August 2, 2007 -- On July 22th, 2007, New World Department Store China Limited (NWDS), one of the largest owners and operators of department stores in the People's Republic of China, entered an agreement with an independent third party to manage and operate a new department store in Wuhan, China. The new department store is expected to commence operation in mid November 2007 with a total gross floor area of approximately 30,000 square meters.

There are four New World department stores in Wuhan currently.

"As one of the first foreign investors in the PRC retail sector, Wuhan is the place where we began our business. We are pleased to add one more store in the city where our brand has been well-established. The new store not only follows our growth strategy to expand in major cities, but also further strengthens our leading position in Wuhan," Junyu Hu, public relations manager for NWDS, told Emerging China.

She also mentioned that the new store is located in Wuchang district, the largest in Wuhan. With an average disposable income per capita of 12,000 yuan (US$1,587) in 2006, people in Wuchang have a strong purchasing power. "The new store will definitely benefit from this strong market environment," she added.

She said that under the agreement, NWDS is commissioned to manage the new store for a three-year term and the company has the unilateral right to extend the agreement upon the expiration of the original three-year term for a further three years. In addition, similar to previous management consultancy agreements that the company has entered with other business partners, NWDS has the right of first refusal to acquire the new store from the owner.

"Foreign and domestic retailers expand to the western areas mainly by opening branch stores, seizing hold of markets in key cities like Chengdu, Chongqing, Wuhan and Xian, because it means greater success of mastering markets in other western cities." Min Li, senior consultant and project manager of Drozak Consulting GmbH, told Emerging China.

"NWDS's stores in Wuhan will benefit both NWDS itself and local economic development," commented Li.

"In recent years, Retailers have been increasing branches to expand into the western areas of the country. For example, French giant Carrefour opened its branch in Chongqing; US retail powerhouse Wal-Mart is also expanding fast in western areas, which has three stores in Kunming and is planning to establish three stores in Chengdu and Chongqing; Supercenter from Thailand and Auchan of France, have also strengthened their expansion to western areas."

"One reason why the retailers interested in China's inland is that the competition in shoreline cities in the country is overheated. On the other hand the development of central and western area has great potential. And the Ministry of Commerce provides supporting policies to conduct business in western areas," added Li.