House of Fraser’s annual Far East supplier conference was held in Hong Kong, on November 3, attracting over 80 suppliers from the Far East and India. Yuan Yafei, Chairman of Sanpower group, showed up with the Group’s executive team and delivered a speech.

Yuan shared his growth and entrepreneurial experience with the participating suppliers, and elaborated on his reasons for purchasing HOF as well as contemplations of HOF’s future development.

Yuan noted that HOF is a department store that boasts a time-honoured history of 165 years, operating in good condition. It is a superb company with consistently positive cash flow. Years ago, however, this high-quality asset was debilitated due to the impact of the European debt crisis and high-interest debt, etc. Sanpower Group will help HOF refinance and convert the high-interest debt before the end of next February, with a view of resolving the financial problems in its development. This initiative is expected to reap net profits within the year.

When it came to HOF prospects, Yuan shared his understanding of retailing. He said that the retail entity will maintain its presence notwithstanding the rapid development of electronic business in the Internet era, as “People are always people”, which indicates that human beings’ social attributes make it impossible for their offline activities to be completely replaced by online ones.

Yuan further pointed out that the old-fashioned, unprofessional retailing mainly focuses on supplier management and venue management, never really prioritising consumers’ needs and interests, and therefore has no value. In the Internet era, retailing must be re-oriented to provide more professional and more valuable supply chain management, thus providing consumers with better products and services, which is the most important.

Yuan commented that despite over 60 years’ development of China’s department store industry, it still lacks enough supply chain management capabilities, and hasn’t established its own brand and more mature buyers system. Nanjing Cenbest’s acquisition of HOF is hence meant to introduce the world’s most advanced department business model to China so as to lead the country’s modern department store. Within 3 years, the sales proportion of Nanjing Cenbest’s own brands and buyers brands will predictably reach 15% and 20% respectively.

Yuan also mentioned a preliminary timetable for HOF’s entry into China. By the end of this December, HOF’s cross-border electronic business will settle in the FTA, which will hopefully see the influx of many European brands and suppliers. Moreover, physical stores are scheduled to be opened up in Nanjing, Chongqing and Xuzhou next year, and quickly expanded to megacities like Beijing, Shanghai, etc.

Yuan also spoke about Sanbao Group’s recent acquisition of Lashou.com, saying that the latter is China’s fourth largest group buying website with a total of 100 million registered users. He hoped that HOF’s business in China can be combined with that of Lashou.com in the years to come, and thereby truly bridge the online and offline businesses.

Yuan finally extended his gratitude to the participating suppliers, who he said are partners both to HOF and Sanpower. He was confident that with joint efforts, Nanjing Cenbest and HOF will make their way to be worldwide outstanding department stores in three years. Meanwhile, he said that HOF is like a bridge that connects Sanpower more closely with its suppliers, so that the in-depth cooperation of the two can hopefully forge a long-term win-win future.

HOF and Nanjing Cenbest’s senior executive team, including HOF CEO John King, COO CEO Nigel Oddy, President of Nanjing Cenbest Fu Dunxun and Vice President and Board Secretary Pan Lijian, were also present at the meeting.