■ Written by | Yan Juyang
Pay attention to the top retail research institute to grasp the retail consumption news
The "convenience store war" between the Chinese family and the Japanese side ITOCHU Corporation continues to ferment.
ITOCHU Corporation, which owns more than 50% of Japan's whole family, was dissatisfied with the unfair distribution of the Chinese family, which was a joint venture with Dingxin Group and operated by Dingxin, and appealed to the court where China Family was registered to demand "dismantling" and recovering 60% of the equity and management rights of FamilyMart China held by Dingxin. According to sources, the Cayman Islands court has announced the verdict on February 25 this year, the Japanese family lost the lawsuit, all the litigation costs are borne by the Japanese side, and the operation of the Chinese family is not affected in any way.
Today (May 16), Dingxin Group released a letter to Chinese family partners in the name of Lin Jianhong, CEO of China Family. The target is family members and franchise partners.
Lin Jianhong's internal letter began by saying, "(Dingxin International) Group is full of confidence and determination to continue to operate the Chinese family. ”
Lin Jianhong's internal letter briefly traces the development of the Chinese family from the creation of the first store to more than 2500 stores today, and the dedication to the convenience store business and the difficulty of today's achievements. Including saying that "convenience stores and retail businesses are the core business of the Group, the Group is full of confidence and determination in the business prospects of China FamilyMart", repeated the determination of the beginning of the article, which is obviously to emphasize the attitude of The New Group: it will not let go of the operating rights of the 2500 Chinese FamilyMart convenience stores requested by The FamilyMart japan.
Regarding the conflict between the Chinese family and the Japanese side, after two days of fermentation, the Retail Research Society received a statement from the Chinese family and more information disclosed by relevant insiders close to both sides. This information has given FamilyMart a "portrait" of the "Sino-Japanese war" that may be closer to the truth.
Specifically, there are four aspects of the controversy.
First, the Japanese side of the whole family has lost the case
In response to the Japanese family's lawsuit against the Cayman Islands court, where The Chinese family is registered, ITOCHU's commercial complaint said: Dingxin's interests in China have not been disclosed and no profits have been shared.
In this regard, relevant people familiar with the matter said that the court of China's Cayman Islands has pronounced the result of this lawsuit on February 25 this year, that is, the Japanese family lost the lawsuit, all the litigation costs are borne by the Japanese side, and the operation of the Chinese family is not affected in any way. It is reported that at that time, the Taiwan media had already reported on the defeat of the Japanese side.
Second, who is in default?
Relevant people familiar with the matter said that in fact, before the judgment, Dingxin Group had filed a complaint to the Arbitration Court of the International Chamber of Commerce at the end of November 2018 that the Japanese family was in breach of contract and proposed arbitration.
The person said that the contract stipulates that if there is a dispute between the two parties, they must first engage in commercial arbitration, but the Japanese family sued the Cayman Islands, which has defaulted first and lost the lawsuit.
3. The premium has been paid
Bloomberg original report mentioned: the Japanese family said that the New Top in recent years to operate the Chinese family profit growth rapidly, but the financial is not transparent, so that the Japanese family can not clearly understand the profits of the whole family in China, did not share the profit fairly, but also broke the news that The new top has asked to reduce the royalty from 1% to less than 0.3%, once withheld the royalty payable for 7 months.
Sources told the Retail Research Society that Dingxin Group has paid all the royalties. And the royalties charged by the Japanese family are three times higher than the average for other convenience store brands such as 7-11.
Who is reaping the fruits?
For it, Taiwan's media analysis said that ITOCHU Corporation and the Japanese family hope to get back the right to operate for two reasons. First, we are optimistic about the development of the Chinese market. With China's rapid urbanization, consumer demand for fast-heating foods and snacks and beverages has also increased. While FamilyMart was previously controlled by Dingxin Group, the operating right was in the hands of Dingxin, and ITOCHU Corporation's recovery of the operating right was a strategic action that hoped to expand the layout of the Chinese market and hoped to occupy the dominant right.
