Despite the scorching heat, Wang Hongtao, a 42-year-old local laid-off worker, travelled all the way to the second Shanghai International Franchise Business Exhibition, which ended here last Sunday.

What appealed to Wang was a bright-looking business opportunity offered by Shanghai Lianhua Convenience Commerce Co Ltd: to spend only about 70,000 yuan (US$8,400) to set up a franchise outlet of Lianhua's convenience store.

"That sum is only the minimum start-up expenditure for such an outlet, but I believe it is a worthwhile investment because of its business prospects," said Wang, who spent time consulting staff from Lianhua on various minor details involved in opening such a store.

In its promotional brochure, Lianhua says the monthly net profit of the operators of its 400-plus convenience stores citywide averages 3,000 yuan (US$360) to 5,000 yuan (US$600), which is considerably higher than the monthly earnings of most local residents.

Official statistics indicate that the monthly income of local residents averaged around 1,200 yuan (US$145) in 2000.

"With this store, I want not only to bring some financial relief for my family, but to have a taste of being a successful boss as well," Wang said.

During the three-day exhibition, many people visited Lianhua's booth in the hope of acquiring more knowledge about convenience stores; dozens of them expressed their clear intention to set up such operations in the near future, according to Xue Jiang, executive of the franchise department of Lianhua, a wholly owned subsidiary of Lianhua Supermarket Co Ltd.

Since Lianhua entered the business three years ago, the company has so far established more than 480 convenience stores in the city and neighbouring Ningbo and Hangzhou, Xue said.

Not content to be small retail outlets selling only food and small household items, those stores offer additional conveniences, from film developing to photocopying to newspaper and magazine retailing.

Rocketing increase

Lianhua is by no means the only name in this business. Many other companies have pushed ahead with their efforts to grab a bite of the local convenience business market.

Bolstered by its 5.4 billion (US$650 million) sales volume last year, Shanghai Agriculture Industry Commerce Supermarket Co Ltd is now busy establishing its convenience store network under the brand of Alldays; preparations by RT-Mart to set up its own convenience stores are well under way; US-based 7-11 is also said to have mapped out an ambitious plan to make inroads into the city, according to the Shanghai Evening Post.

Statistics from the Shanghai Chain Business Association (SCBA) indicate that nearly 1,150 convenience stores were operating in the city at the end of last year, carrying names like Lianhua, Kedi, Liangyou and Lawson. Experts say the figure is likely to reach 2,000 at the end of this year, and they estimate the city's capacity is 3,000 to 4,000 convenience outlets.

While the number of local convenience stores is rocketing, their business also seems encouraging: the combined sales of the stores hit some 1.7 billion yuan (US$204 million) last year, posting a 62 per cent growth over the previous year.

"It's natural to see so many convenience outlets sprouting quickly in the city because the development of local supermarkets has nearly reached saturation point," said Hong Guankang, vice-chairman of SCBA. "The market simply needs a kind of new business operation like convenience stores."

Convenience is an apt monicker for these stores - they usually remain open 24 hours a day, offering food and services long after traditional supermarkets have closed.

The start-up investment for a convenience outlet is within the reach of many people, and the initial preparations, including choosing the location, are not complex. These factors have encouraged many potential operators to kick off their business.

Also, an improving economy and increasing demand for quick and timely services have created a favourable environment for the growth of convenience stores in the city, experts said.

"It's high time for us to start our operation or we will miss the boat," said Shen Jianhua, general manager of Alldays, which hopes to set up more than 300 outlets citywide in the next two years.

However some insiders caution that more efforts are needed to ensure the healthy operation of seemingly booming convenience stores.

"It's useless to look only at the increasing number of such stores; what really counts is their operation quality," said Li Shuxiang, vice secretary general of Shanghai Commercial Association.

Lianhua admits that nearly 8 per cent of its convenience outlets are still in the red, and experts from SCBA estimate that all convenience store operators in the city, except Lianhua and Kedi, are losing money at the moment.

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