China's top 100 chain operators registered 707.6 billion yuan (US$87.35 billion) in sales revenue in 2005, a year-on-year increase of 42 per cent, statistics from China Chain Store & Franchise Association (CCFA) show.

However, compared with previous years, the growth of the sector slowed down last year sales revenue grew by 65 per cent in 2001.

By the end of 2005, the number of stores operated by the top 100 companies increased by 26 per cent to 38,260 from 30,416 a year ago.

Facts and figures  There were 18 foreign-funded companies among the top 100 chain operators in 2005, six more than the previous year.  The foreign-funded companies contributed 20 per cent of the total sales of the top 100 operators.

Bailian Group Co Ltd continued to lead the sector last year. Its sales increased 7 per cent to 72.07 billion yuan (US$8.9 billion) in 2005, and its number of stores totalled 6,345, a year-on-year growth of 15 per cent.

Home appliance retailers Gome and Suning achieved 49.84 billion yuan (US$6.15 billion) and 39.72 billion yuan (US$4.9 billion) in sales revenue respectively, coming out second and third in the ranking.

"Chain operations play an increasingly important role in China's consumption market," CCFA President Guo Geping said yesterday.

Guo's association has been monitoring the sector's performance and making the "top" list for five years.

Its figures show sales of the top 100 chain operators accounted for 10.5 per cent of the country's total retail sales of consumer goods in 2005.

The ratio was 9.3 per cent in 2004 and 4.3 per cent in 2001.

Guo said business scale continued to grow and a number of leading enterprises have seen years of rapid development.

Average sales revenue of the top 100 companies was 7.1 billion yuan (US$876 million) last year, 3.4 times that of 2001.

The average number of stores was 382 last year, up from 131 in 2001.

Fifty-five companies have been ranked among the top 100 chain operators for five years in a row.

Since chain stores began operating in China around 10 years ago, companies have tried to open more stores for expansion.

But "mergers and acquisitions (M&A) have become a key way to expand a business," Guo said.

In 2005, the top ten companies in the sector had 14 M&A moves.

Eight M&As took place in the home appliance retail market, which, to some extent, has driven the sector's rapid development.

The average sales of home appliance retailers grew by 67 per cent last year, while the number of stores jumped by 58 per cent.

"Foreign-funded companies have shown increasing advantages after years of development," Guo said.

There were 18 foreign-funded companies among the top 100 chain operators in 2005, six more than the previous year.

The foreign-funded companies contributed 20 per cent of the total sales of the top 100 operators.

They are more competitive than domestic retailers, especially when running hypermarkets.

They opened 120 new hypermarkets last year, moving into smaller cities in the country's central and western areas as well as major cities like Beijing and Guangzhou.

"As China further opened the retail sector in 2004, foreign-invested and privately-owned companies are taking a growing share in the sector," Guo said.

In 2002, 58 of the top 100 chain operators were State-owned companies. That number dropped to 27 last year.

(China Daily 03/23/2006 page9)