CHINA. In a landmark moment for the country’s tourism retail sector, Sinopharm and China Tourism Group signed a strategic cooperation agreement in Shenzhen yesterday. During the ceremony, China International Pharmaceutical and Healthcare Company Limited (Sinopharm International) also signed a cooperation agreement with China Tourism Group CDFG Company Limited (China CDFG).
The signings followed a day after the historic Monday message that China Tourism Group – the parent company of China Duty Free Group (CDFG) – will acquire a 49% stake in Sinopharm-owned Chinese travel retailer China National Service Corporation (CNSC).
As reported, the RMB 1.228 billion (US$178.5 million) investment represents a significant increase in CDFG’s already dominant status in the industry both in China and globally. represents a major reshaping of the industrial landscape.
The deal brings together two giants in their respective fields. Sinopharm, as the only central enterprise with a core life and health business, is China’s and the world’s leading comprehensive pharmaceutical and health industry group. China Tourism Group is the only central enterprise with tourism as its core business, covering the entire chain of the tourism industry from food, accommodation, transportation, shopping and entertainment.
China Duty Free Group has been the world’s number one retailer by sales for the past three years, according to The Moodie Davitt Report’s annual sector rankings.
Yesterday’s meeting – held on International Consumer Rights Day – was graced by Liu Jingzhen, Party Committee Secretary and Chairman of Sinopharm Group, and Chen Ying, Party Committee Secretary and Chairman of China Tourism Group, pictured just below.
Also present were Wang Haimin, Deputy Secretary of the Party Committee and newly appointed General Manager of CDFG, and Hu Jianwei (Operation Manager), Dong Zenghe and Jin Bin, Deputy General Managers of Sinopharm.
Sinopharm Group Deputy General Manager Deng Jindong signed a strategic cooperation agreement with China Tourism Group Deputy General Manager and CDFG Chairman Li Gang (pictured below).
Sinopharm International General Manager Zhou Song and CDFG General Manager Wang Xuan (above) signed a capital cooperation agreement.
Liu Jingzhen said that the Party Central Committee, with General Secretary Xi Jinping at its core, has made important plans to deepen the reform of state-owned enterprises, promote their high-quality development, and accelerate the construction of world-class enterprises.
This cooperation, Liu said, is a “bright embodiment” of fully integrating the two countries’ advantageous resources, joining forces, building the core competitiveness of enterprises, stimulating innovation and creativity, and building world-class enterprises.
Sinopharm, he said, has made the duty-free business an important pillar in its 14th five-year plan to actively promote the return of overseas consumption and boost domestic consumption. He described China Tourism Group as a leading tourism company in China.
Liu said he hoped the two countries would complement their strengths and share resources in the life, health and tourism sectors to create a “reform model and innovation standard bearer”, especially the duty-free joint venture. This partnership will enhance China Duty Free Group’s “comprehensive strength” globally and promote the high-quality development of China’s economy to reach new heights of performance.
Chen Ying said the strategic cooperation is a “pragmatic move” to implement the major decisions and plans of the Party Central Committee and the State Council to vigorously expand domestic demand, comprehensively promote consumption and enhance development confidence.
CNSC operates 29 stores in the country and (one) abroad. Its downtown network is the big prize and will be particularly attractive to CDFG given the likely upcoming introduction of traditional duty-free downtown stores before going to China.
Sinopharm is ranked 80th among the world’s 500 largest companies and first among global pharmaceutical companies, Chen noted. Its scale of development, efficiency and comprehensive power means it enjoys a leading position in the industry.
Chen said that we hope this collaboration will leverage Sinopharm’s strengths across the health industry chain – including medicine and healthcare, as well as broader aspects of life and health. The combination of Sinopharm’s national medical, health and entertainment industrial bases and China Tourism Group’s rich resources in culture, tourism and duty-free services will drive the expansion of “mutually beneficial and win-win cooperation models,” he said.
This will lead to the innovative development of the duty-free industry and promote the sustainable recovery of consumption in China and the formation of a strong domestic market.
After the equity collaboration, Sinopharm International will hold 51% of CNSC’s shares and CDFG will hold the balance of 49%.
In a statement, the two sides said they plan to accelerate strategic cooperation in the fields of life and health, duty-free retail, medical care and leisure.
They will begin “extensive and deep” collaboration across multiple retail channels – including offshore duty-free; entry and exit duty-free ports; duty-free center in the center; shopping for memberships; cross-border electronic commerce; tourist services; cruise ships; and recreation and residential.
“Together, we will build a new era of ‘duty-free + healthcare’ development with Chinese characteristics,” the two companies said. “This will better meet people’s growing needs for a healthy and better life; contribute to the strong recovery of the Chinese economy; and boost confidence in global economic growth.” ✈
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