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Shanghai Yongle Electronics, China's third largest electronics retailer, has won approval to sell its 20 percent stake to Morgan Stanley, company officials said Thursday.
Yongle sold the stake to the US investment bank for US$50 million after it got approval from the Ministry of Commerce last month, said Huang Jianping, the company's manager of sales and marketing.
It is the first approval for the sale of a stake in a Chinese firm to foreign investors since the country fully liberalized its retail industry in December.
After the purchase, the investment bank is the third largest shareholder in Yongle behind its president Chen Xiao and another company official.
As part of the deal, Morgan Stanley also promised to help the electronics retailer to list overseas, Huang said in a telephone interview.
But Huang said no details about the listing could be released.
He also added that teaming up with the famous investment bank will be a plus to the company's national expansion this year, Huang said.
The company will have a jump in store openings, increasing its outlets to 350 by the end of this year from its 108 at the end of 2004, Huang said.
The company experienced a 54 percent expansion rate last year.
The Shanghai-based company aggressively entered other regions beginning last year, including Jiangsu, Zhejiang, Fujian, Guangdong and Sichuan.
Huang said the North China, South China, East China and southwest region will be priorities for opening stores.
"I cannot name the specific cities because what we want is an all-round expansion in the country," he said.
A statement issued by the company last week said Beijing, Shenzhen and Nanjing will be the focus.
The robust expansion will push the company's sales to about 35 billion yuan (US$4.23 billion) by the end of this year, from about 15.8 billion yuan (US$1.9 billion) last year.
Sales last year increased by 62.4 percent.
Its outlets outside Shanghai will be its important growth engine in the years to come, the manager said.
Outlets outside Shanghai had sales of 6.9 billion yuan (US$834 million) last year, up 112 percent.
Its Shanghai outlets contributed 8.9 billion yuan (US$1.07 billion) last year, rising 37.3 percent.
Analysts said Yongle's co-operation with Morgan Stanley will help it strengthen financial power and challenge another two leaders in the industry, Gome and Suning.
The market listing is a must for Yongle's further expansion plans, following Gome and Suning, said an analyst surnamed Hu from Merchant Securities.
The electronics retailing industry had thin profit in the fierce competition, which has not allowed saving much cash for opening additional stores, he said.
China's largest home appliance retail chain, Gome, gained a Hong Kong listing in June via a US$1 billion stock and bond swap with its sister firm, China Eagle Group.
The Nanjing-based Suning issued its A shares in July and raised nearly 400 million yuan (US$48 million).
The company used the proceeds to expand retail chains and improve its logistics and information systems.
Yongle's Chen said in an earlier interview that he expects Morgan Stanley can help improve the company's management.
He also said the company has plans to open stores globally after it lists overseas.
(China Daily January 14, 2005)
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