Franchise Business in China Promising for Korean Firms
By Kim Tong-hyung
Staff Reporter
Franchise shops and restaurants could be the way to go for South Korean entrepreneurs dreaming of a big payday in China.
KOTRA said Monday that the Chinese market for business franchises reached around 300 billion yuan (about $44 billion) in 2008 after growing by more than 20 percent annually in the previous three years.
The report recommended that potential Korean investors take a harder look at food and beauty businesses, which could provide them with a competitive edge as Korean culture is becoming more hip in China.
China's restaurant industry is worth about 1.5 trillion yuan in revenue, ans is considered among the country's top-10 growth industries along with financial services and telecommunications.
Some Korean companies are already reporting success in exploiting the "Hallyu" (Korean Wave) phenomenon in China, KOTRA said.
A Jeonju-based restaurant chain specializing in "bibimbap," a traditional Korean dish that mixes rice with meat, vegetables and red pepper paste, needed only three years to open 11 restaurants in China, the report said.
A Korean-owned beauty salon in Beijing successfully found a niche market in high-end consumers, charging clients an average of around 3,000 yuan in exchange for premium services that help the shop earn an image as a "noble beauty salon."
Chained coffee shops are a good idea for Beijing, while franchised laundry services could offer a better shot in Shanghai, the KOTRA report said.
"To advance in the Chinese market for business franchises, Korean companies must have detailed knowledge of the markets they are targeting and have differentiated plans for each market," a KOTRA official said.
"We will send a team of researchers to China during this month to improve our understanding of the Chinese franchise market and provide the data to Korean companies."