Leveraging a growing market.

Pan Shuzhen, managing director of Taiwan's Tayohya chain, recently announced her company's plan to segmentise its Chinese mainland business under three brand names, each with its own retail outlets. She spoke of plans to open over 100 new stores next year.

Not to be outdone, B&Q Taiwan also last month announced it'll open its first South China store, with plans to expand its Mainland chain to 42 stores by 2010.

Tayohya currently has about 400 stores, including 200 franchised stores, in over 150 Chinese cities. The chain mainly sells beddings, kitchenware, furniture and bathroom fittings. Its stores for simple living furnishings gross over Rmb100 million annually, with an annual growth rate of about 30%.

"We are going to segmentise and tap the huge Mainland market. In addition to Tayohya, we plan to launch S Plus emphasising the healthy home concept and Susan's Garden that targets female consumers. These three brands may have their own stores, or open stores in their joint names," said Pan.

Tayohya used to only sell private brands. Seeing the prospects for cross-Strait commercial development it decided to break with tradition by bringing in other brands. Yuan's Soap was the first, and more Taiwan household brands are to be introduced to the Mainland. "We have major expansion plans and expect to bring the number of our Mainland stores to 500 by next year," Pan added.

B&Q Taiwan recently realigned its retail business - and also announced the opening of its first B&Q store in Shenzhen. Now it has outlets in northern, eastern, south western and southern China.

"All our 12 Mainland stores are directly operated by our company. We plan to expand our Mainland chain to 42 stores by 2010. We will still be operating these stores directly," said Jiang Meilan, assistant to B&Q Taiwan's general manager.

In the past, Taiwan and Mainland B&Q stores did their purchasing separately. As cross-Strait relations improve, the company plans to adopt unified purchasing for some goods to maximise the benefits of mass purchasing.

Taiwan's manufacturing sector has entered a smaller profit-margin cycle and has to open up new markets, said William Wang, president of the Association of Chain and Franchise Promotion, Taiwan. He saw the Mainland market with its huge potential as a good destination for further growth. The expansion of Taiwan's home improvement chains on the Mainland is a growth trend, he said.

from Steffi Peng, Shanghai Office

(Image courtesy of Tayohya Daily Necessity (Shanghai) Co Ltd)