FamilyMart to end Chinese joint venture partnership with Ting Hsin
Category: #retail  By Paroma Bhattacharya  Date: 2019-05-22
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FamilyMart to end Chinese joint venture partnership with Ting Hsin

Ting Hsin operates overs 2,500 FamilyMart stores in China, sharing revenues and paying royalties to the Japanese firm.

Japan-based convenience store operator, FamilyMart Co., Ltd. has recently revealed plans to end its 15-year joint venture (JV) with Taiwan’s food company Ting Hsin International Group, amid loosening foreign ownership constrains for industries like consumer goods and retail.

For the record, FamilyMart and Ting Hsin had formed a joint venture in the years 2004, a time when non-Chinese businesses were mainly not allowed to set up shops in China without a local partner. Under the partnership, Ting Hsin currently operates overs 2,500 FamilyMart stores in China, paying royalties and sharing profits with the Japanese company.

However, with recent events, FamilyMart has initiated a lawsuit in the Cayman Islands, where the JV and Ting Hsin is registered, to force its partner to resign its 60% stake, claim sources.

Some sources suggest that the move comes in line with the realization of potential growth of China’s convenience-store market by over 60% to $27 billion in the next five years on account of rapid urbanization and demand for around-the-clock snacks, food and beverages in the country.

Besides, Ting Hsin claims that the royalty fees are three times higher than the average imposed by rivals like 7-Eleven. However, FamilyMart have alleged that Ting Hsin reduced royalty fee it pays for use of the brand from the current 1% to 0.3% or less and withheld royalty payments for 7 months, cite reports.

In addition, FamilyMart has also alleged that Ting Hsin did not offer adequate disclosure of transactions related to the JV that would give the company a full picture of the venture’s profitability.

For the uninitiated, FamilyMart is second only to local store Dongguan Sugar & Wine Group Co., which sells low-cost goods in parts of China. The Japanese firm, besides being caught up in a trade war between China and the U.S., is also preparing to open up sectors such as auto manufacturing and banking in 2020 to full foreign ownership and restrict forced technology transfers.

Source Credit: https://in.reuters.com/article/us-familymart-ting-hsin/familymart-sues-to-end-chinese-joint-venture-with-ting-hsin-nikkei-idINKCN1SQ2G3

http://fortune.com/2019/05/14/japan-familymart-seeks-split-china-ting-hsin-international-group/



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Paroma Bhattacharya

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Paroma Bhattacharya

Paroma currently works as a content developer for Algosonline, MSF and a series of alike platforms. Fortified with a post-graduation degree in Journalism and Mass Communication, she delved head long into a writing career, creating resourceful and information enriched ...

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