(Yicai Global) Sept. 12 -- After 20 years in China, South Korea’s largest supermarket chain E-Mart Inc. [KRX:139480] will sell off its stores and leave the country, South Korean media reported.
The firm has sold five of its Shanghai stores to Thailand-based Charoen Pokphand Group and has signed a contract with the group which will be announced next week, informed sources said. E-Mart will sell its remaining stores and pull out of China before 2018, South Korea’s Daily Economy reported.
In May this year, Chung Yong Jin, vice chairman of Shinsegae Inc. [KRX:004170], which runs E-Mart, confirmed the plans to withdraw, adding six stores in China would be closed by year-end.
E-Mart’s Chinese website is currently inaccessible.
The firm entered China in 1997, with stores mostly in Tianjin and East China. By 2011, it had 27 stores, considerably lower than America’s Wal-Mart Stores Inc. and France-based Carrefour SA [EPA:CA] which have hundreds. Since then, the South Korean firm has been closing down stores to prevent bleeding cash. It sold nine and closed eight shops between 2011 and 2014.
Analysts believe the company did not localize well enough. For example, store layouts and decorations are merely copies of their Korean model, which isn’t a good fit for Chinese consumption habits. Operations and labor costs were also too high.
Charoen Pokphand Group, known in China as Chia Tai Group, is taking over the Shanghai stores to push further into East China.