CHINA. In a landmark moment for the country’s travel retail sector, Sinopharm and China Tourism Group yesterday signed a strategic cooperation agreement in Shenzhen. During the ceremony China International Pharmaceutical and Healthcare Company Limited (Sinopharm International) aslo signed an equity cooperation agreement with China Tourism Group CDFG Company Limited (China CDFG).
The signings followed a day after Monday’s historic announcement that China Tourism Group – China Duty Free Group’s (CDFG) parent company – is to acquire a 49% holding in the Sinopharm-owned Chinese travel retailer China National Service Corporation (CNSC).
As reported, the RMB1.228 billion (US$178.5 million) investment represents a telling increase in CDFG’s already pre-dominant industry status both within China and worldwide. represents an important reshaping of the industry landscape.
The deal brings two giants in their respective fields. Sinopharm, as the only central enterprise with its main business in life and health, 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 whole tourism industry chain of food, accommodation, transportation, shopping and entertainment.
China Duty Free Group has been the world’s number one travel retailer by sales for the past three years, according to The Moodie Davitt Report’s annual sector benchmark rankings.
Yesterday’s meeting – conducted on the International Day of Consumer Rights – was graced by Liu Jingzhen, Secretary of the Party Committee and Chairman of Sinopharm Group, and Chen Yin, Secretary of the Party Committee and Chairman of China Tourism Group, pictured directly below.
Also present were Wang Haimin, Deputy Secretary of the Party Committee and newly appointed General Manager of CDFG, and Hu Jianwei (presiding over the operation), Dong Zenghe and Jin Bin, Vice General Managers of Sinopharm.
Sinopharm Group Vice General Manager Deng Jindong signed a strategic cooperation agreement with China Tourism Group Vice General Manager and Chairman of CDFG Li Gang (pictured below).
Sinopharm International General Manager Zhou Song and CDFG General Manager Wang Xuan (above) signed an equity 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 “vivid embodiment” of fully integrating the advantageous resources of both sides, joining forces, forging 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 drive the return of overseas consumption and to stimulate domestic consumption. He described China Tourism Group as a leading tourism enterprise in China.
Liu said he hoped that the two sides will complement each other’s strengths and share resources in the sectors of life, health and tourism to create “a model of reform and a standard bearer of innovation”, 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 achieve new performance heights.
Chen Yin said that the strategic cooperation is a “pragmatic move” to implement the major decisions and plans of the Party Central Committee and the State Council on vigorously expanding domestic demand, comprehensively promoting consumption and boosting confidence in development.
Sinopharm is ranked 80th among the world’s top 500 companies and first among global pharmaceutical companies, Chen noted. Its scale of development, efficiency and comprehensive strength mean it enjoy a leading position in the industry.
Chen said it is hoped that this cooperation will leverage Sinopharm’s advantages across the whole health industry chain – including medicine and healthcare, and wider life and health aspects. The combination of Sinopharm’s nationwide medical, health and recreation industrial bases and China Tourism Group’s rich resources in culture, tourism and duty free will drive the expansion of “mutually beneficial and win-win cooperation models”, he said.
This will lead the duty free industry’s innovative development and promote the sustainable recovery of China’s consumption and the formation of a strong domestic market.
After the equity cooperation, Sinopharm International will hold 51% of the shares of CNSC with CDFG having the balance of 49%.
In a statement the two parties said they plan to accelerate strategic cooperation across the areas of life and health, duty free retail, medical care and recreation.
They will launch “extensive and in-depth” cooperation in multiple retail channels – including offshore duty free; inbound and outbound duty free at ports; downtown duty free; membership shopping; cross-border ecommerce; travel services; cruise ships; and recreation and residential.
“We will jointly build a new era of ‘duty-free + health’ development with Chinese characteristics,” the two companies said. “This will better meet the growing needs of the people for a healthy and better life; contribute to the strong recovery of China’s economy; and boost the confidence of global economic growth.” ✈
