A Lawson convenience store in Shanghai. The company operated 318 outlets in China as of November, according to its website. [Photo / Bloomberg]

Japanese convenience store chain plans almost 10,000 new outlets

TOKYO - Lawson Inc Chief Executive Officer Takeshi Niinami aims to open almost 10,000 stores in China by 2020, selling drinks, food and magazines. To pull it off, the Tokyo-based executive is packing his bags for Shanghai.

As Japan's second-largest convenience-store operator plans to boost outlets in China more than 30-fold, Niinami will spend a month in the nation from May and another within less than a year, he said at a media briefing in Tokyo on Dec 20. Lawson is also training Chinese recruits in Japan to work as store managers in their home country, where the company lags behind rivals Seven & I Holdings Co and FamilyMart Co.

"To get a feel for daily life in China and to take risks, I've got to live there a couple of months," Niinami said. "Staying all the time in Japan, I tend to focus only on downside risks."

"Lawson's move shows how Japanese companies are trying to globalize," said Tsuyoshi Komori, president of Tokyo-based consultant Mercer Japan Ltd. "Spending time and pouring energy into China will prove Niinami's commitment."

Lawson operated 318 stores in China as of November, according to the company's website. The nation is Lawson's sole market outside Japan, where it has 9,935 outlets.

Lawson opened its first Chinese store in Shanghai in 1996, according to the website.

Related readings:  Tesco aims to quadruple China revenue in 5 years  Restructure to create retail giant  German wholesale store expands in China  Retailer scores with new tactic

Its growth in China has been held back by a lack of human resources, Niinami said in April. An initial effort to send Chinese employees to Japan for training proved too time-consuming, he said. Changing its strategy, the company began hiring and training Chinese graduates from Japanese universities.

"The new system started three or four years ago, and now I think we have the resources to accelerate our foreign business," Niinami said in April.

Niinami's own international experience includes starting the Chinese sugar-trading business at Mitsubishi Corp, a Tokyo-based trading company, he said in an interview with THE 21, a monthly magazine in 2008. He is also a Harvard Business School graduate.

He began his career at Mitsubishi, Lawson's biggest shareholder, in 1981 and became president of the convenience-store operator in 2002. In 2005, he was named Lawson's chief executive officer.

Under Niinami, Lawson's operating profit has increased in the past seven consecutive fiscal years. The company forecasts net income in the 12 months ending February may rise to 22 billion yen ($268 million) from 12.6 billion yen last fiscal year, while revenue may fall to 430 billion yen from 467.2 billion yen.

In China, operating profit was at a break-even level last fiscal year, according to the company's website.

Niinami plans to dispatch a team of staff members, including company directors, to China ahead of his own arrival, he said on Dec 20.

The chief executive officer is also improving his Chinese-speaking skills, said Wenzhou Song, founder of Tokyo-based Softbrain Co and a strategic adviser to Lawson in China.

Bloomberg News