Japan s Laox eyes more stores to fuel growth
* Eyes expansion beyond two large outlets already planned
* Does not rule out new share issue as option for funding
* Relaxed visa requirement and stronger yuan to help growth
Laox, a Japanese electronics retailer controlled by China's Suning Appliance and a Shanghai-born entrepreneur, is eyeing expansion beyond the two big stores at the core of its three-year growth plan.
"If there are good locations and conditions are met, we would like to open stores other than the two large ones," Laox CEO Luo Yiwen said in an interview ahead of the Reuters Japan Investment Summit.
A year ago, Chinese retail giant Suning and Luo's company stuck a deal to jointly buy a 55 percent stake in Laox for 1.9 billion yen ($21.2 million), rescuing the firm as it headed for its ninth straight annual loss.
The deal was held up as a symbol of China's growing economic might and was followed by a handful of similarly sized acquisitions over the past year by Chinese firms in Japan.
The shifting balance of power between Chinese and Japanese corporations is one of the topics in focus at the Reuters summit, which brings together top executives to discuss the changing investment environment in the world's second-largest economy.
For a list of speakers at the summit, which runs from June 28-30, click here:.
While it had only half a dozen stores and less than 10 billion yen in sales at the time of the deal, Laox was still a widely known chain in Japan. Just a decade earlier, it boasted a network of some 120 stores and annual sales of 200 billion yen.
"Laox's performance had been bad in recent years, but its brand and consumer electronics retail network still have their value and its revival is possible," said Luo, who came to Japan after graduating from a university in Shanghai in 1985.
"Also, Japan itself is one of the major markets in Asia. It is very attractive as (Suning) pursues its global expansion."
Laox has been trying to carve out a niche for itself by selling products duty-free and targeting a growing number of Chinese tourists, who snap up made-in-Japan rice cookers, ceramic cooking knives and high-tech gadgets.
Luo, who made a name for himself by starting media and retail businesses in Japan before joining Laox, said that revenues were growing at a pace that would allow it to hit its goal of boosting revenues to 70 billion yen by the year to March 2013.
Japan's relaxing of visa requirments for Chinese tourists from next month and the yuan's expected appreciation against other currencies should help. Laox gets about half of its sales from non-Japanese shoppers.
"Many overseas visitors are not coming here as tourists but as shoppers. But in Japan, the infrastructure has not been good enough to welcome these overseas shoppers," he said. "I think Laox is a bit ahead in these efforts."
Luo said the company has been searching for locations for the two large stores expected to add 30 billion yen in sales in the final year of its growth plan, and would aim to open them as soon as possible.
Laox will focus on Tokyo for the near future, but eventually wants to expand beyond the capital, Luo said.
The company has estimated it would need about 8.3 billion yen to finance its three-year expansion plan.
Luo said issuing shares was one option it may consider, and would not rule out an additional investment by Suning.
"I think Suning would provide its utmost cooperation when it best serves Laox's growth," he said.