HK retailer to purchase four firms on mainland

Lifestyle International Holdings Ltd, a Hong Kong retailer, said it has agreed to pay 750 million yuan (97 million U.S. dollars) to buy four department store operators on the Chinese mainland, expanding its sales network to tap rising consumption.
Lifestyle's wholly owned Beauty Power Ltd unit will buy the four companies that own stores in Dalian, Tianjin, Qingdao and Harbin, according to its statement to the Hong Kong stock exchange Wednesday. The stores, which operate under the brand "Itokin," are controlled by a Japanese retailer.

"Lifestyle's growth in Hong Kong is very limited, as finding a good location for a large-scale store is no longer easy," Jenny Chan, Hong Kong-based analyst at Sun Hung Kai Securities Ltd, told Blooomberg News.

The mainland's retail sales grew 14 percent to 770 billion dollars in 2006, after surging an average 11 percent a year in the previous decade. China mainland may become the world's second-biggest consumer market after the United States in 2015, accounting for 14 percent of global spending, according to a Credit Suisse Group forecast.

The acquisition allows the group to "speed up its pace of expansion," on the Chinese mainland. Lifestyle said. The company, owner of two Sogo department stores in Hong Kong, has one store on the mainland.

Asia's second-biggest economy is attracting other retailers such as South Korea's Lotte Group, which plans to set up a department store in Beijing next year. Lotte's Chinese partner, Intime Department Store (Group) Co, more than doubled 2006 profit and plans to open more than 10 outlets over the next five years.

Parkson Retail Group Ltd, owned by Malaysia's Lion Group, has also stepped up expansion in China mainland by buying out its local partners. Parkson's profit last year surged 86 percent to 461 million yuan, fueled by consumer spending at its 36 Parkson stores and two Xtra-branded outlets in 26 mainland cities.

Lifestyle plans to renovate the four stores before reopening them under its "Lifestyle" or other brands. The company is also building two stores, in the eastern city of Suzhou and the northern city of Shenyang, to add to its single store in Shanghai.