China's relentless buyer of Western brands

China's relentless buyer of Western brands

Yuan Yafei likes to break into English words during interviews.

But the 52-year-old business tycoon started to learn English only three years ago.

The founder and chairman of Sanpower Group was little known among the Western media until he snapped up 89 per cent of British department store House of Fraser in 2014 in the biggest Chinese foreign retail deal in history.

In fact, Yuan's buying spree in the past two years also includes US fancy gadget retailer Brookstone Inc and Israel's largest private healthcare and homecare service provider Natali Seculife Holding Ltd.

"When I talked to Western business partners, many interpreters could not exactly translate what I meant. So I decided to learn English myself," Yuan said.

Of course, he had no time to attend language school. Instead, he asked his 10 assistants, all graduates from the world's top 10 universities, to give a daily briefing to him in English.

"I asked questions if I didn't understand. I also asked them what the right English expression was whenever I thought of anything," Yuan said.

"I'm not afraid of losing face. One can never be successful if he or she is worried about losing face."

After studying accounting at college, Yuan worked for the local government of Nanjing, Jiangsu province. Like in the case of many Chinese entrepreneurs, Yuan's path changed because of Deng Xiaoping-led economic reforms. "To live a different way of life", he quit his job in the government in 1993 and entered the computer business at the age of 30, building "DIY"-do-it-yourself, for the uninitiated-machines assembled from components sourced in Guangdong.

In less than two decades, Yuan rose quietly into one of the richest people in China. With estimated assets of 37 billion yuan, he was ranked last year as the 37th wealthiest person in the country in the Hurun Chinese rich list. He was ranked 92nd in 2013.

Sanpower's business covers retail, information services, medical and healthcare, finance and real estate industries. The Nanjing-based conglomerate has controlling stakes in five listed companies and more than 100 subsidiaries.

Explaining the logic behind his overseas purchases, he said: "Very simple. To serve the Chinese market.

"The Chinese market is huge enough. But we don't have enough experience. With the help of money, I can buy Western brands and technologies, which are exactly what Chinese companies lack."

The long history and experience of House of Fraser, Brookstone and Natali could help him expand his retail and healthcare empire in China.

Sanpower owns Nanjing Xinjiekou Department Store Co Ltd, one of the oldest and one of the 10 largest department stores in China. But like other traditional retailers, it faces challenges from the rapid rise of e-commerce and a slowdown in the Chinese economy.

"House of Fraser has 167 years of history. It is not easy to build and sustain a brand for such a long time," Yuan said.

The British retailer has the type of management system that the Chinese counterparts lack, especially its buyer system, house brands and supply chains, Yuan said. "That is exactly what we are looking for."

He plans to open the first flagship House of Fraser store in the Oriental Plaza of Xinjiekou, a central business area of Nanjing, in October .

The Nanjing branch of House of Fraser will feature "British style" to showcase its difference and competitiveness, Yuan said. The "British-style" will also spread to the nearby International Finance Center, which Yuan bought from Li Ka-shing in 2014, where a Hamleys toy store will be unveiled in October.

Last year, the 256-year-old British toy retailer was bought by Nanjing-based Chinese footwear company C.banner International Holdings Ltd, in which Sanpower is a strategic partner. Hamleys' flagship store on London's Regent Street is one of London's major tourist attractions.

"A good shopping mall should be considered as 'a travel destination within the city', where you can have sightseeing, fine dining and lots of fun," Yuan said. "It must meet the spiritual needs of consumers and offer customers a richer experience that could not be offered online."

Yuan said he focused on preparing "content" of his malls in the last five years, rather than opening new ones in China, because he believes China is oversaturated with malls that could not differentiate themselves.

Healthcare is another focus for Yuan.

Sanpower bought an elderly care company Shanghai An Kang Tong Health Management Co Ltd in 2013. A year later, it bought Natali, Israel's largest private healthcare company.

His next goal is precision medicine, an emerging approach for disease treatment and prevention that takes into account individual variability in genes. Nanjing Xinjiekou bought China Cord Blood Corp, the largest umbilical cord blood bank operator in China in terms of geographical coverage, for 7.5 billion yuan at the beginning of this year.

Yuan's overseas buying spree has not stopped. Recently he has been travelling abroad to meet the world's leading researchers in life sciences. "I am looking for the most advanced technologies," Yuan said.

CLOSE-UP

Yuan Yafei

Chairman of Sanpower Group

Born in 1964

Career:

1988 to 1993: Public servant at Yuhuatai District Government in Nanjing

1993: Left his job in the government and started his own business

2000: Established the consumer electronics business Hisap Corp

2011: Acquired a controlling stake in Nanjing Xinjiekou Department Store Co, Ltd

2014: Completed a series of key acquisitions including: House of Fraser, Brookstone, Natali, Mecox Lane, Lashou.com and Funtalk Telecommunications.

Education:

1984-1988: Jinling Institute of Technology (the former Nanjing Polytechnic University)

Cang Wei in Nanjing contributed to this story.

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