France's Auchan to double China stores in 2 years

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SHANGHAI, July 9 (Reuters) - Privately held French supermarket group Auchan SA [AUCH.UL] plans to double the number of its stores in China in two years, a spokesman said, accelerating expansion in the world's fastest-growing major consumer market.

Auchan, which currently runs 17 stores in China, will add as many as eight outlets this year and 10 next year, mostly in Beijing and affluent coastal regions around Shanghai, the French company's China spokesman Zheng Jichang said on Monday.

"We'll aggressively expand in east China where people have high incomes," Zheng said.

Auchan lags French rival Carrefour SA (CARR.PA) and U.S. retailer Wal-Mart Stores Inc. (WMT.N) in expanding in the world's fourth-largest economy, where retail sales grew about 10 percent annually in the past decade.

Auchan also competes with local retailers such as Bailian Group Co. Ltd. (600631.SS), which are stepping up consolidation in an industry the government fully deregulated in 2005.

Auchan on average opened two stores a year in the past eight years, Zheng said. Its China sales jumped 32 percent to 6.2 billion yuan ($775 million) in 2006.

"Now, as Auchan's business is on the right track and there is adequate well-trained local talent, we're ready to grow much faster," he said.

Paris-based Carrefour is opening 20 hypermarkets a year in China, where its sales surged 53 percent to 24.8 billion yuan last year, according to government data. Wal-Mart, the world's biggest retailer, operates 73 stores in 36 cities in China and in February agreed to buy 35 percent of Trust-Mart, the owner of 101 supermarkets in the country.

Auchan last month closed its loss-making store in the northern city of Tianjin, near Beijing.

Earlier this year, Auchan and its subsidiary Banque Accord teamed up with Shenzhen Development Bank Co. (000001.SZ) to offer credit cards in China, to lure customers in the world's most populous country.

China's retail sales are expected to expand 14 percent this year to 8.7 trillion yuan, accelerating from a 13.7 percent increase in 2006, the Commerce Ministry forecast in a report published in June.

Foreign retailers operating in China posted an average net margin of 3.7 percent in 2006, compared with 1.2 percent at local retailers, according to the China General Chamber of Commerce.

((Reporting by Samuel Shen, editing by Charlie Zhu and Edmund Klamann; Samuel.shen@reuters.com; Reuters Messaging: Samuel.shen.reuters.com@reuters.net; +86 21 61041789-1269)) Keywords: AUCHAN CHINA/EXPANSION Keywords: AUCHAN CHINA/EXPANSION

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