Retail and Franchise

With over 1.3 billion potential consumers and a fast growing middle class, many foreign enterprises are finding China to be a gold mine for their products and services. In the past, most opted to sell as wholesale distributors and leave the retailing to the local Chinese. However, with the market being so lucrative, and volume increasing exponentially, many branded consumer companies have switched their strategy and entered the Chinese market as direct retailers. This switch in strategy is fuelled not only by demand, but by the easing of Chinese regulations that enable foreign enterprises to obtain direct retailing licenses without the need for a local partner. This has created a bonanza of highly sought after consumer branded companies opening up dedicated stores in shopping malls and elsewhere to directly capture this market.

At IPO Pang, we have advised foreign enterprise clients in all key areas of their retail business, including brand management, commercial and strategic partnerships, and protection of intellectual property rights.

Competition in the retail industry in China will continue to escalate as more players enter the market, thereby underscoring the need for experienced representation in all facets of retailing, from brand protection to leasing terms, from marketing and advertising to site selection. At IPO Pang, we proactively counsel foreign enterprise clients on risk assessments and under-valued opportunities. We recognize that retailing isn’t suited for every company. But, for some, it has been the engine that has fueled the company’s growth. A well-executed business plan could mean great success, while poorly planned initiatives result in resounding failure. The challenges facing retailers are compounded by a highly-competitive and complex retail landscape in China where the ground rules are constantly shifting.

For some foreign enterprise clients who have succeeded in retailing, often the next step is franchising or opening licensed stores. At IPO Pang, we assist these clients with their expansion by helping them obtain the necessary permits and approvals, and by drafting and structuring their relationships with licensees, suppliers, customers or strategic partners. Our service extends beyond merely drafting the documents necessary to create and preserve these relationships. We also find ways to enhance the value of our client’s business by scrutinizing their operations and offering practical suggestions to improve efficiency. We negotiate, draft and counsel our foreign enterprise clients regarding all commercial agreements related to franchising/licensing of retail stores in China, including ancillary agreements such as logistics and warehousing agreements, supplier agreements, revenue sharing agreements, license handbook, audit policies, outlet code of conduct and other related agreements and documents.

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