Second, the current "general environment" of China's opening up policy is good for foreign investment. The Chinese government is gradually facing the pressure of foreign investment to open up, and recently the Chinese government has gradually relaxed restrictions on foreign enterprises, and currently only requires foreign joint ventures for some industries, including the ongoing US-China trade negotiations to promote China's expansion of open markets, which is the beginning of foreign brands such as Japanese family to rethink and adjust their cooperation with local enterprises. Previously, many foreign brands have successively bought back the equity of Chinese joint ventures.
In addition, last year, it was rumored that ITOCHU Corporation, the largest shareholder of the Japanese family, frequently contacted and negotiated with CITIC Group and Thailand's Chia Tai Group, and at one point it was reported that the three parties had negotiated the terms of cooperation and were only waiting for Dingxin to give up the management rights of the Chinese family. The Thai Chia Tai Group is the operator of 7-11 Thailand, and has made 7-11 the no.1 in the convenience store market in the Thai market. CHIA has been looking for opportunities to enter the larger Chinese convenience store market.
Obviously, this kind of rumor of "dismantling the gang" can very much trigger the "dissatisfaction" of the Chinese family. Dingxin Group began preparations in 2002 and entered Shanghai in 2004 to open the first FamilyMart convenience store. In that year, foreign investment into China still had to cooperate with local enterprises in order to set up stores.
In the past 15 years, the operating ability and achievements of Dingxin Group have been obvious to all. Often compared, the Japanese family in other countries and regions of the brand authorized operation for the local market two or three, less than 7-11, in the domestic market, through the localization of the Dingxin Group management and innovation, but it is more than the peer rivals of foreign convenience stores "top card", and the number of stores, sales are more than 7-11 and Lawson. In the overall convenience store market, FamilyMart's sales are second only to Meiyijia, a local convenience store brand operated by Dongguan Sugar and Wine Group.
Different from Japan's "convenience store kingdom", the operation of convenience store formats in China is often described by the industry as an industry that "bends down to pick up steel", that is, hardship and profit. Dingxin Group will be The Chinese family from 0 to 2500 stores, if the request is required to be out at this time, give up the chinese family's management rights, according to the words of the relevant person, "it is like giving up the child that they have worked hard to raise for 15 years."
"We basically work hard 24 hours a day, 365 days a year." Some franchisees of FamilyMart are also worried that the right to operate stores will be shocked by the "harvest" of the Japanese side.
Attached: Lin Jianhong, CEO of China Family, "A Letter to Chinese Family Partners"
Dear colleagues and franchise partners, hello! Today, I would like to tell you that the Group is full of confidence and determination to continue to operate the whole family in China. Since opening our first store in Shanghai in 2004, in the past 15 years, the whole Chinese family has walked hand in hand, and we have always created today's proud results with the spirit of not accepting defeat. Every day, tens of thousands of partners in 2,500 stores, for more than 2 million consumers to provide quality goods and intimate services, customer satisfaction is the greatest affirmation. Together, we are on top of everyone's calloused feet. Along the way, China Family is honored to move forward side by side with the convenience store industry and witness the Chinese convenience store industry from budding and taking off to thriving. With the support of the government, the convenience store industry and consumers, coupled with the hard work of all partners, the whole family of China has been able to contribute to the healthy and orderly development of the convenience store industry. Convenience stores and retail businesses are the core business of the Group, and the Group is full of confidence and determination in the business prospects of China FamilyMart. The achievements of the Chinese family today are evident in the support of the government, the convenience store industry and consumers, as well as our own dedicated efforts. The accumulated results belong to all the partners of the Chinese family. In the future, the company will continue to follow the government's general policy of maintaining stability, and ensure the rights and interests of consumers, and continue to protect the stable work and life of tens of thousands of employees and their families across the country. The development of enterprises is inevitable through wind and rain, as long as everyone walks side by side and is not afraid of difficulties, what awaits us in the future must be a fruitful joy. No matter how the market environment changes, we must return to the basic work, run every store well, and serve every customer. In the face of external changes, we are ready to face difficulties and start a new situation. Please stick to your post with me, sprint with all your might, and jointly create the next peak for the whole Family in China! Lin Jianhong, CEO of China Family, May 16, 2019
The article is from a public business observer