Beyond cars, Japanese companies haven't made much headway in China.
The nation's top fast-food chain is KFC, most consumer goods are from Procter & Gamble Co., and even though cars made by Toyota Motor Corp. and Honda Motor Co. sell well when political frictions thaw, mainlanders' vehicle of choice is generally a Volkswagen.
But there is one exception: convenience stores.
Of the top 10 in China by number of outlets, just two -- Japan's FamilyMart UNY Holdings Co. and 7-Eleven owner Seven & i Holdings Co. -- have a footprint that spans the country's largest cities, research from Bain & Co. shows. The third big Japanese chain, Lawson Inc., has a presence in China but doesn't make the top 10.
Taking the prize for the most number of stores in total is Guangdong-focused Meiyijia, but FamilyMart and Seven & i are ubiquitous in first-tier cities like Beijing and Shanghai where margins are higher and e-commerce is rife. They both employ a high-touch model, charging franchisees a big initial upfront fee and then dictating strict guidelines on how stores should look and feel.
With Japan's population shrinking, rapidly urbanizing China is a good place for them. After online, convenience stores registered the biggest sales growth last year for all categories of fast-moving consumer goods. Tellingly, it's the convenience store part of the equation that analysts and investors find most interesting about China Petroleum and Chemical Corp.'s planned retail business IPO.
According to Bain, convenience stores recorded a 13.2 percent rise in sales of fast-moving consumer goods versus 36.5 percent for e-commerce channels. Purchases made via grocery outlets or hypermarkets were down to flat.
Doing the daily shopping at smaller outlets that pepper the street corners and office basements of Beijing will become even more of a thing in coming years as the stores start to offer services like buying show tickets or paying bills. Some are already working with e-commerce players: Alibaba Group Holding Ltd. has a tie-up with FamilyMart that allows people to pick up goods ordered online.
A national presence gives FamilyMart and Seven & i an edge, particularly as many local chains have a reputation for poor service and shoddy produce. Two of China's fastest-growing local brands -- Meiyijia and Tianfu -- are containing their development plans to the southern part of the country.
Expansion won't all be smooth. Rising property prices, and rents, have meant some chains such as Quik and Haode have had to close stores.
But if there's one thing the Japanese excel at, it's service and understanding customer needs. China provides a convenient battleground.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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