goubuli required whoever took over the company's assets to
provide a written plan for short-, medium- and long-term
development and not to operate unrelated businesses in Goubuli's
buildings. It also required that all registered employees of the
company be kept on.
The company's total assets are 117.0 million yuan (US$14.1
million) and it holds debt of 80.5 million yuan (US$9.7 million).
Its net assets are 37.0 million yuan (US$4.5 million). Subsidiaries
include the Goubuli Hotel, a sourcing and logistic center, a
fast-food company and over 70 franchise outlets across the
nation.
The company's sales totaled 74.9 million yuan (US$9.0 million)
last year, up 29.9 percent year-on-year.
"The move aims to introduce more capital and expertise into
Goubuli to carry out an overall property rights reform," said
Goubuli's Chairman Zhao Jiaxiang, adding that the market-oriented
reform might be conducive to the long-term development and
international expansion.
The spokesman for Tianjin Tongrentang stressed that the
companies' similar historical and operational backgrounds laid a
solid foundation for future operations.
"The purchase is practical for Tianjin Tongrentang's growth and
provides a shortcut for Goubuli to enhance its competitive edge
amid the cutthroat competition in China's fast-food market," said
the spokesman.
Domestic fast-food companies are facing strong challenges from
foreign giants such as McDonald's and KFC.
Zhang Ping, a researcher at the Economic Research Center under
the Chinese Academy of Social Sciences, told China Daily
that acquisitions may be a good way for famous old Chinese brands
to consolidate their strength and resources to enhance their
overall competitiveness.
(China Daily, China.org.cn March 1, 2005)