Replies to post #63074 on China Growth Stocks

[GorillaGorilla]

YONG - CHBU - what rate has CHBU been adding it's stores? YONG's store franchise is growing at a phenomenal rate. All I can say is that YONG isn't going to maximise sales at a newly franchised store in the the first couple of years - doubly so the 13K added this year.

End of Year
10 23,000 E
09 9,110
08 1,125

They also talked about training people during the year (they haven't decided if it's money well spent so may or may not repeat in '11). It going to take a while for you to organise when you scale up.

Finally, if you only a few shops you are going to be picky about where you put them. Clearly, a loss of quality would be expected with YONG.

rich

[Rames]

YONG/CHBU - that is very easy to explain, using common sense. You can't compare a distribution channel of 500 sales points with one that is 40x larger and probably much more dense. That is like comparing a movie that only gets a limited release in 100 theatres with one that goes live on 4,000 screens. Assumed the products are comparable in quality and price the smaller distribution channel will almost always achieve higher revenue per sales point. If Pepsi were available at only 2.5% of Coke's sales points it would most likely still maintain 5%+ of the combined market.