Sun Ming, a senior publicity officer with the Hong Kong-listed retailer, told China Daily that Lianhua's Belgium subsidiary, Shanghai Lianhua (Europe) Company, will focus on logistics first and pave the way for its chain stores in Europe.

"We've got official approval already and Lianhua is expected to become the first domestic retailer to expand its business outside Chinese territory," he said.

According to Sun, Lianhua will take advantage of its ready access to Chinese-made products by setting up a distribution company in Belgium specializing in food exports.

Lianhua also expects its European subsidiary to help introduce European products into its domestic chain stores in the future.

"It is our first step," said Sun.

"Our next step is to set up Lianhua chain stores in Europe but we haven't set any timetable yet."

Lianhua had a solid listing debut on the Hong Kong stock exchange late last month.

Its shares rose 9.7 percent to HK$4.25 (54 US cents) from its offer price of HK$3.875 (50 US cents) on June 28, the day after its initial public offering. The stock price also surged 11.38 percent on Monday to reach HK$4.65 (60 US cents).

Wang Zongnan, chairman of Lianhua's board of directors, told local media earlier this month that the company's successful listing on the Hong Kong stock market "lays the groundwork for Lianhua's long-term global strategy."

"After years of rapid expansion nationally, Lianhua is ready to take a bite of the overseas market," Wang told Shanghai-based Jiefang Daily.

Established in 1991, Lianhua has more than 2,000 chain stores in 16 provinces, municipalities and autonomous regions around the country and recorded annual sales of more than 17 billion yuan (US$2.1 billion) last year, according to the company's statistics.

Liang Wei, general manager of Lianhua, previously told China Daily that the company is looking to add more than 4,000 stores nationally over the next three years.

Liang said the new stores, mostly hypermarkets and small convenience stores, will mainly target big cities along the country's coast.

And by the end of 2005, Lianhua will have chain stores in around 25 provinces, municipalities and autonomous regions across the country, according to Liang.

Statistics from the China Chain Store Association reveal that the total sales volume of China's top 100 chain-store enterprises reached 246.5 billion yuan (US$26.7 billion) in 2002, up 52 percent over the previous year.

Meanwhile, more than 70 percent of the world's largest 50 retailers have entered the Chinese market, including the top three - Wal-Mart, Carrefour and Metro.

(China Daily July 10, 2003)