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Retailing and distribution in China: Dashang Group

The report was done in 2009

Due to the negative impact of the weak economy and uncertainty about future prospects, the company
planned to slow its pace of expansion and pay more attention to improving its same-store sales and the
group’s overall efficiency in 2009.

North China and Mid China are still the dominant areas for the company. Meanwhile, the company will
gradually venture into other regions in order to achieve its long-term strategy of becoming a world-class
retailer in the future.

Company information:
Address: No. 1 Qing San Street, Dalian City, China
Tel: +86 411 8364 3215
Fax: +86 411 8363 0358
Retailing channels of operation: Mixed retailers (department stores), electronics and appliance specialist retailers, supermarkets, hypermarkets, furniture and furnishings stores

Year end December 2008 2009
Net sales (RMB million) 30,000 32,300
Outlets 240 262
Selling space (‘000 sq m) 2,131 2,317
Number of employees 180,000 190,000
Sales of grocery (%) 15 15

After around two decades of development, Dashang is now a renowned domestic retailing entity, with
various retailing businesses, ranging from department stores, shopping malls, supermarkets/hypermarkets,
electronics and appliance specialist retailing outlets, to furniture and furnishings stores. Apart from
retailing, the company also has interests in foodservice and entertainment.

Dashang’s steady growth can be very much attributed to its public listing, co-investments and cooperation
with other industry players, expansion out of its home base in Dalian and ongoing entry into new retailing

Based in Dalian, the group already has deep roots in the area, but it has established a strong foothold in
Northeast China after steady expansion near its home base. Dashang has now penetrated North China and is
entering West China and East China. The group has over 200 outlets in 11 provinces and over 50 cities in
China, in a number of retailing channels, including hypermarkets, supermarkets, department stores,
electronics and appliance specialist retailers, as well as furniture and furnishings stores. Most of the
company’s outlets are in Northeast China, in third- or even fourth-tier cities in the region.

In 2008, Dashang won the right to participate in the rural home appliance subsidy programme as an official
provider, which will boost its sales of electronics and electrical appliances.

In 2009, the group ranked number one among all department stores in China, according to China Chained &
Franchised Association data.

Dashang has a wide portfolio of private label products, ranging from food, clothing, household care
products to newly-launched jewellery (a private label trademark for jewellery has been applied for). With
over 200 outlets, ranging from department stores to hypermarkets/supermarkets, the group promoted its
private label lines extensively, which are usually priced some 5-20% lower than branded products.

Dashang’s private label products are budget-positioned and mainly distributed through its
hypermarkets/supermarkets and Newmart shopping malls.

The group uses around 17 manufacturers for its private label lines. Every year, the company launches
around 200 new private label products. The group aims to achieve sales of RMB100 million, RMB200
million and RMB300 million in 2008, 2009 and 2010, respectively, from private label.

Dashang Group Private Label Development and Management Co Ltd, was established in January 2004,
dedicated to the research and development, marketing and sales of private label products. 2008 saw it
become Dashang Nonstaple Foodstuff Private Label Co Ltd and Dashang Industrial Products Private Label
Co Ltd, aiming to accelerate the development of the company’s private label offer.

The company will continue to develop its private label products in the following years. The company is
expected to have more than 1,000 types of private label products by the end of 2010 with annual growth of
25% in value sales terms.

Private label brand Sector(s)

Dashang Jam, juice drinks, sweet and
savoury snacks, rice, plain
noodles, canned fruit, canned
seafood, edible oils, mineral water
Budget range

Newmart Disposable paper products, laundry
care, slippers, underwear, socks
Budget range

Baidaiyi Disposable paper products Budget range

Aomashi Womenswear, women’s footwear Budget range

Maizhesen Menswear, men’s footwear Budget range

Arthur Men’s shirts Budget range

Dashang is present in many retailing channels, including mixed retailers (department stores), hypermarkets,
supermarkets, electronics and appliance specialist retailers, as well as furniture and furnishings stores. In
mixed retailers and furniture and furnishings stores, Dashang is a top three player in value sales terms.

Dashang has steadily developed its retailing business in China, to rank ninth in 2009. The group has several
competitive strengths. Firstly, it has tight control over its costs, with its purchase department buying
directly, instead of through distributors. Meanwhile, it is devoted to its private label business, establishing
two separate companies to deal with the development and marketing of the products. Secondly, it pays
strong attention to the integration of its retailing businesses. For example, Dashang Newmart Shopping
Mall is an integrated ‘one-stop’ shopping and leisure centre, where consumers can shop in the Dashangmanaged
Newmart Supermarket and also in its electronics and appliance specialist store. Thirdly, the
company has continuously entered new retailing channels, in a bid to drive sales revenue.

Dashang is the retail banner used for its department stores, electronics and appliance specialist stores, as
well as hypermarkets/supermarkets. Dashang Jiajia is a ‘one-stop’ furniture and furnishings centre, while
Newmart is a new type of department store, more like a shopping mall, usually covering over 100,000 sq m.
These varied retailing channels meet local consumers’ different and changing needs.

Channel % value share Rank
Hypermarkets 1.2 13th
Forecourt retailers 0.3 6th
Department stores 2.5 1st
Furniture and furnishings stores 0.2 2nd
Electronics and appliance
specialist retailers 1.0 3
Retailing 0.3 9th