China's first foreign-invested discount store made its debut in Shanghai yesterday amid growing competition in the domestic retail market.

The opening of the store, which operates under the brand of "Dia," marks an important move by Spain's Dia Group - a subsidiary of French retail giant Carrefour - and Lianhua Supermarket Holdings Co Ltd, the country's largest retail operator.

The two companies have formed a 140 million yuan (US$16.9 million) joint venture, Shanghai Dia-Lianhua Retail Co Ltd (SDLR), to introduce this relatively new retailing business model into China with a massive expansion plan.

"Our primary target is to open 300 outlets in Shanghai by 2006," said Liang Wei, general manager of Lianhua.

At the same time, three additional outlets also started operating in Shanghai yesterday apart from the flagship store.

Two more new stores will open in the city next week, said Johannes Wang, expansion manager of Dia's China operations.

Dia also plans to open another 300 discount stores in Beijing by 2006, and the first is scheduled to appear there around October.

Originating in Europe, the concept of discount stores is a relatively new concept on the Chinese mainland market. Such stores, ranging from 200 to 500 square metres, will primarily offer general household merchandise, especially food, at low prices.

Many of the goods on sale display the store operator's own brand. These goods are obtained through a direct supply contract from the manufacturer, helping lower costs.

In that way, by average, the prices of such own-label goods could be 10 to 20 per cent lower than those of the same type in other mainstream hypermar-kets or supermarkets, making discount stores more attractive to many consumers.

So far, Dia has developed a batch of nearly 150 domestic suppliers that provide over 300 types of Dia-branded goods - or about 30 per cent of the total goods on offer - at its local discount stores.

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