Change of heart for Chinese Takashimaya
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Takashimaya in China has reversed its decision to shut down its Shanghai store after negotiating a rent reduction.
“Due to support from the landlord and Shanghai Changning District, we can expect improvement in profitability of the business,” read a statement from the firm.
Takashimaya in China has not turned a profit since its launch in 2012 despite its location in close proximity to a large and affluent Japanese community. Takashimaya was anticipating a ¥2–3 billion (US$18.7–28.1 million) loss at the end of this financial year before the reversal.
It is not clear whether or not the firm received assistance from the Chinese government to continue operating, although tax incentives may have been likely. The closure of Takashimaya would have had a significant effect on the local area’s economy given the recent sale of a large interest in nearby rival store Carrefour following years of losses.
An online commentator referenced in a Nikkei report wrote, “The problem with Takashimaya is its location, which is far away from the main road and the poor goods on offer. Probably only ghosts will shop there.”
Questions & Answers
Q.What specifically led Takashimaya to reverse its decision to close the Shanghai store?
What specifically led Takashimaya to reverse its decision to close the Shanghai store?
The firm reversed its decision after successfully negotiating a rent reduction. This support from the landlord, along with help from the Shanghai Changning District, is expected to improve the business's profitability.
Q.How has Takashimaya's financial performance been in China since opening?
How has Takashimaya's financial performance been in China since opening?
Takashimaya in China has not generated a profit since it launched in 2012. Before the reversal, it was anticipating a loss of ¥2-3 billion (US$18.7-28.1 million) for the current financial year.
Q.What potential broader economic impact did the article suggest Takashimaya's closure would have had locally?
What potential broader economic impact did the article suggest Takashimaya's closure would have had locally?
The article suggests the closure would have significantly impacted the local economy. This is especially true given the recent sale of a large interest in nearby rival Carrefour, which also faced years of losses.
Q.What reasons were suggested for the store's poor performance, aside from its financial results?
What reasons were suggested for the store's poor performance, aside from its financial results?
An online commentator referenced a poor location, stating it was far from the main road. They also criticised the 'poor goods on offer' as contributing to the store's difficulties.
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