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Joint agreements the best choice for multinationals

(chinadaily.com.cn)
Updated: 2007-05-08 16:55

After China entered the World Trade Organization (WTO), more top 500 enterprises are seeking expansion in China through cooperation.

Mcdonald's Corp together with China Petroleum & Chemical Corporation (Sinopec), one of China's three largest oil and gas firms, opened the first of two dozen drive-through restaurants in January this year,BeijingYouth Daily reported.

The restaurant is located at Sinopec's Shahe East gas station in Beijing's Changping District. It is 1,710 square meters and has dual access routes for cars. The routes are located off Badaling Highway.

The drive-through on Beijing's northwestern outskirts is McDonald's 16th in China, but its first venture with Sinopec. It is also the first to open next to a Sinopec gas station, the result of a cooperation contract signed in June last year between the two mega companies, both among the top 500 enterprises in the world.

"The potential is enormous," said Jeffrey Schwartz,chief executive officerof McDonald's China. He said the alliance with Sinopec, which has some 30,000 petrol stations around China and adds around another 500 every year, could become a "powerful platform" for McDonald’s to build its business.

Another top 500 company, Mitsui & Co Ltd, which set up an office in Beijing in 1980, signed an agreement withBaosteelGroup, China's largest steel maker. The two sides establishedShanghaiBao-Mit Steel Distrubution Co Ltd in 2002 with a total investment of US$12.25 million. Baosteel holds a 65 percent stake in the joint venture and Mitsui holds the remainder.

The joint venture concentrates on the processing, sales, distribution and storage of high-grade cold-rolled sheets, silicon steel and surface-treated sheets, and mainly targets automotive plants and household electric appliance manufacturers.

As a prominent world steel distributor, Mitsui has advantages in global purchasing and sales network, while Baosteel has a strong domestic steel sales network.

In theretailsector, Bertelsmann Direct Group and Carrefour signed an exclusive agreement last year. In the contract, Carrefour will not allow other book retailers to set up stalls in its supermarkets, while Bertelsmann won't enter other supermarkets. By the end of this year, China will have more than 30 Bertelsmann bookshops in Carrefour supermarkets in Beijing,Tianjin, Shanghai, Shenzhen, Xiamen, Guangzhou, Shenyang, Chengdu andChongqing.

Carrefour said the better brand image of Bertelsmann will attract more high-end consumers for Carrefour. The two sides are also in negotiation to cooperate on other aspects of the business including book promotions and marketing activities.

Another win-win cooperation is between Metro Group, one of the world's largest trading companies, and China National Foreign Trade Transportation (Group) Corp, a leading logistics service provider in China.
Sinotranshas won a strategic cooperation deal with Metro Jinjiang Cash & Carry, a subsidiary of the retail giant Metro Group. Under the deal, Sinotrans will become Metro Jinjiang's sole dry-food and non-food logistics operator in China. This will mean Sinotrans will deliver goods from some 1,000 suppliers to Metro's 33 retail outlets across China.

The Sinotrans contract win has ended a month-long bidding race between multinational and local logistics providers to become the company's dry-food and non-food deliverer in China. The contract term is for an indefinite period. Metro Group Logistics has developed a tailor-made logistics program for retail operators called Procurement Logistics. It has already proved successful in Germany, Poland, the Netherlands, Turkey, Russia and Spain, and will now be introduced to China and operated by Sinotrans.