Wahaha plans to close Hangzhou mall

Leading Chinese beverage producer Wahaha Group plans to shut down its boutique shopping mall in Hangzhou, capital of East China's Zhejiang Province, due to serious losses, Beijing-based China Real Estate Business reported Monday.

The company has not paid the rent for the shopping mall, which is called Waow Plaza, for nearly half a year, said the report.

Calls to Wahaha's PR representative remained unanswered by press time.

A spokesperson of the property owner confirmed this with the Global Times Monday, saying that Wahaha last month proposed unilaterally terminating the 16-year rent contract that was signed two years ago.

"We are now negotiating with Wahaha to figure out the reason for the sudden termination," he said, suggesting that they may pursue legal avenues to protect their own rights.

Analysts said the bad location of the mall likely hindered its business.

"Waow is surrounded by blocks of office buildings, but the area is not popular for socializing or shopping. Besides, its front gate does not face a busy street, which is not good for attracting consumers," Li Lei, an independent industry analyst in Hangzhou, told the Global Times Monday.

The plaza is located in Hangzhou's Qianjiang New Town, which is being developed into a new central business district, and takes up 35,000 square meters of rented space in Zunbao Building, according to a Wahaha press release e-mailed to the Global Times in 2012.

Waow Plaza is the first shopping mall that was opened by Wahaha, in November 2012.

At the high-profile opening ceremony, Wahaha's ambitious chairman Zong Qinghou said that with an investment of 1.7 billion yuan ($272.2 million), he planned to open another 100 malls around the country within three to five years after testing the waters in Hangzhou, where Wahaha's headquarters is located.

But currently there are only two Waow shopping malls that have been opened - one each in Hangzhou and Changsha, capital city of Central China's Hunan Province, according to media reports.

It is not easy for any company to expand business into a totally unfamiliar industry and things appeared to be more difficult for Wahaha, which rushed into the domestic retailing industry after less than two years of exploration in the sector, said Yan Qiang, an industry analyst and partner with Beijing-based Hejun Consulting.

Yan did not show any confidence in Wahaha's shopping mall projection due to the lack of thorough preparation.

He told the Global Times Monday that as a successful domestic beverage giant having just entered the domestic retail industry and intending to sell foreign products, the company needs a fairly long time to understand which brands or what kind of clothing local shoppers prefer.

Most goods sold in Waow Plaza are bought directly from European boutique brands that are popular among fashionistas in Europe but have yet to be popular among Chinese consumers.

"I only went to Waow Plaza several times, mainly to have meals. The goods sold there are not as expensive as high-end brands like Hermès, but prices are a concern when it comes to unfamiliar brands," Wang Qing, a local resident, told the Global Times Monday.

"As for the familiar brands such as Gucci, the products in the mall are usually out of date," Wang said.

And Wahaha also has to devote a lot of effort to get used to this sector's current pressures, such as high inventory, weak demands and booming e-commerce, according to Yan.

Data released by China National Commercial Information Centre at the end of May showed that the sales volumes of clothing generated by major Chinese off-line retailers grew 1.1 percent year-on-year in April, slightly down from 1.7 percent a year earlier.