Japan convenience store, restaurant chains speed up overseas expansion

Asian Economic News, Nov 18, 2008

TOKYO, Nov. 12 Kyodo

Japanese convenience store and restaurant chains have accelerated their overseas expansion, especially in Asia, as domestic business conditions have deteriorated due to excessive competition in a market shrinking amid the falling birthrate and aging population, an industry body said Wednesday.

The number of Japanese franchise chains' overseas outlets at the end of June this year increased by 2,947 from four years earlier, or by 986 from a year before, to 12,116 including 8,492 convenience stores and 3,404 restaurants, the Japan Franchise Association said.

Their overseas outlet openings have concentrated in the fast-growing Asian market, including China where the number of stores opened by Japanese franchise chains has more than doubled in four years from 419 in 2004 to 916 in 2008.

South Korea has remained their largest overseas investment target for the past four years, followed by Taiwan and the Philippines. China has replaced Thailand as the fourth.

As the number of middle-income consumers has increased in China and other Asian countries, ''convenience stores and restaurants have grown more acceptable with Westernized lifestyles in these countries,'' said an official at the association.

Asian countries' development of production and distribution systems has ''allowed stores in these countries to procure local products that are as good in quality as those in Japan,'' a convenience store chain official said.

Among convenience store chains, FamilyMart Co. launched its overseas expansion with a store opening in Taiwan in 1988. It expanded into China in 2004 and opened 163 stores in four years. By the March 2009 end of fiscal 2008, FamilyMart will see the number of its overseas outlets exceeding that of its domestic stores.

Yoshinoya Holdings Co., which operates a chain of ''gyudon'' beef-on-rice bowl restaurants, started operations in China in 1992 and has opened some 140 restaurants there.

Duskin Co., which runs the Mr. Donut restaurant chain, has opened outlets mainly in the Philippines and Thailand.