Monetising Chinese retail shoppers is turning from a distribution to direct shopper experience for cross-border goods company Jatenergy (ASX: JAT).
Jatenergy has signed a binding agreement to open a retail outlet, which it intends to call ‘JAT Maternity and Children’ within the 80,000-square metre Hui Yue Shopping Mall, to open “in the next few months.”
Jatenergy says the kid’s section of the shopping complex will be the largest indoor children’s themed shopping centre in Zhengzhou spanning 18,000 square meters over three levels, called “Kid’s City”.
The expansive Chinese-based company has said it intends to open a “cornerstone retail outlet” within the shopping complex, that caters for mums and children within ‘Hui Yue Kid’s City’, a dedicated “one-stop shopping destination” in Zhengzhou, the capital city of Henan province which is home to around 100 million people.
The Hui Yue shopping complex is owned by the Henan Sheng Rung Holding Group, a Chinese company owned by current Jatenergy Director Mr Xipeng Li. As part of the close ties with Sheng Rung, Jatenergy will obtain a “three-year rent-free period” with a negotiated term expected to be agreed thereafter, sometime in 2021.
Jatenergy will still need to spend an uncertain amount to set up and equip the store but says there are “no conditions precedent contained in the agreement with no other payments to be made”.
“This is an unsurpassed opportunity for JAT to build its China presence and generate revenue,” said Mr Wilton Yao, Director of Jatenergy.
In 2021, Jatenergy expects to establish a “flagship store agreement” with sales volumes being measured and used to gauge whether further stores will be opened in other parts of China at other Henan Xipu shopping centres. If the upcoming retail store is successful, Jatenergy is likely to expand its retail store footprint in China by opening stores in other cities.
Just last week, Jatenergy revealed its intention to acquire a controlling interest in Green Forest International, a Sydney-based wholesaler, distributor and exporter to Hong Kong and mainland China. Today’s announcement of a retail store in China is likely to supplement the deal and is likely to stock many of the brand names marketed and sold by Green Forest.