Japan’s Lawson exploring options for China unit: sources

JAPANESE convenience store operator Lawson is exploring strategic options for its China operation, sources said, as consumption in the country recovers after Covid lockdowns.

The Tokyo-based firm has held talks with advisers as it weighs possibilities to boost growth in its China unit, including introducing strategic partners and selling minority stakes, the sources said, asking not to be identified because the information is private.

Deliberations are preliminary, and Lawson could decide against any deal, they said. A representative for Lawson said there is no specific discussion at the moment.

Lawson opened its first Chinese store with a Shanghai location in 1996, as indicated by its annual report. It had 5,540 stores in the country by the end of November 2022, its quarterly report showed. 

The company reported net sales of 9.3 billion yuan (S$1.8 billion) from its China operations in fiscal 2021, as indicated by its annual report. Lawson is targeting 10,000 locations in the country by fiscal 2025, and has flagged opportunities for mergers and acquisitions as it aggressively expands its business in China, the report showed.

The abrupt end of China’s three-year zero-Covid battle, and signs that infections may have peaked, have fuelled optimism around a rebound in consumption. Economists raised their forecasts for the world’s second-largest economy, predicting 5.1 per cent growth in 2023 and 5 per cent next year, a Bloomberg survey last month showed.

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Foreign retail brands in China have been positioning themselves for growth in the country. McDonald’s China lined up US$2 billion in bank loans to support further expansion in the country last year. On Wednesday (Feb 8), the Chinese operator of Canadian coffee chain Tim Hortons agreed to acquire the exclusive rights in China to develop and sub-franchise Popeye’s fried chicken. Both brands are owned by Restaurant Brands International. BLOOMBERG