China Dongxiang Plans To Acquire Phenix, Open New Stores

China Dongxiang (Group) Corporation has announced that it plans to acquire Phenix Corporation, a Japanese apparel retailer.

Phenix Corporation has global ownership of Phenix, a skiing and outdoor sports clothing brand, and the ownership of Kappa in Japan.

Founded in 2002, China Dongxiang was originally a subsidiary of Lining. In July, 2005, Lining sold 80% of its stake of Beijing DongXiang Sports Goods Development Corporation, the predecessor of China Dongxiang. Before that, China Dongxiang was responsible for the manufacture and distribution of Kappa in the Mainland and it was the exclusive agent of Kappa in mainland China and Macau. However, the exclusive rights were due to expire at the end of 2007. After Lining's withdrawal, Morgan Stanley helped China Dongxiang acquire all the rights of Kappa in mainland China and Macau through a capital injection, which allowed China Dongxiang to become the owner of Kappa instead of a agent.

Wang Zhiqiang, CFO of China Dongxiang, said in a press conference that the group's budget in 2008 is expected to be about CNY140 million, of which CNY10 million will be fixed assets and for system development; CNY60 million will be used to open no less than ten flagship stores; and CNY70 million will be used to build their Beijing headquarters. In addition, the group will support its dealers in opening at least 650 new stores around China in 2008.