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Warner to Open China Retail Stores

27 Mar, 2006 By: Erik Gruenwedel

Warner Bros. is reportedly planning to open 200 branded retail stores in China in the coming years, including the first one March 26 in Shanghai.

The stores, which target China's burgeoning middle class, would feature licensed merchandise, books and video, including Looney Tunes and DC Comics brands, according to a report by Reuters. It apparently represents a return to a U.S. retail strategy the studio ended in 2001 when it shuttered all stores.

The Walt Disney Co., which sold its U.S. Disney Stores to The Children's Place in 2004, continues to operate stores in China and Hong Kong.

About 17 million middle-income households (50 million people) have monthly salaries upwards of $1,244, according to AdAge/McCann Worldgroup. In Hong Kong, middle class homes account for half of the territory's population.

China had 16,665 chain stores at the end of 2005, an increase of 20.7% compared to 2004. The 30 largest chain stores accounted for 7.3% of total retail sales, worth $831 billion last year.

Last September, in an attempt to outmaneuver rampant piracy in China — and to a lesser extent, Russia — Warner Home Video and Universal Pictures International agreed to distribute each other's DVDs in the two countries.

With more than 100 million DVD players in Chinese households, sales of DVD and VCD discs were expected to top $1 billion in 2005. Numerous reports suggest upwards of 90% of all entertainment DVDs sold in China are pirated and obtained on the black market.

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