Aeon's mall in Beijing opens on November 7, 2008. Photo: IC

By Li Qiaoyi

Takuya Okada, the 84-year-old founder and honorary chairman of Japan-based Aeon, the largest retailer in Asia, declined to take a seat after standing to give a one-hour-long speech in Tsinghua University recently.

"I'm still quite young," he told the admiring audience.

Okada also believes China's retail market is still young.

In an interview with the Global Times, Okada said he was impressed with China's massive stimulus package and with the growth of the country's gross domestic product (GDP). The country's GDP reached 7.9 in the second quarter of the year, up 1.8 percentage points from the first quarter, according to the National Bureau of Statistics.

Promising market

Okada added that China also remains short of modern and advanced retailing enterprises, which presents many opportunities for foreign retailers such as Aeon to expand their business in China.

When establishing Aeon's first shopping mall in Beijing in November 2008, Aeon CEO Motoya Okada said the company planned to build 11 outlets in Beijing and Tianjin including five shopping malls, three department stores and three food supermarkets within three years. But by the end of June Aeon had established 49 outlets in China and the number was expected to reach 100 by 2010.

But the expansion goal will be delayed somewhat due to the global economic crisis, Kazumasa Ishii, managing director of Beijing Aeon, a main group company, told the Global Times.

Takuya Okada, founder of Aeon.

Since Aeon entered the Chinese mainland market in 1996, the company saw annual double-digit growth until last year when it slowed down, but has since begun to gradually pick up. It's now expected to register about 8 to 9 percent in 2009 from a year earlier, according to Ishii.

With many outlets built in some second- and third-tier cities such as Qingdao and Yantai in Shangdong Province, and Dongguan and Fozhou in Guangdong Province, Aeon has fully tapped the potential of China's second- and third-tier cities, while endeavoring to grab a slice of metro market, said Ishii.

With the advent of China's expanding automobile growth, malls can also be established closely around downtown cities as well as at their outskirts, said Takuya Okada.

Indeed, there were few customers driving to Aeon's first Beijing mall initially, said Liu Yang, a frequent and long-time customer, but now it is hard to find space in the mall's 3,000 free parking slots during weekends.

Cautious expansion

But Aeon has seen fierce competition from Chinese retailers such as WuMart, Ishii said, adding that his company also suffers from a lack of experienced, capable retail managers in China. Aeon is growing faster than its ability to find qualified managers, despite the company's management training courses, he said.

As such and while waiting out the economic downturn, Aeon said it is putting the caution lights on when it comes to continued rapid expansion and mergers and acquisitions in China, compared to international rivals such as Walmart and Tesco, Ishii said.

The most efficient way for Aeon to ensure a growing market share is through innovation and diversification, the company believes, just as founder Takuya Okada did when he transformed a single small grocery shop into a global heavyweight.

In Japan, Aeon developed 7-Eleven style Ministop stores, as well as specialty stores ranging from shoes and casual clothes to books.

It also got into automobile sales, entertainment and forged joint ventures with Western enterprises such as The Body Shop, The Sports Authority and Kureas.

Some went out of business, but most developed into significant mall specialty stores after the 1990s.