Several well-run Chinese department stores, following the Hong Kong debut of Hangzhou- based Intime Department Store Group Co., Ltd. (1833.HK), is planning initial public offering in mainland or Hong Kong. These include Guangzhou Grandbuy Co., Ltd. and Chongqing General Trading (Group) Co., Ltd. Intime Department Store listed on the Hong Kong Stock Exchange on March 20.

Its H-shares opened at HKD 6.1 per share on the first trading day, and closed at HKD 6.44, up 19.5% from the IPO price. The trading volume hit 238 million shares and the turnover amounted to about HKD 1.84 billion. Intime offered 450 million new shares at HKD 5.39 each and raised CNY 2.09 billion in proceeds. Investors are wooing the department store companies, thanks to its strong prospect and high risk-resistance capability, said an analyst from GF Securities. It is the right time for the department stores to go public.

There are 57 listed retailers in mainland China, of which 80% are department store companies. The department stores suffered a decline in sales revenues and gross profit margin from 2000 to 2003, as chain supermarkets and electrical appliance marts were emerging. However, they made a turnaround since the second half of 2004. The country's department stores are periodically reviving. China's department stores are once again coming into the consumption boom, according to BNP Prime Peregrine Securities.

There are 320 million youngsters aged from nine to 25 who are from one-child families in China. They tend to have stronger purchasing power and stronger desires to live better, compared with those aged from 26 to 30.

Therefore, they will constitute a major consumer group in China's retail market, BNP Prime Peregrine said in a report. It is not easy for the department stores to become chain operators.

There's no real bellwether in China's department stores market, no matter it is foreign or Chinese player. Parkson, from Malaysia, currently runs a network of 38 department stores covering 26 major cities in 18 provinces across China, thus taking a leading position among the peers. Taiwan's Far Eastern Department Store now has 12 stores in mainland while Pacific Department Store is principally present in first-tier Chinese cities, like Beijing and Shanghai. Among domestic players, Beijing Wangfujing Department Store (Group) Co., Ltd. (600859.SH) is the biggest in the sector. Wangfujing now runs 17 department stores nationwide.

The company achieved CNY 6.37 billion in turnovers in 2006, up 27.38% from the previous year; and net profits were up 570.37% to hit CNY 181 million last year. It plans to increase the department stores up to 40 and achieve CNY 30 billion to CNY 40 billion sales revenues annually by the year 2010. Acquisition is the most effective way for the department stores' expansion. Intime, for example, takes a 29.88% stake in Hangzhou's Baida Group Co. Ltd. (600865.SH). and a 22.62% stake in Wuhan Department Store Group Co., Ltd. (000501.SZ).

Nanjing's Golden Eagle Retail Group Ltd., (3308.HK), who went public in Hong Kong in early 2006, acquired Xi' an Minsheng Guomao Shopping Center after its listing.