Wahaha opens Waow Plaza

Leading Chinese beverage producer Wahaha Group expanded its business Thursday when it formally opened a boutique shopping mall, called Waow Plaza, in Hangzhou, East China's Zhejiang Province, in order to make European boutique products affordable to domestic consumers.

The Hangzhou-based company has focused full efforts on its boutique shopping mall project with an investment of 1.7 billion yuan ($273 million), and plans to open another 100 Waow Plazas around the country within three to five years after testing the waters in Hangzhou, said Wahaha in a press release sent to the Global Times Thursday.

Most goods sold in Waow Plaza are bought directly from European boutique brands that are popular among fashionistas in Europe but have not entered the Chinese market until now because of a lack of suitable channels, Ren Weifeng, brand director of Wahaha, told the Global Times Thursday.

This ensures Wahaha a competitive pricing edge compared with traditional domestic retailers who purchase foreign products through middlemen, Ren said.

The company plans to develop its boutique retail business in two ways—by inviting European producers to open exclusive shops in Waow Plazas across the country, and by acting as middlemen for European brands to sell in China, said Ren.

However, Li Lei, a Hangzhou-based fashion insider who went to the opening ceremony, told the Global Times Thursday that he was only familiar with one of the male clothing brands advertised outside the plaza, a Spanish brand called Groc.

Even some foreign suppliers, who also attended the ceremony, said they did not know some of the brands sold in the plaza, said Li, adding that most goods sold in Waow are priced moderately but still higher than average Hangzhou residents' expectations.

Taking a male suit as an example, he noted that high-end brands like Hermès, which are usually sold at 10,000 to 30,000 yuan in domestic markets, range on average from 8,000 to 9,000 yuan in Waow, while Hangzhou residents prefer a price under 3,000 yuan.

"The goods sold in Waow are not expensive, but prices will become my concern when it comes to unfamiliar brands," Wang Qing, a local resident who works in the building next to Waow, told the Global Times Thursday, adding that Waow is surrounded by blocks of office buildings, but the area is not popular for socializing or shopping.

Wahaha still has much work to do in promoting the European brands they are introducing, and Waow's bad location may greatly hinder its future operation, Yan Qiang, an analyst from Adfaith Management Consulting, told the Global Times Thursday.

Besides, as a successful domestic beverage giant just entering the domestic retail industry and intending to sell foreign products, the company may need a fairly long time to get used to this sector's pressures, which include high inventory, shipping costs and customs duties, Yan said.

He also noted that the fierce competition in the domestic retail sector has made it much harder for retailers to eke out a profit, clouding the future of Wahaha's retail business.