Carrefour to sell China stores

The world's second largest retailer Carrefour is considering a sale of its businesses on the Chinese mainland and in Taiwan, including a possible IPO in Hong Kong or a consolidation of assets with another company, The Wall Street Journal (WSJ) reported Monday.

The IPO route could raise around $1 billion in funds, the newspaper said, citing an unnamed source familiar with the matter and adding that the French retailer's plans are still at a preliminary stage.

Carrefour aims to seek a sustainable future through the plan, sources said, either by raising money from further expansion or by enhancing competitiveness with the help of a partner. The sources said the retailer has not yet hired bankers to implement the plan.

Lu Dongbin, an industrial economics professor with the School of Business at Renmin University of China, told the Global Times Tuesday that Carrefour's plan is likely to signal an IPO.

"Carrefour will get rid of its unprofitable businesses and bad assets in the mainland and Taiwan to boost attractiveness to investors before an IPO," Lu said. "A restructuring will benefit Carrefour's share price when it goes public."

He added that the retailer is making a wise move if it indeed plans to go public in Hong Kong.

"Carrefour will be able to obtain plenty of funding from the financial hub of Hong Kong, which is a great opportunity for the company to expand its operations in Asia and raise its global influence," he said.

However, Li Weihua, a professor with the Franchise Research Center of the China University of Political Science and Law, told the Global Times Tuesday that the hypermarket operator's plan could also be a simple re-steering of its core competence.

"China's traditional retail industry, in which Carrefour operates, is challenged by rising commodity prices and the online shopping trend. So Carre­four might sell part of its traditional businesses and build a stronger online shopping venue or launch more supermarkets in less competitive areas," Li said.

He noted that the company will definitely not exit the China market altogether.

The French retailer, operating 220 hypermarkets on the Chinese mainland, commanded a 6.9 percent market share in 2012 and is the fourth largest player in China's highly competitive retail scene.

The Sun Art Retail Group, a French-Chinese joint venture that operates Auchan and RT-Mart stores, leads the competition with a 13.6 percent market share, according to the WSJ report.

Li said he expects the branches that Carrefour decides to sell in China to be a hot commodity among other industry players.

"Many local Chinese retailers, such as Beijing-based Wumart and Hualian Group, as well as Germany's largest retail chain, Aldi Nord Group, will be eyeing the stores that Carrefour has left behind," Li said, adding that Aldi is likely to bid high since it has intended to enter China for a while